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Thursday, 29 September 2016

How this 18-year-old Russian payment gateway CyberPlat is breaking into the Indian market

Ask anyone in the startup space, and they’ll tell you that it seems to be the age of fintech. And among the various sections of the fintech ecosystem, none has received more attention than payment gateways.

And yet, CyberPlat has been on the scene even before the term fintech existed. Possibly amongst the first electronic payment systems of Russia, the integrated multibank internet payment system was introduced in 1997 within the e-commerce department of Platina Bank, with an aim to provide IT-support for effecting cashless transactions in all financial services of the e-commerce sector, from ‘micro’ payments to interbank transactions.

Today, with offices in Russia and Mumbai, CyberPlat claims to have more than a million transactions per day. They say that they have been growing in the double digits since their entry into India, being profitable for the past four years.

Cyberplat’s first online payment was effected on March 18, 1998 for the Garant-Park Company in Moscow, and the first payment to a cellular communication operator, Beeline, was carried out on August 12, 1998.

In 2000, CyberPlat was incorporated as a separate open joint stock company. By the end of 2015, the system was processing payments made in favour of more than 4,700 service providers, including mobile and stationary communication companies, cable TV and wire-based and mobile internet providers, security alarm systems, and utility and power supply companies across virtually all regions of Russia.

CyberPlat has been in operation for 18 years and is the largest, most reliable and well-adjusted electronic payment system in Russia and the CIS countries, along with operations in Germany, Austria and India.

Due to constant upgrading of its technological platform, the CyberPlat payment system is currently capable of processing more than 1,400 financial transactions per second.

Breaking into the India market

“Today, when I look at India, I believe that, like Russia, India too is on the cusp of a payment boom and both have a similar financial legacy. The regulatory policies in both the countries are conducive for a robust growth in the sector,” says Alok Jha, MD, CyberPlat India.

When the team set up CyberPlat in Mumbai in 2009, India, they say, was experiencing and enjoying the growth of the internet and there was an upsurge in its users. Alok adds that it was the perfect time for the team to enter the country.

CEO and Founder of CyberPlat says: India seemed liked the right place for CyberPlat as the economy and the market place was conducive for the growth of Payment aggregators like us. Having a leadership position in CIS countries, Austria and Germany, India was a natural choice. Even from a legacy perspective, Russia and India have shared a healthy economic relationship. We are very aggressive in our growth plans for India and would want to become the number one payment aggregator in the country.

However, building the organisation from the ground up and staying profitable was a challenge as there were already established players in the market, resulting in CyberPlat having to jostle for place in an established market in which they were the last entrants.

“But this did not deter us, and we focused on offering the right products to our clients at the best price. We remained consistent with our core business proposition and grew business by building strong, trust-worthy relationships. We believe in being the growth partners of our clients and keep introducing new products to meet their requirements. We also offer customised and tailored solutions to befit their business model,” says Alok.

Bringing in a differentiator
CyberPlat in India differentiates itself from competition by way of service, technology robustness and a wide range of products. The team adds that they offer a secure and reliable platform with a 2048 bit electronic digital signature encryption facility, ensuring a high degree of security for transactions.

Alok adds that their disaster management services, among other facilities, make them the preferred partner for top telecom providers, DTH providers and utility service providers. “We are a technology-oriented company offering a wide range of products and services to choose from,” says Alok.

In India, the team considers Oxigen and Euronet Worldwide as their competitors. Both these players started from the B2B space and eventually forayed into the consumer space, while CyberPlat continues to serve the business requirements in the B2B space.

Being a multi-category service provider, the team claims their core strength is the aggregation of consumer payment products, a wide distribution network and the enabling of micro flexible top-ups. “Further, we enable channel partners with this set of payment products across wide variety of verticals. We also enable networks that are not tech savvy to modernise themselves (especially the SME industry) with our web and mobile-based white label solutions,” says Alok.

The team claims to have partnered with over 300 B2B and B2C clients across retail, e-commerce and mobile applications. CyberPlat also helps new partners with a single platform for various digital payment products, enabling their businesses to function faster.
The exploding payment gateway market

The market for online payments is growing rapidly in India, and Harshil Mathur, Co-founder of the payment gateway Razorpay, estimates that the market has grown by 50 percent over the course of the last year. With a lot of startups coming up in India, the need for payment gateway solutions is bound to surge. He pegs the market size of the sector to be around $54 billion in India.

Globally, Stripe is a major player in the payment gateway space, having raised $280 million, along with making two acquisitions. Currently, Razorpay directly competes with players such as PayU and Citrus Pay, which was acquired by PayU. Instamojo is also a player in this space, but focuses more on individual payments.

Payments have become synonymous with fintech. It was one of the first segments where startups began to grow and disrupt the way people transacted, and it was also among the early regulated players. The second highest funded space, this year there have already been nine deals. The total amount of funding made between last and this year is $866 million.


“With the United Payments Interface (UPI) and IndiaStack coming in, the flow of money will be easier and product development simpler. There is inclusion at the bottom level, and at the top levels, the regulator is opening the ecosystem, making it easier for startups to bring in technology,” says Harshil.

With the fight in the payment space getting heated, mergers and acquisitions or alliances seem like an outlet to beat competition and stay ahead of the game.

Staying ahead of the curve

The CyberPlat team believes that the payments landscape in India is at a point of inflexion. Alok adds that with intense competition and strategic collaboration among market participants, the lowering of the costs of banking and underserved and unbanked consumers beginning to find utility in formal financial services, the opportunity will be immense.

He believes that the players in the new payments ecosystem will supplement as well as ride the wave of smartphones, internet penetration and recent policy initiatives like Jan Dhan, Aadhaar and Digital India to find creative ways to deal with each other in the new marketplace.

The team claims that CyberPlat is growing at 100 percent year-on-year. “We will soon open our second office in India in New Delhi and expand our team strength. We will also be introducing new innovative products and services this year, along with adding new partners in the multi-category businesses to increase our footprint,” says Alok.

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