AvenuesAI Limited (539807) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q3 FY '22 earnings conference call of Infibeam Avenues Limited hosted by K.R. Choksey Research. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Parvati. Thank you, and over to you, ma'am.

Thank you. Good evening, everyone. On behalf of K.R. Choksey Research, we welcome you all for the Q3 FY 2022 earnings conference call of Infibeam Avenues Limited. I take this opportunity to welcome the management of Infibeam Avenues represented by Mr. Vishal Mehta, Managing Director; Mr. Vishwas Patel, Executive Director, Founder and CEO of Payments business; Mr. R. Srikanth, President; and Mr. Hiren Padhya, Chief Financial Officer. We begin this call with a brief overview of the company by the management, followed by the Q&A. I now hand over the call to Mr. Vishal Mehta for his opening remarks. Thank you, and over to you, sir.

Thank you, Parvati. Good evening, and welcome, everyone, to our third quarter earnings call. I wish everyone a very happy safe and prosperous 2022. India presents a very, very great opportunity as we are a very nascent -- in a very nascent start-up ecosystem, with about only 4 to 5 years in this space versus 20, 25 years than most other countries like the U.S., U.K., China, Japan, Korea and others. Hence, we believe this decade will be the year of tech-led organizations for India that will solve many business challenges and make us more efficient in the way we do business, consume resources and will make governments also very efficient to handle economic affairs with use of technology. Government's vision is to make India a less cash economy and Infibeam will play its part in adding to the nation's purpose. We aim to do that by enabling the merchants from top of the pyramid right up to the bottom with 2 of the most basic business requirements in the digital space: marketplace software and platforms to the business digitally, and payments to accept money digitally. And we offer a full stack solutions under both these options, and we have been doing it for more than 2 decades now. Many global tech platform companies have over the last 2, 3 years also doubled up as a payments company. We envision this combination as a successful business strategy back in 2016. Together, we have built a very comprehensive suite and solution for our merchants for a very long-term value creation and sustainable growth. We have presented this on Slide 16 of our presentation deck, which is called Growth-Oriented Business Model as a header under the company Overview section in the earnings presentation. In the slide, you will also see as we began our journey with digital payments, we built a deep portfolio and a profitable business model for long-term sustainability. Our payments business under the brand CCAvenue, which was launched in 2001, and we will complete more than 2 decades of incorporation in the next few days. We have been PAT profitable, profit after tax profitable, in this business for 20 years straight. A reputed Singapore-based research firm in the fintech block mentioned, "Can payments be profitable? This is lessons from Infibeam Avenues." Our payments business has a very strong customer acquisition engine with almost minimal customer acquisition cost. We worked in retail payments for more than 11 years and had the benefit of first-mover advantage to target all the premium businesses in India whom we can continue to serve even today. We have built an innovative products through our journey and expanded both horizontally into different payment-acquiring businesses, and we've expanded internationally as well. We cover merchants of all different sizes and scale. To have a huge competitive advantage and a great value proposition on top of our payments business, we have the platform business to significantly scale up the customer acquisition and also retention, engagement and cross-sell opportunity. The combination of payments and platforms, enterprise platforms that make the customer even more sticky and allows us to generate additional revenue scale our businesses and start incrementally contributing to our margins. Among the platforms, the GeM platform, which is called the Government e-Marketplace, is one of the strongest offerings with millions of merchants registered to sell to the government. We earn on a per-transaction basis with revenue linked to order value of each transaction. In FY '22, the order value is estimated to be INR 1 lakh crore, which is projected to double by FY '23 as per comments from GeM. Thus, the scaling opportunity is immense. And unlike payments, there is no pass-through as this is a business of software. So most of the earnings flow to EBITDA impact. This is why our platform business is high operating margins and it helps us to generate consistent cash flows quarter-on-quarter. Also, the merchant base on such platforms have been increasing at a very fast pace. Currently, GeM alone has 3.5 million merchants. Add to this one, the merchants of our payments business, acquiring business, the entire offering of CCAvenue, and from other platform businesses that is BillAvenue as well as ResAvenue as well as other large enterprise clients to whom we cater the platform business to presents a very long-term opportunity to build out other new products. To let you know, we added almost 8,000 merchants across our fintech portfolio every single day in Q3, totaling to over 800,000 merchants in the 3 months ending December 2021, which has been our highest ever. We've added 5 million merchants with many marquee brands. Similar to our own payments and platform growth strategy, we also have an investment-led growth strategy. See the bottom of Slide 16. We aim to present across the entire ecosystems of payments comprising of payment acquiring through Infibeam Avenues, payment issuance through our majority-owned subsidiaries, which is Go Payments; our payment network through our majority health subsidiary, So Hum Park, in consortium with other large MNCs and international MNCs as well where we are awaiting RBI approval; as well as cross-border payments through Fable Fintech incubated right in our offices. The entire portfolio offer leads to our next phase of growth to monetize on the rich and growing merchant database. We aim to do so by enabling leading -- lending to our merchants. We know the credit gap in the country is almost $300 billion, and takers are many. We have 3 models under lending, which we discussed in the last call as well: secured lending through same-day settlements, which we are doing; aggregating buy now pay later options; and third, enabling credit through a credit platform TrustAvenue, which we launched today. Secured lending is up from $150 million in Q2 to $175 million in Q3, a run rate of $700 million, 3x ahead of our FY '22 guidance of $200 million. We are targeting $1 billion run rate by end of March 2020. The buy now pay later option, which is the second option, are available. And under our payment gateway, we will offer more and more of these options to merchants where we can earn upfront MDR, which is merchant discount rate without any collection worry or NPA. And the credit platform, TrustAvenue, will be a future revenue and margin driver for us, one that we will give to all of our platform implementations as well as to our clients using our premium gateway. India's digital story picked up from the time of demonetization, accelerated by COVID and also digital has been one of the core go-to-market strategies for most businesses. Overall, digital payments in India is just about 4, 5 years old versus nearly 2 decades in some of the countries, including U.S. and China. There are only about 250 million digital payment users in India with a population of 1.4 billion. Hence, we believe the headroom for growth in India is significant and we are at an advantageous place due to our unique business model. Between December 2020 to December 2021, our market share in India's digital payments industry, as per RBI report, has significantly improved. It is important here to note that while we are chasing growth, we are also having a profitable business model and we continue to grow our profits in India's hypercompetitive market with parity pricing and where there are regulatory guidelines of zero MDR on UPI and rupee debit cards. Hence, we continue to maintain single-digit contribution from zero MDR payment options. When the impact on our net take rate is low, we continue gaining market share without compromising on profits. Over the next few years, we will invest and work towards improving our market share further in India, increase revenue contribution from our new businesses and our investment-led business scale as well as our international expansion scales, it will also scale with our lending business. It will improve further our operating profits. We're also planning and we'll be announcing and we've already talked about this in our disclosures, and Vishwas will cover it in slightly more detail, but all of our payments today are digitally online payments. And we are now also getting into an off-line payment opportunity, one that will be hybrid, one that takes over a merchant's payment requirements, both as online as well as offline. Thank you. And I will now ask Vishwas to give you updates on the payment business and more.

