Digispice Technologies Ltd (NSE: DIGISPICE) Q3 2025 Earnings Call dated Feb. 17, 2025
Corporate Participants:
Amit Sharma — Head – Care & Customer Lifecycle
Dilip Modi — Chairman
Unidentified Speaker
Sunil Kapoor — Whole-Time Director and Chief Financial Officer
Analysts:
Unidentified Participant
Presentation:
Amit Sharma — Head – Care & Customer Lifecycle
Good evening, everyone. A very warm welcome to the Earnings Zoom webinar of Technologies Limited for Q3 and 9M FY ’25. We have with us Mr Modi, Chairman of Spice; Mr Sunil Kapoor, Whole-Time Director and Chief Financial Officer, Spice Money; and Ms, Head, Investor Relations.
Before we begin, I would like to state that some of the statements made in today’s discussion may be forward-looking in nature. The actual results may vary as they are dependent on several external factors. A statement in this regard has been included in the result presentation sent to you earlier. We will commence the call with the management taking you through the operational and financial performance for the period under review, following which we will have an interactive Q&A session.
I would now like to invite Mr Dhilip Modi to commence the presentation. Over to you, Dhilip. Thank you.
Dilip Modi — Chairman
Thank you, Amit. Thank you so much. Let me welcome you all. Good evening to the quarter three earnings call for Digi Spice Technologies. It’s always a pleasure to connect with all of you. Some of you have regularly been attending these presentations on a quarterly basis. Thank you for your time and thank you for your interest in joining us. I know there are many other investor presentations happening at the same time. So thank you for taking out the time to hear us out.
Do you know, friends, we are building something really exciting at Digi Spice Technologies Limited in a part of India that is small towns and we are really taking the benefits of technology and the use of digital to drive financial services deep into Bharat. Today, Digi Spice Technologies has become a focused fintech company where we are building a leading fintech platform under the brand Spice Money. We are progressing on this quarter-on-quarter.
I’d love to share with you today on some of the new products that we have launched in the — in this financial year and give you some sense of the progress that we’ve seen in-quarter three on those products. As a company, we are focused on digital financial inclusion, a very critical theme for our country, and we are truly using the power of technology to drive penetration of formal financial services into deep India. So let me start my presentation by taking you through an executive summary of where we are closed on this quarter.
So effectively, friends, just to kind of recap, Digi Spice Technologies is building its fintech business under the brand Spice Money. This is a company that has built a digital financial services platform, which onboards small merchants in small-town India and they double up as assisted digital payment points for consumers in small towns. So what it effectively means is millions of consumers in small towns and rural India are able to go to their nearby merchant to withdraw cash from their bank account, to deposit their EMIs, to pay the electricity bills, to open new bank accounts and to offer many more — get access to many more related services.
So effectively, as in urban India, we see a huge digital payments play — a playout. In small town and rural India, we are seeing merchants play a big role in helping digitize cash and in becoming a strong assisted digital payments network. Digi Spice through Spice Money has built one of India’s leading assisted digital payments network in small-town India.
So if you look at the summary page on the left-hand side are our four key strategic building blocks for what we are building out from a value-creation point-of-view. The first is consolidating our share of the core digital assisted payments industry and maintaining market leadership, making sure we double down on operating leverage in our core business, using our extensive network and distribution channels and our tech platform to bring many more strategic products like savings and investments to the market with the right set of partners.
Today, our network is serving as a place where customers can withdraw cash and deposit cash as well as pay their bills and open accounts. Going-forward, as they open more accounts, we are looking to see how to make them into fully bank customers with respect to saving and investment products and many more related credit-related journeys for them. As a third building block, credit continues to be an important part of our journey going-forward. And we are in the process of working with the regulator to look at a strategic NBFC acquisition from within the group so that we can use it as a as a platform to create our own credit products for our captive merchant base as well as the MSME around the merchants.
And finally, something that I’d love to talk to you about on this call is how we are entering the UPI space. We are building something truly unique to which will allow us to expand the UPI consumers. Today as a country, UPI, which is our pride. We’ve seen over 400 million consumers adopt the UPI platform to do digital payments, but there is an opportunity to bring in another $300 million to the UPI platform. We at Spice Money are now committed to contribute to that part of the challenge and the opportunity and we have got our license from the regulator, which is the prepaid instrument license, which is now interoperable on UPI. And we have launched our Spice Pay product that I will talk to you briefly about today, which is our entry into UPI.
So just as a quick update on quarter three. Do you know, we continue to be a market-leader in the enabled payment system business with a market-share of above 17%. Like you have the UPI stack, you have the enabled payment system stack where customers are using their biometrics seated into the bank accounts to transact with their bank account, whether it’s to deposit cash or to withdraw cash. We at Spice Money have a leading market-share of 17% and we have held this. In fact, now we’ve got closer to 18% market-share and we are looking to continue to focus on growing this. From just being a cash deposit and a cash withdrawal network, Spice Money has become today one of the largest collections network in small-town India.
So today, we have also started — our merchants have started also functioning as collection points, Dino for strategic partners like MFIs and NBFCs in small towns, and we have seen significant growth in our collections business, a growth of close to 80% year-on-year. Then also in addition to ABS, we have seen our collections becoming a big part of our story. The third one is current account savings account. This has been a significant focus product for us in the last one year. And again, we’ve seen significant year-on-year growth, triple-digit percentage growth in the number of accounts we’ve opened for our strategic partners in the last nine months-to a year. Currently, we are opening over 2,000 accounts a day.
