Mobile payments service provider Ezetap Mobile Solutions Pvt Ltd has raised $3.5 million in a Series A round of funding from Chamath Palihapitiya’s Social+Capital Partnership, a Silicon Valley-based VC firm, as well as from Peter Thiel (co-founder of PayPal and one of the early investors in Facebook who is now associated with a VC firm and a hedge fund), David Sacks (Yammer founder), David Sacks (Yammer founder) and Nicolas Berggruen. Social+Capital Partnership led the round which also saw participation from the existing investor AngelPrime. As part of the investment, Palihapitiya will join the board of Ezetap.
The Bangalore-based startup was set up in 2011 by Abhijit Bose (CEO), Bhakta Kesavachar (CTO) and Satheesh Vattekkat (VP, engineering). It focuses on the mobile payments market in Asia and has launched a mobile point of sale (PoS) solution that allows gadgets like feature phones, smartphones and tablets to be converted into PoS terminals – in-store, on the road or at the customer’s doorstep. This is facilitated by connecting the Ezetap Card-Reader (that has been designed and manufactured in the country) to the headphone jack of the devices.
The company also offers a configurable mobile app that works with both feature phones and smart devices, and a flexible platform that allows Ezetap or any third party to build and turn on value-added services, tightly integrated with its core payment service. The service is built as per the global PCI-DSS standard, works across all global markets and has been launched in India and Kenya. Going forward, the company will make it available in other countries across Asia and Africa.
“The transformation of mobile handsets into intelligent PoS has revolutionised the payments industry. But for the most part, this growth has been in the US and parts of Western Europe,” said Bose, co-founder and CEO. “In India alone, there are almost 300 million cards but only 600,000 terminals. However, the low penetration of smartphones, distribution challenges and the early stage in market maturity require a different understanding of customers, business models and breadth of capabilities,” he added.
Ezetap had earlier raised an undisclosed amount from AngelPrime, a startup incubator launched by serial entrepreneurs Shripati Acharya, Bala Parthasarathy and Sanjay Swamy in 2011. As part of the investment, all three had joined the Ezetap board.
Interestingly, Social+Capital Partnership has separately invested an undisclosed amount in Bangalore-based angel investment firm and incubator AngelPrime. The investment will be used to finance the startup companies that AngelPrime will incubate and seed during the next three years. Late last month, Silicon Valley-based VC fund Mayfield Fund and a group of unnamed investors also invested an undisclosed amount in AngelPrime.
Parthasarathy and Acharya also co-founded Snapfish, a US based company in which Mayfield invested before it was bought out by Hewlett Packard. On the other hand, Swamy worked in companies like Xerox PARC, headed the mobile payment company mChek and also co-founded the mobile customer feedback service ZipDial.
(Edited by Sanghamitra Mandal)
Sachin Jain November 9, 2012 13:46
Congrats to the Ezetap team for the for the funding as the investment team resonates the huge potential in Payments Industry in India. However, Indian market should be looked differently from U.S/European counterparts esp. given the over cautious approach followed by our regulator (RBI).
It will be interesting to see how Ezetap and some of their peers (Mobiswipe etc.) will be able to keep pace with the roadmap laid down by RBI with regards to CP transactions esp when it comes to EMV/2FA compliance beside other technical upgrades like DUKPT and TLE. While the intent of RBI is well founded, all these upgrades will add to the product cost thereby depleting their cost advantage.
The other key area will be security. While PCI DSS is in place and all incumbents have/will comply with the requirements, there needs to be hightened sense of security esp where the players are looking at replicating Square’s business model of just providing card swipe dongles and an application. How will security environment on phone (which doesn’t belong to POS provider but a person in such a situation) made “air tight” to ensure data integrity (we all have multiple apps on our smartphones and do we actually know what kind of data do these apps have access to!!). To my understanding, printing of receipts is far less a headache (its a requirement of RBI and not VISA/MC). One bad example of data skimming on such a product will attract lot of eyeballs (esp RBI) given that we have a abnormally low value of reported credit card fraud in India as compared to our peers in developed world.
Lastly, out of 300m cards, credit cards should be just 25m while the remaining are debit cards. While we all know the usage of debit cards (besides taking money out of ATMs), acquiring banks needs to strongly push for debit card usage (given the lower merchant discount recently implemented) to increase number of transactions per POS as the same may be critical for Mobile POS to have a justifiable business case.