Dutch-based payments company PayU is buying Indian payments startup CitrusPay for a whopping $130 million, several sources reported Wednesday morning. The deal would be one of the largest, if not the largest, in the short history of Indian FinTech. It might also point to the apparent success of bringing India’s population into the mainstream financial system and furthermore into the realm of digital financial services. It is also the fifth largest acquisition ever for Indian startups.
“Today’s announcement is a significant milestone for both businesses, as well as the FinTech industry in India,” PayU’s global operations CEO Laurent le Moal said in a statement. “It is exciting for everyone across the PayU and Citrus teams as we bring together new capabilities that will help us to better serve our collective clients.”
The deal places CitrusPay CEO Amrish Rau at the head of PayU’s India operation, ostensibly meaning the two companies will be completely merged and CitrusPay’s brand will cease to exist. The deal will also see PayU co-founder Nitin Gupta leave the company to found a new company, though why was not immediately clear. CitrusPay and PayU have very similar business models. PayU maintains operations around the world. Its India branch offers net banking, credit and debit options and allows users to attach their digital wallets to their regular checking accounts for the purpose of making purchases online. The company received a “semi-closed wallet license” from the Reserve Bank of India in August. The Boston Consulting Group said in July they expected the Indian digital payments market to reach $500 billion by 2020.
CitrusPay is a Sequoia Capital-backed company, having participated in all of the company’s three funding rounds which to date have raised $32.5 million. Beenos Asia and Ascent Capital have also participated in those rounds.
The deal might that imply the market for payments is not only growing but also maturing to the point that competition is consolidating and is becoming attractive to global players. It also could be an indication of structural changes in the economic behavior of the people there. The Indian Prime Minister’s office has been adamant about getting more of its very large unbanked population into the mainstream financial system. That program, dubbed Pradhan Mantri Jan-Dhan Yojana (PMJDY, or Prime Minister’s People’s Wealth Scheme) launched in August 2014 with 415 million Indians still not holding regular bank accounts. That number drastically fell to 233 million unbanked Indians by the time the initiative’s first reports were released in October 2015, meaning 182 million Indians had finally gotten accounts.
CitrusPay was founded in April 2011 and has over 100 employees in India. They have maintained their headquarters in Pune.