So effectively, if you look at our network, it has over the last five years consolidated its position in helping people engage with their bank account. So instead of going to a bank branch or an ATM machine, consumers are finding it much more convenient in small towns in rural India to go to their merchant who signed-up on the SpiceMoney digital platform to transact with their bank account. This is using their biometrics seated into the bank account and we have a leading share there. Now over the last year, we’ve also doubled up this network from a collections point-of-view and also from a point-of-view of opening new bank accounts.
So from being an ATM network, it is becoming a CDM network to also becoming effectively a bank branch network, helping consumers not only transact with existing bank accounts, but also open new accounts., which is our UPI offering, we have now launched this. We have done our launches in select districts in states of Bihar and Madhya Pradesh, which are our strongholds of markets from a network point-of-view, I would like to talk a bit about that. And then finally, from a corporate actions point-of-view, we have applications which have been filed in with the regulator with respect to the NBFC acquisition.
And also finally in terms of amalgamation of Spice Money, which is today sitting as a subsidiary of Digi Spice Technologies to merge it into Digi Spice. Effectively, Dino, our subsidiary, which is SpiceMoney, our fintech business will get merged into Digi Spice Technologies. This is a process well on its way since August 2024 and we are going through the necessary statutory approvals and we’ll keep you updated through the stock exchange announcements as and when we get the approvals coming through. So effectively, Digi Spice is now a very focused fintech company and we are focused to meet the unmet formal financial needs of Bharak using technology.
Over the last five years, if we move to the next slide, our main asset that we’ve built is our strong digital merchant network, which is doubling up and as an assisted digital payments network in a small town India. If you see between FY ’22 December 2024, we’ve grown from close to 240,000 merchants to now over 1.5 million merchants who have been onboarded on our SpiceMoney digital platforms. Effectively, you can think about it as 1.5 million small shops in small towns and rural India, effectively serving as digital payment and banking points for millions of consumers. This is a network that we’ve grown at a CAGR of over 55% and something that now we are looking to consolidate.
If you look at the right-hand side, you see that we’ve got deep presence across North, Central and East India and now we are deepening our presence in West and South of India. So our goal is to make sure that we can get as close to consumers in small towns and rural to be able to give them access to digital payment and banking points. And effectively, these are consumers who tomorrow will go digital and they will look at both our merchants as points where they can transact, but also points which can assist them in their Go digital journey.
Before we get into the details of the quarter three, I’d like to share with you know our entry into the UPI space. You know, we believe that today, India with over 400 million consumers is all set to figure out the next journey and that journey will come from Bharat. It will come from small towns. Today, there are multiple reasons which are holding back consumers from getting on to UPI and we are trying to solve for some of them. So because we have an extended merchant network through which we get access to millions of consumers who transact on our network, we’re effectively playing a role in digitizing cash at the last mile. Our goal is to ensure that we also are playing a role in onboarding many of these consumers onto UPI.
So on the next slide, I would like to share with you the journey that we’ve started for Spice Pay, an initiative within Spice Money. This is our UPI offering. It is a unique product that we designed to secure UPI transactions without exposing your bank accounts. Effectively, it runs on a prepaid instrument wallet. Three years back, Dino, this wallet was made interoperable with UPI, which basically means instead of just bank-to-bank transactions, you can have bank to wallet and wallet to bank.
Now for a cash first consumer who has never used a digital payment instrument, we have created a product where now he can open a full KYC PPI wallet, loaded with cash and start doing digital payments. This is something that we are piloting in two of our strong markets in Bihar and Nadhya Pradesh. And few of the services that we’ve gone live with, our full KYC wallet is around to send and receive money, add cash, bill payments and recharge, including scan and pay.
So I’d like to visualize that today many cashless consumers who want to do digital payments, what are their options? Because still they don’t — most of the UPI platforms today are focusing on moving money from bank to wallet, while many cash first consumers are looking for opportunity to add cash to wallet and be able to do digital payments from there. If you see between October to Jan, which has been our beta period. We’ve already opened over 13,000 wallets, out of which 10,000 wallets are active.
These are small numbers for now, but this is a pilot phase. But just to give you a sense that we are already beginning to see — if you see the services box on the left-hand bottom side, you already see people adding cash to the wallet and doing scan and pay. These are first-time UPI users, many of them, you know who are now getting exposed to UPI. So we’ve built a very simple interface on the right-hand side as you can see where the SpySpay app allows first-time UPI users to create a digital payment instrument, which allows them a digital account, which allows them to load cash as well as then use it to send money, scan and pay as well as pay their bills and to recharge. Effectively, we are seeing this as a way for consumers to get the confidence to start doing digital transactions.
We are — we have many learnings that are already on the way. We have many more services that we are looking to go-live on this. We look at this as more a kind of a neobanking kind of a platform where we want to build this into a full stack financial services platform, adding many more saving instrument, savings, investments, insurance and credit products going-forward.
