From debit cards, payment gateways, QR codes to even sound technology, the payment platforms for consumers have evolved over the last few years. But, business-to-business payments, that is, corporates making payments to vendors and suppliers, have not seen much innovation. Observing the opportunity, three colleagues - Yadvendra Tyagi, Hemant Vishnoi and Naveen Bindal - working with a payments firm CitrusPay (now acquired by Naspers-owned PayU), founded a commercial credit card start-up EnKash in 2017.
What it does
EnKash started out as a transaction management platform that enables large corporates to make various core and non-core business payments through a commercial card issued by banks. It also helps them in connecting with their suppliers, buyers and their ERP/accounting systems to speed up the financial transaction process.
In August 2019, it launched its own 'Freedom Corporate Credit Card' for small and medium enterprises (SMEs) and start-ups, which the company says, is India's first corporate credit card for SMEs and start-ups. The credit card helps small businesses, which largely remains underserved by banks, make digital marketing and cloud spends, vendor, utility and rentals payments and even GST (goods and services tax) payments. "This is similar to Brex in the US, which has become a unicorn in just two and a half years," says Yadvendra Tyagi, Co-Founder, EnKash.
SMEs often resort to borrowing from banks and NBFCs for their working capital requirements and emergency needs. However, due to their stringent credit assessment process, most of them fail to receive funds. While new-age fintech NBFCs have started catering to this segment, the interest rates that they charge remain higher. "If SMEs borrow money from fintechs, they will have to pay interest from day one because they have taken a loan. This is where EnKash comes. EnKash corporate card offers interest free credit, that is, you don't have to pay interest for 30 days. You swipe the card and pay to vendors, suppliers, etc."
If the payment is not done on the due date, that is on the 30th day, EnKash charges an interest rate of 2.5-3.5 per cent per month.
The start-up's payment management system comes handy in judging the credit worthiness of SMEs. "Our live transaction platform helps companies make payments on daily basis. EnKash gets to see their payments and bank statements etc. So, we are different from other companies, which still follow traditional ways of credit assessment," says Tyagi.
Currently, the company only caters to GST filing SMEs.
For credit card lending, EnKash has tied up with a couple of NBFCs. While these NBFCs provide the funding, EnKash does the entire due diligence and bears the risk of default. The start-up is in the process of acquiring an NBFC to start lending from its own books.
So far, EnKash has issued nearly 1,000 cards. The company says it has a pipeline of 3,00,000 cards to be issued. "We will be covering this as a milestone and later expand the client base by taking vertical-based approach," says Tyagi. On leveraging bank partnerships, the company says soon they will collaborate with more banks.
A major chunk of the company's revenues come from its transaction platform. It earns on the basis of per transaction charges. "It is usually fee income cut in the entire value chain," says Tyagi.
The fintech start-up has so far raised over $3 million in Series A round from Mayfield India and Axilor Ventures in April 2019.