Thanks, Vishal. So this quarter, we have taken payments to a new high. So our payments transaction processing value has grown 60% year-on-year. We've added a big pipeline of merchants, which is consistently growing for the last 5, 6 quarters. So we are very proud that we have doubled the number of merchants than one of our largest peer. Our 21-year-old brand speaks for us when it comes to portfolio services, securities, success rate, tech support, customer service and even on timely payouts to the merchants. We are a preferred choice of our customers and partners. This quarter, we have seen a good uptake in the sectors that were badly affected by the COVID pandemic, be it airlines, travel and all those have experienced pre-COVID levels of volume. This is a very good sign, and we hope that trend to continue, which will have a positive bearing on our overall performances. We continue to expand our portfolio in the Indian market. In the past, we have launched payments for corporates, payment services for banks, expanded possibilities within our online payment gateway business. But today, we are taking a very big step further to become a full-pledged payment player by entering into the off-line payments. For this, we have acquired 100% in the Bengaluru-based Uvik Technologies, whose payment platforms can allow smartphones to be converted into business and payment terminals. Apart from contactless technology allowing to pay by tapping on the phone, it can also offer QR codes for payments payment links. We can offer bill payment services embedded within the app. We can also offer them agency services through Go Payments, which can be an additional income to them. We can enable lending. We can offer credit cards. We can offer BNP and options for our customers, reports, analytics and many other things, which really helps on the merchant's day-to-day business. We'll also be giving -- able to give seamless payment technology with a larger basket of services for those merchants having both off-line and online business. The company has issued equity sales of preferential basis to Season 2 ventures, not exceeding INR 27.5 crores as part of the deal. Additionally, we also keep building the tech spec. We realize the opportunity is ripe for lending to the merchants to help them with working capital and grow their businesses. Vishal already mentioned the above 3 models that we have under lending. Today, we have announced the launch of trustavenue.com, a marketplace lending platform for businesses to get unsecured loans, MSME loans up to INR 5 crores and loans under the government's [ ultra ] scheme. And in principle, approval for a loan comes in less than an hour. We have 5 million merchants and we are rolling this out for everyone. We have multiple layers of revenue. We do not take any credit exposure as we are a tech platform, offering a marketplace with high intelligence and analytics for our merchants for the lending institutions to carefully underwrite the loans. Continuing our expansion in the Middle East, especially GCC, we have received an expression of interest from the Royal Family of Qatar Thani Group to form a JV in Qatar. They will also be doing a primary investment in the JV by the Royal family. Infibeam Avenues directly or through its subsidiary holds majority stake in the JV. This year, Qatar is hosting the football FIFA World Cup in November 2022. As the nation gear up for this event, we believe there'll be a lot of opportunities through the year to expand quickly in Qatar. Qatar, like its peers in GCC, is focusing on increasing the digital business. With Qatar's entry, it will cover 3/4 of the GCC in the payments business, namely Oman, UAE, Saudi and now Qatar, the 4 biggest players, e-commerce markets in the GCC region. We await RBI's approval on the new umbrella entity for the payments network license like an NPCI. A payment network is the most important digital part of the digital payment ecosystem. If we get the license, it will be a big opportunity where we can build innovative products through our experience. And with the help of our consortium partners, we'll be able to reach the bottom of the pyramid and to serve customers across India. Now let me hand over the call to Srikanth to give you our Q3 business update. Thank you, and Srikanth, over to you.