So we really want consumers in small towns who have yet not started availing of the benefits of UPI to use this product, which has been designed keeping a cash first consumer in mind to get on to UPI and do transactions without exposing their bank account because one of the things that they’ve been concerned about is fraud and the journey that we’ve seen where they work closely with our merchants to do digital transactions, how we can build that confidence with them alongside with our merchants who will also play as points to help them to get on to the platform and do digital transactions on their own.
So this is a journey that we’ve started. This is our baby steps into the UPI space. We’re already leading in the AEPS space. We’ve built-out in the collection space and now we’ve enter the UPI space with our own offering. And this is something that we’ll keep you updated as we go-forward. It’s one of our big strategic goals going-forward and we believe that we can build a strong business where not only we have merchants on our digital platform, but also millions of end consumers who are cash first to be onboarded on our digital platform and therefore play our role in digitizing Bharat when it comes to digital financial services.
So I’d love to talk more about this in the Q&A session, but now I’d like to hand over to to walk us through the business and services update for quarter three. Over to you,.
Unidentified Speaker
Good evening, everybody. Thank you,, for that. And now I will run — run everybody through the detailed business how we performed in the nine months and the quarter ended December. So can we move to the next slide, please?
So here we are looking at the GTV trends, how our business has grown over the last four years is on the left-hand side, we can see that over the four years, approximately at a 33% CAGR, we have grown our GTVs. And if you see the financial year ’24, collections as a part of GTV started contributing significantly. And now coming to the quarter performance, we can see that in the quarter — quarter three ’25, FY ’25, our collections GTV has come close to INR15 crores on the total GTV of INR32 crores. So we are saying that collections as a part of our business is now contributing approximately 46% to 47% of total volumes and it’s come close to the APS business. So it’s as big as our APS and micro ATM business now.
So this is one big — one big development that has happened in the last three, four quarters and we’ve been working towards building collections as a focused product in the last three, four months, quarters. And that’s what is showing here on an overall growth of 21% in the quarter that we’ve done, 43% growth has come from the collections business and we have also grown 16% against the same quarter of the previous year. So that’s how we’ve trended on GTVs. Can we come to the next slide, please? Here in-line with the GTVs where we are also seeing the GM trends. So over the last four years, again on GM trends, in-line with the GTVs, GM has also grown approximately to at 30% CAGR. And on the right-hand side where we see the quarter performance, we can see how each bucket has contributed to our GM now.
So if we see that INR44 crores of GM that we have done this quarter, it’s grown by almost 2% as compared to the previous quarter and 5% as compared to the previous year same quarter. So here also, we can see that approximately INR10 crores has now started coming from collections as a business. Though we are still very strong with our APS and micro ATM GTVs and GMs, but that’s towards a flat — that’s towards a flat trend, but GM from collections is now growing. So it’s grown 16% quarter-on-quarter.
And if we see also one more thing that we’d like to call-out here is subscription packs. Subscription as a revenue, AVC has grown approximately 80% as in the — in this last one year. So if we see last same year, quarter three, we were doing approximately INR2.5 crores from subscription packs, while it has almost reached to INR4.5 crores from subscriptions that we are selling to merchants for subscribing to our business of APS and MBTM and hence we are building a long-term value with them so that they keep associated with our business and we are able to get repeat business from them and they are our long-running customers when they subscribe to these packs. So this is also a pie that is now increasing as and has become approximately 10% of our GM.
Can we move to the next slide, please? Yeah. So here we are showing how we’ve trended on GM as a contribution from each product that we get. So if we see, in the three business lines that I called in the previous slide also, collections, subscription packs and bankings are the three business lines whereas — where our GMs have increased as compared to the last year same quarter. We have — we have doubled down on these business lines. We’ve started — we’ve started increasing our banking accounts also. And from that, now we are generating almost 4% of our GM, 10% from subscription packs and 22% from the collections business. So that’s how these three pie are continuously increasing as a focused product that we are driving.
Can we go to the next slide? Here we are looking at CMS business in detail. So if we see the GTVs of CMS have increased by approximately 51% as compared to the previous quarter and approximately 80% as compared to the last year same quarter. When we drive CMS, our major goal is to drive large CMS counters or SMAs who are giving us approximately 90% of our collections business. So if you see that here, the large CMS counters have increased by 20% quarter-on-quarter and approximately 32% year-on-year. So these are the counters which are today giving us 94% of our total CMS GTV. These are big counters who contribute to the cash collections that are happening on-ground and they are growing consistently. So this is — this has been the focus for us. And again, if we see the financial — again, if we see the transacting enterprises also, those of — those have also increased and we are trying to get more-and-more partners on-board.
Next slide, please. On BBPS, we’ve almost trended flat this quarter. BBPS electricity and others have had a seasonal impact because of this quarter being a lighter one. But on AMI and others, we have remained a little flat this quarter. And the focus here for us is to grow and maintain our repeat customer-base so that we work with them again and again and we are able to drive that repeat behavior that they come to our platform for doing these bill payments. And on that, if we see year-on-year, we have grown approximately 23% as compared to the — as compared to the previous year same quarter.
