What BharatPe business model looks like?

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What BharatPe business model Looks like? 💼 A Thread 🧵

I watched a YouTube video by @thinkschoolbot (which makes case studies about different businesses, which are insane) on how @bharatpeindia makes money 💸

So it started as simple that when there was a wave of digital India 🌊 majority was shifting to UPI and other payment options available in India.

They encountered a significant problem with UPI that a QR can accept payments from that particular company and when a merchant UPI account is from a different company, they either ask the customer to pay through cash or have multiple QR of different companies to receive payment.

BharatPe founder @Ashneer_Grover 👨 & Shashvat Nakranisees 👦 see this as an opportunity and builds an application that can accept payment from a single QR.

They also made some other changes for merchant welfare. Back then, other UPI payment apps used to charge a separate fee to transfer money, around 1.5% in most cases. Even then, they don't support same-day transfer.

Bharatpe changed this completely, and they removed all the charges while transferring money and introduced same-day transfer. This move led to significant movement & onboarding of merchants on the Bharatpe platform.

But then the question arises how does BharatPe earn money if they made all transfers free? 🆓 Ashneer Grover knows that it will not be wise to charge money from small vendors for transfer💫

Ashneer Grover knows that one will not be happy 😔 to pay the charge but will be happy to pay 😀 the interest on the loan one will receive 💰

They did a remarkable job introducing loans for small MSMEs and small vendors, as they cannot get loans from the bank because of a lack of documents or any other reason. BharatPe started distributing loans to these small vendors at 2%/month.

All they did this with their algorithm that tracks sellers' monthly income, daily transactions, transaction amount, and other factors. And which they calculate the creditworthiness of the merchant on their platform.

But in the loans industry, the default rates are petty high. Even then, 96% of loans taken from bharatpe users are paid back. This is because they cut this down from their daily transaction transactions, and in that way, they can make the default rate as low as 4%.

So in this way, BharatPe made a genius move by offering loans and making money out of it. In 2021 they had an avg 300crores per month of loans distributed ranging from Rs10,000 to Rs 7,00,00. They are planning to aim to distribute $1B loans 💲 by the end of this year.

BharatPe introduced a 12% club in which people invest money and bharatpe will then further distribute this to the people who need it, and from the income of interest, they share it with the investor. In that way, they can create a win-win situation for both investors & themselves

Thank you @thinkschoolbot @Ganeshprasad999 for sharing such beautiful case studies.

Hey readers, I am Siddharth Talesara 👦, an engineer who designs ❤️ gardening. I like to read & share things like -Entrepreneurship 💼 -Business 💸 -Web development 🌐 -Coding 💻 -Graphic design 🎨 -Photography 📸 -Gardening 🌱 Follow for more such insightful threads 🧵