Thanks, Vishal, and congratulations. During the quarter, we saw a 90% increase in our total TPV, led by sharp growth in payment business and increasing our value on the government marketplace. We are now at the run rate of processing over INR 3 lakh crore, more than double of what we did in the whole of FY '21. We are inching closer towards achieving the appropriate TPV of INR 1,000 crores on an average per day, which we plan to achieve by the end of March '22 and then develop [indiscernible] FY '23. The growth in payments business in terms of TPV comes mainly from the large enterprises that we have added in the last few quarters, [indiscernible] buying during the quarter, increasing contributions from travel and hospitality sectors due to Diwali and Christmas vacation as well as festival occasions and an average increase in discretionary expense led by festival quarter. This quarter, we have added a lot of SMEs, gross [indiscernible] and it will be interesting to see how this industry is playing out over the short term, medium term. Growth in GeM order value comes from continued support of the government to make the digital purchases for transparency and savings, encouraging government departments to buy from the platform and large number of sellers for various sectors registering on the platform, increasing the number of products and serves available on the platform. In the last [ 20 ] days starting from the last week of November to last week of December, the order value in Government e-Marketplace platform was in the range of INR 10,000 crores on an average, INR [ 333 ] crore actually per day, which is very remarkable number. We are strengthening our payments play by entering into our clients as Vishal and Vishwas just mentioned a few minutes ago. So we will be targeting off-line as well as it opens plenty of opportunity for us. CCAvenue, our business brand for payments, at base is 0 cost point-of-sale and the basket services the company offers all under one group will help the company in acquiring off-line customers to scale our payment business. We have [indiscernible] as Vishal was mentioning -- Vishwas has mentioned expression of interest from Royal Family of Qatar, including primary investments from them to set a payment business in Qatar through a joint venture structure. Qatar's entry will further deepen our penetration in the fast-growing DTC e-commerce market, which is expected to gather USD 50 billion by 2025 from USD 25 billion as in 2020 as [indiscernible] report. We already have a presence, as you all know, in UAE, Saudi and through our market leader in our credit card payment business in Oman. Our AI-based platform, branded TrustAvenue, is actually launched today. Partnership with lenders and the integration is now in full swing. For a confluence of payments and platform [indiscernible] and engaging tools for the merchants, which we plan to monetize through the lending and advising services that we will build upon as we go forward. Lending will be the revenue and margin growth driver in the next 2 to 3 years' time as we scale. I will now hand over the call to our CFO, Hiren Padhya. Over to you, Hiren.

Thank you, Srikanth. Our revenue for the third quarter was up by 74% year-over-year. If you notice, Q3 of last year was already the top quarter in FY '21, and we rose by 74% on that. This is mainly due to our continuous effort of building a strong fintech portfolio with high merchant additions over the last 5 to 6 quarters, which is helping us building a strong growth pipeline. This quarter, we offered promotional rates in the payment business, processing fee of 1.75% due to festivals and vacation or travel season during this quarter. The processing fee was 2% in quarter 2. Despite the drop in the processing fee, we were able to grow on a net take rate by 2% in the quarter, which was led by a good business portfolio mix. So far as EBITDA is concerned, in this quarter, it has grown by 10% quarter-on-quarter. This quarter, we have made expenses towards building a new business, leading to higher total operating expenses. These expenses are necessary in order to build future growth. We are in an expansion mode. Given the 75%-plus headroom available for growth in India in payments, we are chasing growth but without compromising on profits. Our profit after tax has increased to INR 74 crores in the quarter, growing by 89% year-over-year and 35% quarter-on-quarter. Our cash position remains strong. EBITDA to cash conversion has consistently been above 100% for many years now. Our CapEx cycle is behind us, and we are [ great ] for the company. As we scale in our new businesses over the next few years in India and internationally, our cash flow will improve further and the economy will generate higher ROA and ROE. With this, I hand over the floor to the operator for Q&A.