Can we move to the next slide, please? Now coming on to the banking business. So now we see the banking business in detail, we have approximately opened 7.8 lakh saving accounts till late and approximately 50K accounts, current accounts till late. One big thing that we’ve started generating float income, which is a recurring set of revenue stream for us from these accounts. So almost INR130 crores is a balance that we maintain in this — in these accounts today and which is helping us generate a float value also. That’s a revenue — that’s a revenue stream, recurring revenue stream. And then if we look at the who have opened five-plus accounts, that number has reached to approximately 27k who now are basically working with us on a repeat basis and opening more-and-more accounts on our platform. So that’s showing a behavior of a repeat or a large banking counter that’s now that — so we have approximately 27,000 big banking counters also today.
Can we move to the next slide, please? So coming to credit now, credit, as already mentioned, has been a focus product that we’ve been trying to build-on in the last couple of years. And if we see the performance today, we have now started focusing majorly on the secured loans and on secured loan distribution with multiple partners. So here we see in — on the right-hand side, quarter-on-quarter, we have approximately grown 1.9 times, almost 2x in the secured loan business as compared to the previous year same quarter and up and almost held ourselves as compared to the last quarter, a little regrowth looking there because a couple of partners that we have had a journey with. But this is a business — business that we are now focusing to grow a more-and-more. And looking at the current trends, we’ve reached at a approximately INR20 crores a month kind of a GTV from secured products distribution. So this is one focus area that we are driving in credit business.
Can we come to the next slide, please? And here we’ll talk about our key product that is AAPS. This is the product where we’ve been a market-leader. And looking at this quarter performance, if we see Q-on-Q, we’ve grown approximately 11.5% as compared to the industry growing by approximately 9.6% and our market-share has also grown as compared to the previous quarter by approximately 30 bps. So this is a space where there have been made major regulations have been coming and this space, even after a lot of these transaction limits coming in and transactional to FA coming and going and we’ve been able to stay and hold our market-share in this core product.
Our transaction size also if we see the transactions attempted have also grown quarter-on-quarter by approximately 8.6%. So we know that the customers are still coming on our platform to do APS and they are increasing quarter-on-quarter. And the success ratio of transactions also is maintained. Also, if we see the large APS SMAs, they have grown by approximately 25% this quarter. So we see after the transactional 2FA going out, we have seen a growth in this metric and again big counters have started increasing their GTVs. So that’s — that’s where we are with our major product AEPS.
Now I would like to hand over to Sunil for the financials presentation. Thank you so much.
Sunil Kapoor — Whole-Time Director and Chief Financial Officer
Good evening everyone can we do more? Thank you.
This slide contains about the consolidated financial highlights. If we see the quarter three financial year ’25, there is a customer GTV of 31,951 against INR26,258 crores in the previous quarter, there is a growth of 16%. However, our revenue is — has grown 7% quarter-on-quarter and 2% on Y-on-Y. And consequently, the gross margin has increased by 3% from INR43 crores to INR44 crores. And if we compare it with the Y-on-Y growth, it’s a 5% increase and indirect cost from INR46.4 crores to INR45.9 crores, which is almost flat and EBITDA has improved due to the gross margin and some bit of in reduction in indirect cost from minus INR3.2 crores to minus INR1.9 crores. And consequently, the EBIT, 40 lakhs in the last quarter moved to INR2.8 crores in this quarter. And PAT from the continued business is a positive in this quarter of almost INR1 crore against INR1.5 crores negative in the previous quarter. And PAT — discontinued business is INR90 lakh rupees in this quarter and overall PAT is 1. Sorry, it’s INR10 lakh rupees positive and PAT in the earlier quarter was INR1.6 crores negative.
So the point is to be highlighted is with respect to YTD figures, if we see that PAT continued and discontinued business is INR25.7 crores negative in the previous nine months and in this nine months, we are trending about INR1 crores negative. And if we see on the 10th line-item, which is a notional gain loss on investments, which is mark-to-market recognition of investment what we have made, that’s — has nothing to do with the cash flows or the profitability of the company. But from the accounting standpoint of view, considering after this notional loss, PAT is INR26.6 crores for nine months and INR25.7 crores in the previous nine months.
Can we move to the next slide, please? If we — what I have presented in the previous quarter — previous slide, if we see this slide, we have a breakup into the platform business and the new — relatively new initiatives what we are trying to build is pay and credit distribution. If you see that we are investing for these two new initiatives that is resulting into investment of INR3.3 crores of EBITDA loss from — in-quarter three financial year ’25 and for nine months, it’s INR8.1 crores. So this is a — this shows about our investments into the new initiatives and which may be generating the revenue and the gross margin and contributing over the — on overall operating efficiency of the company going-forward. Thank you.
I’m handing it over to Amit.
Questions and Answers:
Amit Sharma
Thank you, Sunil. With this, we will now open the floor for the Q&A session. Any participant who wishes to ask a question may please raise their hand and I’ll ask the console to put your front to ask the question or alternatively, you may ask write your question in the chat box, which I will read-through to be answered. Any participant who wishes to ask a question may raise their hand or write the question in the chat box will wait for some time till the question queue is assembling.
We have our first question from Aniket. Spice has a 17% market-share in Adar enabled payment system, which is AEPS, what strategies are being implemented to further strengthen this position?
