Novopay Will Redefine Efficiency & Reliability in Banking Services

Novopay was incorporated in February 2014 by Srikanth Nadamuni (Chairman), Sridhar Rao (Chief Executive Officer) and Gautam Bandyopadhyay (Chief Operations Officer).

Novopay provides banking, mobile recharge and electricity and other bill payments, at the convenience of a neighborhood kirana store through an android app and Aadhaar biometric scanner. The customers can use these facilities using the Novopay consumer app as well as send money to their friends and relatives.

The company have around 45,000 retail outlets in the Novapay retail network across 20 states .

Sujata Sangwan Interacts With Srikanth Nadamuni, Chairman, Novopay and Spoke to Him

Idea Generation

There were two ideas behind the creation of Novopay. One was Nandan Nilekani asking me “Can you create a payments and banking platform to service a billion people, run by 100 people”. This question implied a highly efficient and scalable system that would bring financial inclusion to all.

The other input came from Vinod Khosla who talked about his experience at Kirana stores when he was growing up in Delhi and how the shopkeeper gave credit to his customers – thereby acting as a small banker to the community.

My own work as technology head of Aadhaar brought me close to the financial inclusion and banking. These ideas and experiences were responsible for the creation of Novopay.

Special features

-> Novopay focuses on the 900 million people who are unbanked or underbanked. Most other startups focus only on the middle class with smartphones.
-> We look at the problem of financial inclusion that is worth solving and we are getting good traction doing so.
-> We have built the world’s best payments and banking platform that is solving a very real problem on the ground.

Challenges Faced

-> Setting up a physical network of retail outlets is non-trivial. It took a lot of planning and hardwork to build a 45,000 strong retail network in 20 states.
->Banking is a very traditional industry, it take a lot of convincing to get Banks to adopt new technology and new ways of doing payments and banking.

Monetization and Traction Details

-> Novopay works on a system of commissions, ie. they charge the customer a very nominal amount for each transaction. The customer can be an end consumer or a business that is using Novopay services.

-> Novopay has created a merchant network of 45,000 retailers. We have perhaps the largest deployed network of Aadhaar MicroATM devices in the country. As of now, Novopay has a user base of over 4,50,000 users.

Differentiation Factors

-> Many startups seem to have not focused on unit economics and lost their way.
-> Our current projections are we turn profitable in about 18 months.
-> We do not discount or sell-below-cost, for if our customers come to our stores that’s because of our products and services not freebies.

Advice To The Emerging Startups

-> Create products and services that add real value to the customer
-> Startups are 5% idea, 95% execution, no make that 99%.
-> Focus on your cash flows, don’t discount your products or sell-below-cost for you will attract the wrong customers. If your products have little value you better come to know of is early, so you can do something else!

Funding Details and Future Plans

Except for our seed round from our parent company Khosla Ventures, we have only raised money from strategic investors from the banking sector. We will continue to take strategic investments for our financing needs.

Market Size & Opportunity

The market size for Novopay is quite large. As its services help provide payments and banking service to everyone, regardless of whether they have a bank account or not. Even users without a feature phone can use these services. This makes the addressable market size of Novopay very large. The prime focus is to get its services out to the unbanked population which is almost half the population.