[Operator Instructions] The first question is from the line of [ Anil Nahada ], an investor.

I have a couple of questions. The first question is on the Uvik deal. I would just like to know that how are we going to scale up this business? And at what level presently the business is, if you can give me like the 6-monthly numbers or 9-monthly numbers. And how do our merchants are on-boarded onto that platform? Is it a direct on-boarding or there is some other way to do it?

Okay. Vishwas here, I'll just take the question. Okay. The idea here is that today, we are very well represented on the online sphere on the website for in-app connections and other things. Now if you see the problem in India is on the off-line acquiring, in the sense that you won't find a post terminal at a kirana store, say, in a village in Assam or Odisha, right? Because the point-of-sale terminal is around INR 10,000 to INR 12,000 and the cost of deploying and training the merchant, plus there are hardware costs of battery and other things that keep coming recurring. And of course, you are to start -- keep sending them printer rolls or charging rolls pending to start slip at the end of the transaction. So that's why the POS terminal was not able to penetrate into that tier -- level 2 -- tier 2, tier 3, tier 4 and limited numbers. So what is now coming is QR codes in the small places, which is very limited with only UPI transactions. It can do credit card transactions and other things. Uvik has a Tap on Phone, which comes with an app. So within a CCAvenue app, right, here, you can do a digital onboarding of a merchant, right, within 2 minutes. And then he -- the merchant has the ability to accept credit card, debit card, everything within the system. So what it means, like suppose if you are a teacher somewhere in a village in Tamil Nadu and you want to accept INR 1,100 from your student's parents, right, and they are giving you a credit card but you can't, right, accept. So all you have to do is go to the Google Play Store and download the CCAvenue app, right? And there, like a calculator kind of interface comes in, you just put INR 1,100. And then from your phone only, the parents can just tap on the phone to their credit card, debit card, and the transaction will go through without OTP or anything. So that's how easy it is then deploying a POS. And we anticipate the point-of-sale terminals to disappear in the next 3 years. So this is the future technology, Tap on Phone. Any phone can become an acquiring point-of-sale terminal. Now today, we are growing exponentially. If you see the merchant intake, we onboarded 800,000 merchants this quarter at the rate of 8,000 merchants every day. Now with this kind of solutions, which is mass based and anybody across the country can start just download and start accepting payments for off-line customers or customer's present scenario, then we intend to scale up. So hence, our total processing volume at $44 billion, we have already given guidance of $100 billion in the next 3 years. So this will help expedite our growth rate. And this is future technology. Uvik is the only company in India, which has certified with Mastercard, Visa and NPCI's RuPay to accept the transaction with glass -- pin on glass, right? So we are the only company in entire Asia which is certified right now, along with one company in Turkey. Hence, the acquisition made all sense. It also helps all our existing bases of almost 5 million merchants. So those were using POS terminal offline can start downloading the app and collect it through their smartphones.

Yes. That sounds great. I mean what kind of top line are we expecting from -- what kind of like transaction processing volumes we're expecting from this in a couple of years' time out of the...

Yes. We've already given guidance of $100 billion, more than double from what we are at $44 billion run rate. It will go more than double than what we are and even more further. So it depends on how far we are able to aggressively market, in which we are going to do market [ excessively ]. But it will double from the current TPV that we have. And even the merchant take rate, we expect to double on the correct [indiscernible].

Okay. A couple of other questions. One is on the GeM revenues. The GeM revenues that we get on the per-transaction basis, are they accounted in which segment, the payment segment or the e-commerce segment?

They're part of the e-commerce segment.

E-commerce segment. Okay. And the last question is on the payment switch. Have we deployed the payment switch? And what is the future outlook for that?

So payments switch stand-alone cannot work. We have launched a product called CPGS, that's the CCAvenue payment gateway service for big banks and big banks and big corporate merchants. So that is already deployed and live where we give the full payment gateway along with the bank and connectivity with various switches, including our switch, a third-party switch or to the bank's switches, whichever. So we have launched this around 1.5 years back. We have successfully deployed in Oman, where the country's largest bank, which is Bank Muscat, which is already live and processing transactions over there. The #2 bank in Oman, Bank Dhofar, also is live now. In India, we have signed up with JioMart. CCAvenue, CPGS as a white label is already used by ICICI for the corporate side. The retail side is also under discussion. HDFC, Bank SmartHub is also live. The Kotak AllPay payment gateway is also powered by CPGS and the CCAvenue payment gateway service, the white label. So the whole CPGS has already started and live, to answer to your question.