Dilip Modi
Yeah. Aniketh, I’ll take that to begin with. So thank you so much for your question. Dino, Aniketh, the way we see the enabled payment system today, if you see the country, the headline point is that over 550 million accounts, but over 1 billion biometrics registered and most of the accounts have their biometrics seated in it. So like in UPI, the transactions happen when your mobile numbers seeded into your bank account. AEPS is a way to transact with your bank account using your biometric. This is an industry of close to INR60,000 crores a month, which is basically INR60,000 crores worth of APS cash withdrawal transactions are happening both on us and office.
And when we talk about our 17% share, it is basically of the office market, which is approximately about INR23,000 crores out-of-the INR60,000 crores. The way we see this market is that there are players who have entered this space at a regional level. We are one of the few national players who have a national presence. We see an opportunity because now this space is also going to get consolidated due to a lot of self-regulation as well as a need to bring in more products to drive cross-sell for the merchants to grow income. As more-and-more merchants are enabling customers to withdraw cash, they also are providing other services. And for us, as we are growing our lines, especially like collections, feeding in a good working capital source for the other merchants as well to do this business.
So I think there’s a lot of need for innovation, new products, need for self-regulation, a lot of focus on compliance, which companies like ours are fully doubling down on and make sure that we build this business in a very responsible way. So we are very confident if you look at our market-share at a state-level, there are many states in the North and East where our market-share is upwards of 20% and in the South, it’s sub 10%. So we are looking at a state-by-state strategy of how to grow AEPS market-share and therefore, what you see at 17% is at an all-India level. But as you see that as we get more densor coverage in South and West, those markets will also start improving market-share beyond 10%, which will help us go closer to 20% plus market-share on an all-India basis.
Amit Sharma
Thank you,, for the detailed answer. The next question is from Naman. I’d like console to open his audio.
Unidentified Participant
Am I audible?
Amit Sharma
Yes, Naman, you can go-ahead, please.
Unidentified Participant
Yeah. So my first question pertains to the CMS GTV. So it’s a huge leap, 51% quarter-on-quarter. I understand that it was led by an increase in the number of large SMEs. But what I ask you is that the increase in the number of large SMEs, was it a result of a conscious action that was taken or otherwise? And what kind of traction can we expect in the next three to four quarters? Thank you.
Dilip Modi
So, thank you for that question. See, the growth in GTV is a combination of both growth in large SMAs as well as growth in business per enterprise. So one of the things that we are doing is we are doubling down on some of the larger enterprises and doing more with them to drive more stickiness. So it’s a combination of both growth in collection points as well as growth in business per enterprise. So both of them continue to be drivers to know as we go-forward.
You want to just add to that?
Unidentified Speaker
Yeah. So Naman, here as Zilip rightly mentioned, we’ve added some couple of big enterprises who have helped us grow business significantly in this last quarter and that’s reflecting in how we’ve been able to increase business size per counter also. So overall, both the counter volume and the numbers of counters have grown in this quarter, leading to that significant growth in GTV and GTV forming a significant portion of our overall GTV also.
Amit Sharma
So thank you,. Naman, hope that answers your question. Any further question? I think we’ll move on to the next participant. Before that, I’d like to request participants to ask a question, please raise your hand. Yeah, Naman, you there?
Unidentified Participant
Yeah. Yeah. So my next question relates to the recent GST order that was received by amounting to somewhat 4.3 crores. Any update that you can give on that?
Sunil Kapoor
Hello. Good evening, sir. I take this question. So go-ahead. Yeah. So this GST notice what we have received for the — some of the export services, what we were doing in the well business, discontinued business and we have provided — because we were not given enough opportunity to kind of put our view on the record but we are hopeful that we have now provided almost all the details with respect to the collections of whatever the export was there. And we are very hopeful that this case will be in our favor and whatever the provisions we have to follow, we have followed that.
Amit Sharma
Thank you, Sunil. And before — okay. Thank you, Naman. So that answers your question. Now before we move on to Prateek for the next question, I’d like to request participants to ask a question they may raise their hand or put their question in the chat box.
Next question comes from Pratik. the impact of 2FA on remittance, are you seeing this recording — receding now or is it still leading to the decline in remittance volumes?
Dilip Modi
So Prade, the true factor authentication was something that came in at a transaction basis for our AEPS business, which now has moved on from not having to apply on every transaction to just the first transaction of the day. So as showed in the AEPS numbers, we’ve already seen the impact of that quarter-on-quarter on quarter three versus quarter two in terms of growth in volumes of business. So effectively, now we just have a two-factor authentication on the first transaction, not on every transaction. We will have to wait-and-watch how the volumes continue to look at going-forward because they continue to be transaction limits set by the banks and all that.
As an industry, overall, Pratik, we have to closely watch fraud to sales ratios. We are working in a part of India that’s very financially vulnerable. So we have to make sure that we stay on-top of it. We at SpiceMoney continue to invest in our Dino point of fraud monitoring models and systems to make sure that we can keep the ratios under control, Dino. So I think this was something which was put in more to control fraud to sales, which I think now has been controlled. I think the growth in volumes will be more driven by other events like growth in subsidies at a state-level or overall growth in remittances. So I think the impact of 2FA has kind of waved off once it’s been removed from the — from a per transaction basis to just the first transaction of bidding.
You want to add to that? Any point that I may have missed?
Unidentified Speaker
I think you’ve covered the point.
