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Ever since the Indian government started promoting Cashless India, we have been seeing new players in digital payments and one of them is Bharat Pe. Which had crossed 2.5 billion within its 2 years and more than 75 lakh merchants are using it on India today inside different cities. Along with this, Bharat Pe has also got a place in the top five fintech company and you must be wondering how Bharat Pe has achieved such a big achievement in such a short time.

The story begins .

The story of digital payment in India begins when the Indian government announced demonetization. After that announcement of the government, 86% of the cash currency inside the country had become invalid. And people started adopting digital payment, at that time Paytm was very useful for the people because Paytm was the only digital payment that used to make even small payments. And this was the time when other players also took entry in the market.

Now where people were adopting this cashless system, Shasvat Nakrani, a student of IIT Delhi, had discovered two big flaws of this system

The first drawback in this was that you could not do cross-platform transactions like if you use on the phonepe, then you cannot pay with the QR code of Paytm even if you want, he will not be able to scan the QR code.

The second drawback is that digital payment platform did not charge any fee from the customer, but he charged 1.5 percent on every transaction from the merchant, meaning that if the payment of ₹ 500 is made, the merchant has to pay 1.5% of that to that company. Was the company whose qr-code he is using.

So to solve both these problems, on 20 March 2018, Shashwat Nakrani and his partner ashneer Grover launched Bharat Pe.

The best thing he did was to bring a star feature on his wall and run an ad campaign called Ek Bharat Ek QR. Meaning that you could easily scan the QR code of Bharat Pe with any digital payment scanner and make payments.

And they made Bharat Pe free for both the merchant and the customer. Where other digital payment platforms used to take 1.5% commission, they used to give their service in India for free. And where others used to take 2 days to settle the payment, not in India, this work was done within 24 hours. With such an amazing feature, lakhs of merchants started adopting it as soon as Bharat Pe was launched. And soon its user base crossed the figure of lakhs.

The question is that if no one was taking commission from a merchant on India then how was Bharat Pe earning money.

So this is where Ashneer Grover's expertise begins: Ashneer Grover had a good experience with American Express and Grofer. Ashneer Grover knew that the margins in the retail industry are very low, so it is impossible to charge a merchant commission and make a profit. That is why he found such a way of revenue generation that no one would have thought of it before him. And that way was to provide loans to small business owners.

Ashneer knew very well that there are lakhs of small retailers inside India when they had to get their goods ordered and no bank gave them easy loans to increase their work. Then due to some other problem he used to reject but did not provide loan to them. And seeing this, Ashneer Grover launched his merchant landing service.

So the question now comes that when the big banks of the country were not giving loans to these merchants, what was so special about Bharat Pe that they took advantage of this golden opportunity so easily. And most importantly, how did he maintain his default rate by giving so many unsecured loans.

In fact, the thing that helped Bharat Pe the most here was its artificial intelligence algorithm. Actually here the algorithm keeps the data of cash flow and spending pattern of every merchant in India. Meaning that this algorithm saves the data of whatever payment is received on India and whatever the merchant tilts his bill.

Now whoever applies for a merchant loan, this algorithm creates a data of their income, projected savings, inventory value, income consistence on the basis of all their previous transactions done. Then it is decided from that estimate whether the loan should be given to the merchant or not.

Let's say a merchant has monthly cash inflow of ₹ 300000 and there he applies for a loan of 10 to 20,000 in Bharat Pe, then the algorithms of Bharat Pe will approve him for that loan and if he is another merchant Whose month's cash inflow is ₹ 200000 and that merchant applies only for a loan of 200000, then in this case the algorithms of Bharat Pe will either reject that loan or will give that loan to the merchant on high interest.

So according to this, in today's date, Bharat Pe provides loan from 10,000 to ₹ 700000 to small merchants and the time to repay this loan is 12 months and this loan is given at an interest rate of 1.75% to 2.50% . And the interest that is taken from the merchant is the main income source of Bharat Pe. But after this the problem now comes that how to recover the loan money with interest. Because it is very important for any business to maintain the stallment connection and default rate. That is why the company has to employ a substantial workforce only for payment collection.

You will be surprised to know that the repayment rate of Bharat Pe is 96%. Which is the highest in the market, so how did they get this benchmark on India, even after giving such a risky loan, the repayment rate on India is very good. Actually the answer is Automatic Repayment Bharat Pe has designed its system in such a way that the merchant does not need to fill the monthly installment because the interest fee from the merchant's account is automatically deducted from their transaction before settlement every day.

Till date, Bharat Pe has given loans of more than 3 thousand crores to 3 lakh merchants. And what is left is that today the loan service on Bharat Pe is in more than 24 states. In this way, Bharat Pe has solved a lot of problems of small traders today with its amazing business strategy and AI. And this is the reason why the name started appearing in the top fintech companies on India.