Yes, so that answers the question. And how do we make revenues on this? I mean it's on a per-transaction basis? What kind of BPS are there?

Yes, there are multiple modes of revenues with different banks. It comes under the differing head. So there is a setup fee. There is a per-merchant onboarding, there is a fee. Then there is a per transaction flat fee that is charged for processing those transactions. There is support charges and many others. So it comes under different avenue and it depends from bank to bank how we close it.

It is customer-centric. It's also a customer-centric...

There's no charges to the customer. There's no charges to the customers. It's...

No, I'm saying it is a customer-centric. Our customer-centric bank can be [indiscernible]

Yes, yes, it's bank centric. Yes. It depends from bank to bank. [indiscernible]

And this also goes into the e-commerce revenue?

No, no, no. It will come under the payment business.

Yes, it comes with the payment business.

[Operator Instructions] The next question is from the line of [ Punati Pavikel ] with K.R. Choksey.

You all have mentioned about the drivers of margin growth in your commentary. So you believe that as a share of value-added services like CPGS or new banking services where you'll be doing the lending, BNPL and AI-based credit platform, so you think that this is going to have an immediate impact on the gross profit margins in the few quarters ahead because you've been getting a good traction from the audience concerned with respect to these businesses? So do you believe that this is going to have an immediate impact on the GPM, gross profit margin, first thing? And what could be the share of this particular value-added revenue to the total revenue? It could be as a percentage of total revenue or net revenue. And the second question is your depreciation expenses have been coming down year-on-year since Q3 '21. So any particular reason for it? And how do you think it will pan out going forward?

Okay. I will take this question. Basically, the first question, to address the first question is that our strategy, which we mentioned actually and execution we mentioned in this call, is this are all actually going towards our achieving $100 billion total TPV. And that's basically a unique target for a mantra for the company. So we believe that all of our business model, 75% to 80% of our business model is basically linked to the total TPV in terms of transaction revenue model. And even in this quarter, if you are seeing, total TPV has gone up 90% year-on-year and profits have gone up 89% year-on-year. So it is in a way directly a linear actuator to TPV in a way. And for all capital purpose, lending basically are definitely a next-generation growth for the company, both for the top line and also for the bottom line. And [indiscernible] settlement, we have already experienced actually bottom line growth driver ever since September 2020. And we're also getting into the opportunities of -- [ flying ] opportunities. Even though the point-of-sale terminals are going to really away 3, 4 years' time frame from now. But for all practical purposes, we don't want to miss this hybrid opportunity, and therefore, that there are several functionalities and specifications are coming along with that acquisition, which we believe that using our brand, we will be able to really acquire more customers on the client space. And plus you have the TrustAvenue lending in terms of a strong brand, which is actually launched today. Any merchants, not necessarily that they are our merchants, even external merchants can really log in. And we will be able to really do the lending services through partnerships with our banks and NBFCs. So all put together, all lead to the growth drivers, not only for the bottom line -- or the top line, but also to the bottom line. Therefore, we are all working actually for the consistent improvements in the margins. You can see actually this kind of an increment in the margins during the current year. And therefore, that uniformly that on one side, investments and platforms are happening. On the other side, that growth in the business on our legacy business and new business are really happening. Therefore, that 2, 3 quarters, you can see some amount of tractions in the bottom line, further tractions on the bottom line. But just wish to really have a really scalable, sustainable, profitable growth in the medium to long term. That is where our objective. [indiscernible], what was your second question?

Yes. The depreciation expenses have been coming down year-on-year.

Yes. Thanks for the question. As you can see, last year [indiscernible] to our annual accounts, our enterprise payments [ lockdowns ] on technology platforms or the various assets, intellectual property assets, which got capitalized, and we have been amortized actually based on certain legacy conventional policy. But as the period actually goes, as the further investments are going into this kind of an IP asset, the implemented value of assets have been significantly gone up. And we have, as Hiren was mentioning, we are not a capital asset-centric company. And therefore, that for all intents and purpose, with the existing assets that we will be able to really gear up our existing guidance of $100 billion TPV in 3 to 5 years' time. So that's what we guided. Therefore, that [indiscernible] asset filed for licensing [indiscernible] have been increased and that is one of the reasons for our amortization reduction by [ INR 250-odd ] crores actually during the current quarter.

So how do you think it'll pan out? Like because you have already -- you see that the valuation of those intangibles is actually more. Then, of course, your amortization cost will continue to drop down, is it? Or how it will be stabilizing at these levels?