Amit Sharma
Thanks,. Before we move to next question, I’d like to request participants to ask a question, they may raise their hand or write question in the chat box.
Next question comes from Aniket Redkar. So he says, thank you, sir. Can you elaborate on the impact of UPI adoption and zero balance savings accounts on transaction volumes and revenue growth.
Dilip Modi
Okay. So effectively, Anike, Dino, we believe that as an industry, we have to solve for growth in number of UPI users from 400 million to 700 million as a country. So the next 300 million users on UPI will come from Bharat. I think the way we are seeing the growth in zero balance savings accounts and we showed in our presentation that we’re doing close to 2,000 accounts a day. This is just demand for more accounts because now as an ecosystem, we are pushing for more transactions going digital, moving from cash to cashless economy.
So more-and-more people having accounts, more-and-more receiving their salaries into accounts, benefits into accounts and all of that. So that’s driving the adoption of accounts. UPI as digital payments is growing more-and-more services are going digital, even on many platforms like BBBS, things like gas booking and all no longer are enabled through cash payments, you have to make digital payments. So there is a need for a digital payment instrument, whether it’s an account or a wallet, you know to make a digital payment.
So if you have to grow digital payments, we have to move cash to digital. And so to us, whether it’s a zero balance savings account or a UP — or a PPI wallet interoperable on UPI, I think both of them can help the consumers make digital payments. I think this will definitely have an impact on transaction volumes as showed us that the float balances on the accounts that have been opened have grown to over INR130 crores. And so therefore, this does have implications on revenue with respect to float income.
On transaction volumes, of course, the whole idea is that as we open up more wallets, Dino, we will see transaction growth happening and subsequent to that revenue growth will follow. So to us, Dino, fundamentally, we are working to see how we can enable more-and-more digitization in small towns by enabling customers to have access to more digital accounts, whether it’s a full-fledged bank account or a wallet. Both serve the purpose of enabling people to do UPI and make digital tails. So we’ll continue to focus on that and I believe that will lead to both transaction and revenue growth down the line.
Amit Sharma
Thank you,, for that answer. Next question is repeat from Aniketh. Are there any plans to expand into adjacent fintech verticals such as insurance distribution, wealth management or AI-driven financial services?
Dilip Modi
Absolutely, Ariketh. Dino, there is so much of work happening in the AI space and we are very encouraged by a large — by a part of the startup ecosystem also looking at local language models, Dino and also looking at how we can use AI to drive down cost-to-serve and be able to innovate for small-ticket financial products. So we are committed — and we are a tech-first company, we are committed to leverage AI and are working to find partners in this space. We will work-through collaboration both on product and technology. Insurance and distribution and wealth management is something there are lots of players out there. You know multiple mutual fund companies, multiple insurance companies who are looking to access, access small merchants, small consumers.
So as a tech first platform, our goal is to integrate with them and therefore leverage our network distribution, reach and our platform to be able to offer more services. We’ve started with collections move to banking and within banking, we started by opening accounts. We started by distributing credit. Now whether it’s FT, RD, mutual funds, insurance, this is the direction we are going to move and AI is going to be a big part of our strategy going-forward because we are serving a market which is one — which needs us to keep reducing cost-to-serve and increase the reach and penetration of these services to many consumers. So as we’ve seen with AEPS, it’s enabled us to bring down the cost of delivering an ATM service to the masses of India. So technology is the answer to help us reduce cost and drive reach.
Amit Sharma
Stop. In this release, last question from Aniketh is, how is leveraging technology to enhance digital lending and microfinance services? What growth potential do you see in these areas?
Dilip Modi
So Anike, Dino, one of the things that we are very committed to is driving formal penetration of formal credit into small merchants in small towns. Do you know we have 1.5 million small merchants already onboarded on our platform and there’s a lot of data around these merchants we have. Many of them are new to Bureau as well. And therefore how do we unlock the power of alternate data to be able to give them access to formal credit products. There are many lenders out there who do not lend to them because of lack of collateral and lack of adequate data around them, lack of access, because there aren’t enough branches in small towns and in rural areas. So obviously, digital is going to be the way forward.
I think microfinance has been a big revolution in India, but I think with technology, there is an opportunity to create a kind of 2.0 revolution. So I think here we’ve started with working with partners on the secured lending side. I think using alternate data, we will look at how we can work with partners on the unsecured lending side. Do we want to be a little careful around that. We closely watch the regulators’ guidance around the making sure that there is no over leverage as well as doing proper income assessment. So because we have merchants transacting on our platform, it gives us opportunity to also do some of those things better. So we are taking this journey forward and credit is going to be definitely the next growth engine for us.
Amit Sharma
Thank you,. Before we move into the next question, I’d like to request participants to ask a question they may raise their hand or put their question in the chat box.
I’ll now take Utshav Bahiti’s question before Aniket. Utshav asks, sir, are there any pressure on the margins? GTV has grown by 16% Y-o-Y, whereas revenue and profitability are not in-line.
Dilip Modi
After you want to picked-up on the point of product mix and impact on margins and revenue?
Unidentified Speaker
So Utsab, here though our GTV has grown more and we — as you rightly mentioned, the revenue and profitability is not in-line with revenue growth, but what has happened is in the product mix, if you see, now collections is — is becoming a product where we are constantly growing GTVs. But collections as a product in compared to other products such as banking or AEPS, which are where we are traditionally a leader, collections is a smaller margin product. So what happens is when we grow too much on CMS, the margin mix may not — margin is growing, but due to the change in the product mix, the overall GM is not growing in-line with the growth in GTVs. So that’s what has happened in the last quarter.
Amit Sharma
Thank you,. Again, a request to participants in order to ask a question, you may please raise your hand or put your question on the chat box.
The next question comes from Aniket Redkar. In terms of going digital, given the potential surge in digital payments, especially with platforms like WhatsApp entering the market, what are Digi Spice’s plan to enhance its digital payment services? How does the company plan to differentiate itself in an increasingly competitive landscape.
Dilip Modi
Aniketh, thank you for that question. It’s a very important question because UPI has been around for some time now and lots of players who are using UPI as a way to anchor many transactions. I think our differentiation is really the ecosystem that we are in. See, there is no barriers-to-entry of any UPI player anywhere. But despite that, we do not see the UPI numbers growing in terms of numbers beyond the level because there are some infrastructure gaps. And many bank accounts, but not many active debit cards needed to activate UPI. Many banks not technically yet ready on UPI, some of the smaller rural banks. So for us, SpicePay, which is our digital wallet strategy interoperable with UPI, where you can add cash to wallet and scan and pay.
If you look at telecom, historically, we were — initially telecom was a postpaid market and when it moved to prepaid, even at a shop, you could top-up your card to do telco to be able to recharge your phone. So we believe that in the larger part of Bharat, you know where we are still figuring out active bank accounts.
Hello, am I audible?
Amit Sharma
Yes, you are.
Dilip Modi
Yeah. So even in a larger part of Bharat, where we talk about active, inactive bank accounts, we want to make it easy for people to move money in and out-of-the account. And therefore, one of the big differentiators we see us that this network that we’ve built becomes a very strong cash acceptance network and helps people digitize cash at the last mile.
And so therefore, we believe there is a great opportunity for us to be able to use this network as a differentiation to bring in the next-generation of UPI users in the country. And I think that’s going to be our big differentiation in terms of the leverage that we have of the network as well as the millions of consumers that we have access to who are using our network to transact with their bank account and pay their bills. So I think it’s the network, the access and the product that we’ve built around the UPI and PPI wallet that we believe will allow us to differentiate and help grow the UPI market at large.
Amit Sharma
Thank you, for the detailed answer. I’d like to request participants to ask a question you may please raise your hand or type the question in the chat box.
Next question comes from Pritik. The geography of operations for the top few players in payment bank business is largely UP/Behar concentrated. Is it our choice to start with these geographies or is that the large base of labor in these geographies make them hot bed for our business? Additionally, how is South Market in bracket, Tamil Nadu, etc in terms of size.
Dilip Modi
Now I think, Pratik, the very reason why most players are concentrated in Northern UP and Bihar is just because the banking infrastructure was most needed in these from a last mile point-of-view. So when a lot of accounts got opened over the last decade or so, know, most of them for consumers in these markets because more populous states are in the North and the East. And by definition, not enough bank branches and ATM. So AEPS became a very strong product for these markets. Having said that, we are seeing now the South markets also pick-up.
These have been basically more corridors and the North have been more received site corridors because we have more people going from UP and Bihar working across India. And so effectively, it’s in the receive side corridors that we’ve seen more of the AEPS business grow, while in the south or the sense side corridor, we’ve seen more of the remittances business grow. Recently, we’ve seen a lot of state-level subsidies growing in the south as well, which is leading to the growth in the ABS business in the South. We at SpiceMoney are both in the cash withdrawal, but also in the remittances space.
And with the recent regulatory changes in the remittances space, we believe we have an opportunity to use our wallet product to clearly create a strong proposition on the remittances side, something that we’ll come and talk to you in the next quarter. And I think there will be a good market for that in the south and allow us to enter the south in a sound way.
Amit Sharma
Thank you, Thillip. Next question comes from Surat Sinde. I would like to request consult to unmute Surat Sindesh can you please unmute Suraj platform? Yeah. Suraj, you are unmuted. You may please ask your question.Hello., please go-ahead.
Unidentified Participant
Hello. Am I audible? Yes. Hello. Hello. Hello. Yeah. Thanks opportunity. Just wanted to understand that in your presentation, you have mentioned that your enabled business is contributing around 56% to 60% to the top-line and the collection business is contributing to nearly 20% to the top-line. And also you have ventured into the other business segments. So just wanted to understand, over the years, when will other ventures will contribute on the absolute basis. As far as this other enable business is concerned hello. Hello.
Amit Sharma
Yeah., can you repeat your question, please because we were losing your voice in-between. So if you can be a little bit. Yeah, you are audible. You’re audible. Yeah. And a little slow in your asking the question would be great help. Thank you.
Unidentified Participant
Okay. So I’m talking like your other renewable business is contributing to nearly 56% to the top-line. Your CMS business is contributing nearly 20%. We lost your voice. I think also venture into the other stable network.
Dilip Modi
Yeah. I think Amit, what I’m picking-up from Suraj is he is looking at our revenue and margin mix and talking about how we can look at new services contributing to a higher share of our aggregate margin mix beyond AEPS. Is that your late point, Suraj?