I think we believe that it could be in the range of INR 35 crores to INR 38 crores on an average actually annual basis. And right now, it is about INR 9 crore actually on average per quarter. And I think INR 35 crores to INR 38 crores actually based on our existing assets, that could be the number.

The next question is from the line of Nandan Vartak from Wealth Managers.

So I wanted to understand the [ UPI] Google Payment system or require any services of [indiscernible]. Am I audible?

Are you saying that does Google Pay or...

UPI-based application payment applications, could they require any services on [indiscernible]?

So basically, we use them as a payment option to offer to all our merchants and [indiscernible] out of it. And that the UPI option across all our merchants, anybody wants to use a pay to Google Pay or AllPay or through Paytm can pay. So we use that as a payment option. And we enable their services through UPI. If they're a Google Pay customer, they can pay our merchants via CCAvenue on that.

Okay. Okay. And can you give an update on JioMart affiliation that we have? So what would be the revenue contribution on that part?

I will take this question. Revenue contributions is a customer-centric confidential information. So therefore, we will not be able to share it. [indiscernible] any large enterprise customer-centric information unless it is a public data, we will not be able to share. But however, our relationship with the large enterprises is too good, both on the strategic side and also on the tactical side. And our e-commerce marketplace platform is doing numbers and [indiscernible] next value proposition and the relationship is ongoing, both on the payment side and also on the platform side.

[Operator Instructions] The next question is from the line of [ Alvin Data ], an investor.

Can you hear me?

Yes, yes.

Yes. So my question is on the other expenses on the consolidated results. On a Y-o-Y basis, they've grown 92% and on a Q-on-Q basis 79%. So can you throw some color on these expenses? And how do you see the trajectory of the run rate going forward in the next 3, 4 quarters on the other expenses?

Sure. So basically other expenses is basically provisions, the provisions that we make on a quarterly basis. So I think that is -- those are one-off charges. They are not recurring charges. That pretty much builds up most of the other expense setup that you talked about.

Okay. So it's not going to be a similar trajectory going forward? That's what you were trying to say?

Yes. That's right. That's right. So we've been, in a lot of ways, appropriately conservative all of the standards. And in terms of following that standards, we provision every quarter.

Okay. My second question is regarding your Slide #26 on the investor presentation deck, which talks about secured lending performance, $175 million of extra settlement. So being a payment gateway or a fintech, can you lend? Or how is this lending happening? Are you allowed to lend by RBI? And if not, then how is this happening?

So I will take this question. It's a tactical question. Basically, we cannot take any credit exposure. And therefore, we are not taking any credit exposure, both on the secured lending through extra settlement. And unsecured lending actually through relationships with banks and NBFCs, we are not taking any credit exposure. So that's number one. Number two is that the loan book cost of [ $175 million ], which is equivalent to almost $700 million, and we're heading towards $1 billion, started from 0 in September 2020. It is basically [indiscernible] customers in the transaction. So if you are making the settlements actually on 3 plus 5, 3 plus 7, 3 plus 3, you are making a settlement on the fee, on the fee base. So that reflects actually a regional charge to the company. And our cost of funds is hardly anything, and therefore, that is not a driver for the company. And this activity is going to be a tremendous activity. So Infibeam is working very well and we are not taking any credit exposure. And this is allowed by the regulator.

The next question is from the line of [ Anil Nahata ], an investor.

On the TrustAvenue, which we have launched, how are we going to attract the customers? Since it's a marketplace, how are we going to attract the customers to that?

So there are multiple ways. The first thing is, like Srikanth had mentioned, that we will open up the platform for customers who are already using our CCAvenue payment gateway. We've got more than a few million merchants who transact payments through us. And that opens up an opportunity to offer them lending products. You see there are multiple products in lending as well. Srikanth just mentioned one, which is express settlement where we don't take credit exposure. Similarly, there will be other opportunities as well. The big one, of course, are SME-based lending. The ticket size being anything to do to move from INR 50,000 to close to INR 5 lakh or INR 10 lakh. And those are the ones that typically banks don't cater to. And those are the ones that -- who process through us that we can potentially open up that opportunity, too. So that's one area. The second area is the larger enterprise clients who are using our platforms. So we open up that opportunity whereby we can reach out to many, many more audiences, and that becomes an opportunity to reach out to those clients as well. These are primarily the 2 areas that we will focus initially as far as TrustAvenue is concerned. There will be other products and features that we've built on top of TrustAvenue as a road map, which we'll talk to as and when we launch. But initially, our appetite is to go with merchants who are using our platform and enterprise clients who'd wish to avail the feature sets and the framework that we have developed to be able to reach out to those merchants.

So this is essentially a cross-sell opportunity using our other data? And do we also be able to use the GeM merchant base for this thing?

So like I said, yes, we will have to work with each of our enterprise clients and reach out to as many of their merchants as possible. But to answer it in a short way, absolutely, we would like to showcase the TrustAvenue framework to many of our enterprise clients and we'd like to see how we can actually participate. You see, any time a merchant gets more capital and cash flow, they can deliver better on a marketplace. So to give you an example, there are 2 different kinds of factoring that happened. And RBI has opened a factoring in a very large way. Where earlier, only a handful of NBFCs were able to do factoring, now many, many customers. So what you talk about is maybe invoice-level discounting and order-level discounting. When a seller receives an order, you can discount that order. Or when a seller invoices, you can discount an invoice. And so those are the ones that are opportunities that we'd also want to explore. Absolutely.

Great. And another question before I -- the SAR has stabilized over the last quarter -- or this quarter, rather, from 6 to 6.2. How do you see it going for the next 3, 4 quarters?

We're looking at a more upward trajectory because we were a little bit, because of the COVID pandemic, main performing merchants where the MDR is a percentage base, be it the hospitality sector, be it the airlines, be it all the others were severely affected because of the pandemic. But now in the last quarter, they have come up and we see a more aggressive quarter this -- they are coming back to their normal businesses, specifically with international flights also starting. So you should be aware that your company processes for many -- more than a dozen international airlines like Emirates, Gulf Air, Delta, Air France. So all those flights, when also it starts in a normal way, we see a more upward trajectory on that, intake on that -- on the gross margins. So from 6 to 6.2, we hope it will go up even more further.

[Operator Instructions] The next question is from [ Ajit Golat ] with UBS.

I just had to ask about the future outlook of the company. Just the Board had already come from about what exactly. So what are the parameters we're using to get into the developed market like the U.S. or any of the other countries wherein we are looking out for the expansion of the business? Or do you continue with the same kind of region wherein we are targeting the overall -- the business model which is there in the current line?

I will take this question. So thank you for asking this question. This is a growth driver which we are talking about in the last 2 quarters. We talked about in the beginning of this year that we will double our export settlement in terms of this driver. And we are actually about, instead of 2x, we had about almost 4x. So that is one thing. Second thing is that we are -- we have said in Q2 that we will do an artificial intelligence platform for our credit services and lending services. And I think as we committed by December year-end, we have launched actually our TrustAvenue platform. Well, technically, it launched today. But actually, it got ready actually in December year-end. And we are waiting for the actual launch date actually. So this is going to be another driver for our lending business and current business, which is going to be a huge opportunity. And we believe that it will be going to be next--generation growth actually for the company. Number three is that on a Pan-India, as you know, that digital push is actually -- we are just above 20%, 21% in terms of the overall market opportunities. And still, 70% or 75% is non-digital. So the conversion of non-digital to digital is happening. And that is helping us actually in terms of our [ revenue ] business doing the print and PG payment infrastructure services business to our merchants. So this has really led to the total TPV of INR 75,000 crores, almost $10.2 billion as we speak on a quarterly basis. The same number, about the same quarter of the previous year, the number was INR 39,000 crores. So it's almost doubled actually not only with the TPV, but also in the bottom line basically. So for all capital approach, with our push of digital, our [ revenue ] business will also continue in Pan-India. And for all intents and purposes that we are getting into the off-line mode through our technology framework, partly announced [indiscernible] and partly acquired actually through unit acquisition. And that is going to be an addressable market to really capture the accelerated growth, and this is the fourth growth driver. As [indiscernible] as we have mentioned that India is a huge opportunity. And however, we started really about 3.5 years ago, again scratch 0. And today, we are about almost AED 4 billion, almost $21.1 billion actually of consortium, which we are doing. With our Oman presence of credit card payments and we are about 90% plus market share, and that is also likely to go up. Now with the new joint venture being formed actually with the primary investments from Royal Family of Qatar, we at the management, we at the company sincerely thank the Royal Family of Qatar for their active interest in the company and to accelerate payment business in Qatar. So we believe that in the medium term, that is going to be a huge growth opportunity for the company. And of course, that's not [indiscernible] started 2 more countries. But slowly, that really slowed down our costs of new country operations. But still, we believe that the COVID situations globally have not settled, even though in India it has settled partly. But globally, that's not been settled. So once we get settled, we will accelerate our growth opportunities in the new country operations, at least 2 or 3 countries actually going forward.

[Operator Instructions] The next question is from the line of [ Amut ], an investor.