Unidentified Participant
Yeah. So precisely, I think yes. So that he says yes.
Dilip Modi
So Suraj,, that is the goal. That is the goal because at the end-of-the day, look, all the merchants are already on our digital platform, they are accessing consumers, consumers are coming to them we’ve demonstrated over the last four to five years how we’ve brought in multiple services to grow beyond just the basic APS cash withdrawal product itself. So how do we diversify the product portfolio. So something on the last slide that you saw from Sunil where we are looking at UPI and we are looking at credit distribution as two new engines for growth for us.
Like this going-forward, there’ll be many more in the areas of savings, investments and insurance. So gradually something which was nearly 90% of our pie has now become close to 55% of our pie, this will go to 40% to 30% as we see growth of more products. We believe that with opening accounts, our ability to cross-sell more to the customers because we moved the merchant from being a pure ATM and collections point or a payments and collections point to also becoming a banking point.
So therefore, like you go to a bank branch and get access to multiple services, we are looking-forward to the consumers getting access to multiple services at our merchant point. So directionally as our network moves more towards becoming a kind of a branch network, we will have an opportunity to cross-sell more financial services and hopefully that will start contributing to our revenue and margin mix. So this is a journey we are on. I know — I don’t know-how quickly it will happen, but directionally, we are going there.
Amit Sharma
Thank you, Dalit. I think Sur doesn’t have a repeat question again a request to the participants in order to ask a question you may please raise your hand or type your question in the chat box so there is another question from Suraj. What initiatives have been taken to expand the agent network and customer-base in rural fintech services?
Dilip Modi
So Suraj, as we showed on the map in the presentation, our concentration of agents have been strong in North, Central, East, South and West, we have an opportunity to deepen our presence. So a lot of initiatives are on the way. They start by bringing onboard Dino channel partners who in-turn help us onboard merchants onto our platform, Dino with a relevant suite of products and obviously, with that comes new customers. As we are looking at our UPI product that in itself will help us bring a new cohort of consumers and with credit distribution, we’ll be able to engage with branches of many partners to also cater to their consumers. So across-the-board, we are moving on the way both in terms of expansion of network as well as our customer-base.
Amit Sharma
Thank you,. So another question from Suras. If from the current 17% in AEPS market, market-share to 70% if from current 17% market-share, if we have to gain market-share to say 2022 or higher market-share, what will be the efforts required in terms of and other drivers?
Dilip Modi
So Suraj, as I mentioned, if you look at our 17% market-share, this is an all-India level. We have many states in Northeast Central where we have market-share is already 20% 22%. So we’ve already seen that how at a state-level, we’ve been able to cross 20% in terms of AHBS market-share. What efforts we are doing there are efforts that we have to do in the rest of India, which is in South and West, which is working with partners to onboard more and working with to onboard more customers. So it’s a playbook that we’ve created in North and East that we will try and replicate in South and West with a whole new brethora of products that we believe are more relevant for those markets.
Amit Sharma
So thank you, Dalib, for that answer. One last request to the participants in order to ask a question, question you may please raise your hand or ask question in the chat box as there are no further questions there is a repeat question from Suraj. If you are giving commissions to the, they are doing business for us. If competitors come and give higher commission to the, they will move-out. What are we doing to retain them?
Dilip Modi
I think, Suresh, this is where spoke about our strategy on subscriptions. I think you know, if you see, we’ve grown on subscriptions double-digit year-on-year significantly. It was contributing about INR2.2 crores, quarter three last year, now INR4.4 crores quarter three this year. And what happens with subscription, Suraj, is that the starts you know getting more onto our platform because they’ve paid-for a longer period of time and they’ve got the benefits associated with that. So there is an incentive for them to keep transacting on our platform. So we believe that subscriptions is a good way to grow both retention as well as lifetime value per merchant or per. So this is a strategy that’s working well for us and we’ll continue to work on this.
Amit Sharma
Thank you, Dilip. As there are further — no further questions from the participants, I would now like to hand over the call to for his closing remarks. Over to you, sir.
Dilip Modi
Thank you, Amit. Dino friends, I would say that we are on a journey for driving digital financial services into Bharat. Today, if I look at Bharat, and we look at the GDP journey for our country and the journey towards becoming the third-largest economy, a Vixit Bharat, I think financial service is going to be the underpinning for that. Today at Digi Spice and Spice Money, we’ve built a large digital financial services network in deep or parts of Bharat. And I believe that you know, through an API architecture, we will be able to integrate lots of formal financial services into small merchants and consumers in Bharat.
So we are working in a very important, interesting and evolving space. We have earned the right to be able to innovate and build for this space and that’s why we’ve doubled down on it. And that is why we have said we will focus on becoming a pure fintech company and growing our business in this space. So we really look-forward to your continued interest in watching us evolve in this space.
Any feedback more than welcome, please do reach-out to us even between calls. And we are a company — young company that’s continuing to learn as we go along and we look-forward to this journey of growth, impact and scale in the mid to long-term. Thank you very much for your interest and hope to you. Wish you all the best. Thank you.
Amit Sharma
Thank you. Everyone. Thank you, everyone. With that, we conclude this call. You may now please disconnect the call.