My question is -- and maybe it's more I just want to hear your viewpoints. In, let's say, in the next 2, 3 years, we achieved our target of $100 billion, let's say, doubling -- more than doubling our current quarter's GMV rate, where do you believe this -- given the rate of competition, competitive intensity, the reality of the technology going on in the market, the amount of smartphones we have and not have, where do you believe our -- this take rate will go, the 6.2 bps which you believe will improve going forward? Of all the opportunities that we're doing in lending, how much can it improve our margins to? Like do we have a ballpark viewpoint on that? Or yet it's still being fleshed out?

Yes. Okay. So on the part the GMV and the payment business is increasing, right? There's a misnomer that because of GPI being 0 MDR, nobody is earning in the payment business, right? That's not the case in the sense that even on the UCI MDR, government has given out INR 1,300 crores back as an NDR for those who did not earn anything for the past 1 year. And we expect that 0 MDR somewhere down the line as the government will compensate all that. So there's money to be made on every option. And UCI is still a debit option. There is still credit which is growing phenomenally well. Again, if you've seen, credit has grown 100% in just 1 year, the credit card systems that are there, right? And then there are so many other India has the maximum number of payment options in the world, more than 200-plus. Net banking is not affected. That is also growing. Wallets are coming in. And then subsets of those payment options, be it an EMI, spending instructions and others, so that business is growing. You can see from the GMV also, we are almost double what we did the last year and 9 months alone, more than double. So from that perspective, those payment business is growing. There's a real opportunity now start coming and kicking in with the backward integration as well as forward integration, how we put it. Backward integration is the platform that we have built. We are earning in technology. Whereas we [indiscernible] and giving it to the banks and others, that for every transaction we put, we are making money. For every merchant ID we open, we earn money. For every support we give or resource, we make money. So that's the backward integration that we have gone into with the CPGS product. And in the front end, many value-added services from the merchants, lending is just one of them. Many other services that we will continue to roll out, which will be accretive. So payment processing is a growth engine, which is what you can call it as a fast-growing commodity item. But the services behind and the services ahead, the value-added services that we can give merchants, be it on lending, but many other of our platform services, there is money to be made. So the whole idea here is that payment being the core, the backward integration as well as forward integration make good money. So that's the whole strategy we're about.

I see. So you believe that the take rate will improve like dramatically like it will go from 6.2 to like 8, 9, 10? Like I know it's difficult, but we believe that...

Yes, it can grow. It can grow. And as I said, those take rates went down not primarily because of UCI, but because during the COVID period, the main thing like entertainment, travel, everything went down, which are in percentage bps. And utility items like bill payments, education, which is typically in a flat fee, went up. That's why the take rate and flat fee is lower than in a percentage-based model where I'm charging a merchant, say, 2% and our cost is 1.6% or something like that. So percentage earning on a transaction cost is almost much higher than the [indiscernible] transaction amount, we're charging INR 4 a transaction or INR 3 a transaction and where you're earning 25 paise or 50 paise per transaction. So those percentage, those businesses, be it travel, hospitality, entertainment, all these are coming back. And those take rates will increase. And overall, if you see the whole Indian market dynamics, it's only 27%, which is overall digital. There's a whole new universe of 73% that we still have to go and capture. The entire health care is not done. We have a list of 1 million schools, which are still not accepting fees online. There are so many other businesses, B2Bs that we have launched is where the corporates, the vendor payout, the vendor payments, so many things that we can do. So payments and the business is close to the [indiscernible]. As India moves towards the $5 trillion economy, this thing will keep growing. And the margin is also -- because government has realized the 0 MDR for UCI is not helping the payment systems because acquiring is not growing. Hence, the government or the finance industry paid out INR 1,300 crores for last year. Going forward also, it will continue to compensate. So those take rates and other things will grow, and the value-added services will take it to another level.

Just one last question. This new that we had applied for -- to RBI, any updates from RBI on that? Like are they coming out with any update on who's going to get the license anytime soon?

We have absolutely -- look, I am also the Chairman of the Payments Council of India. And in all time, I have to say that we did put a question to RBI on what we are thinking. But they said that as and when anything happens, we'll let you know. Maybe internally, they are collating or putting up the idea of how to [indiscernible] apply. Maybe they might be doing their internal due diligence and the process. I think similar to be like how did they set up small finance bank when [indiscernible] Committee gave out. So I think those plannings will happen. RBI is not the one who will backtrack for not giving a license or anything. They've got pulling up this whole process and so many consortium have worked so hard in putting up such a big application and other things. So RBI will definitely come out sooner or if not later.

This concludes our question-and-answer session. I would now like to hand over the call to the management for closing comments.

Thank you. Thank you all for joining our third quarter earnings call, and we will keep you updated on the new launches and new things that company will be undertaking as we go along. Thanks for your participation, and have a good evening.

Thank you very much. On behalf of K.R. Choksey Research and Infibeam Avenues Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.