Digitising Payments, the Oxigen Way

Digitising Payments, the Oxigen Way

Fintech & Financial Services

Backed by a string of strategic investors like Citi Group Fund (U.S.) and Microsoft Corp., Oxigen Services, has evolved from introducing a retail wallet for individual telecom service customers to developing wallet services for banks, retailers and customers, with which it aims to enable financial inclusion and digitise payments in India

Pramod Saxena, CEO, Oxigen Services Pvt. Ltd.
Pramod Saxena, CEO, Oxigen Services Pvt. Ltd.

When Pramod Saxena founded Gurgaon-based Oxigen Services Pvt. Ltd. (in a joint venture with South Africa-based Blue Label Telecom) in April 2004, it wasn’t just an idea moment which led him to turn entrepreneur. Rather, it was the wisdom he had gathered over his years of being at the helm of Motorola and Essar Telecom, which led him to identify a latent opportunity in India’s digital payments space.  To put his observations in perspective, let’s run through some numbers. 2004 was the year mobile phone connections in India hit 30 million subscribers and overtook the number of fixed-line connections. Despite being a relatively small number when compared to China’s subscription at close to 400 million, it presented promising potential for telecom companies.

As the number of mobile subscribers grew, there came the challenge of making payments and recharge seamless for telecom customers. As Saxena cites, the primary challenge lay in understanding how the recharge process could be made frictionless for customers. That’s around the time he began toying with the idea of introducing a wallet service, especially for retailers. “There were many telecom service providers at that point and each circle (region) had a different mobile plan which also kept changing every week. This meant retailers had to deal with hundreds of SKUs (such as scratch cards) on a physical system and they couldn’t keep score of how much money was being spent,” recalls Saxena. In the second phase, operators like Airtel started recharge on phone. However, the drawback in this was, for every telecom connection’s recharge, the retailer had to own the SIM card of that particular operator and keep a balance with each of them. “At a time when every operator is focussed on serving their own customers better, we thought of a way to make payments device agnostic for telecom service providers by bringing them on to a single platform,” says Saxena.


“Apart from rebranding ourselves as Oxigen, we re-launched our wallet business as Oxigen Wallet (earlier known as Oxicash Wallet) in late 2014 and positioned it as a product with a larger goal; to enable financial inclusion and digitise payments in India.”


It was this thought that led to the launch of the company’s first wallet designed for the retailers in 2004. The wallet acted as an aggregator platform for service providers and a single point-of-contact platform for retailers. They could now access the mobile plans of any telecom provider by just paying a single amount on a wallet, which could be distributed across all players (by Oxigen), depending on customer recharge amounts/plans. “Mobile phones were not smart enough back then, and GPRS and CDMA were still at a nascent stage. Hence, we created an intelligent PoS (Point of Sale) device, supported by a sim, to establish connectivity. This proved to be beneficial to the retailer who was at the core of providing this service to telecom customers,” explains Saxena. With a round of funding from Citi Group Venture for US $11.5 million the company established this as a successful model with 19 services being aggregated across 20,000 retail outlets (across a few states) by 2006. “Citi’s fund was the first external capital we raised since founding. The funds were channelised towards developing the retail engagement channel and laying the foundation for an ancillary business, Oxigen Infovision,” shares Saxena. Oxigen Infovision was setup on the premise that VAS providers (at that point) weren’t gaining much revenue share through telecom operators, hence this business could act as a content aggregation platform which provides customers direct payment access to VAS providers, where the former could pay for the service at the retail counter directly.

Despite the retail engagement model proving successful, the company did meet with a fair share of challenges from the smaller, emerging players who tried to replicate the model and from the telecom operators themselves. “The telecom operators felt it might kill their distribution system and they were wary of us acquiring a very big muscle in that space. They were either restricting their products from being listed on the wallet or giving us lower margins. What they didn’t realise was that we were focussing on creating an ecosystem for all services instead of eating into distribution,” explains Saxena.

Against all odds

In 2008, a year before Paytm, Mobikwik, Citrus Pay and Freecharge began making their foray into the Indian wallets space, Oxigen Services, with a second round of US $32 million financial funding from Microsoft Corp., launched Oxicash Wallet, its mobile wallet product for customers. “While a part of the funding was used for growing the business, Microsoft wanted to promote an online business with mobile wallet as a payment mechanism across all phone models,” says Saxena.

Although it carried the advantage of being a first mover, the company wasn’t allowed to promote its product aggressively since RBI had not yet introduced regulations for it.  To make up for this, in 2009, it capitalised on another RBI regulation which allowed retailers to become BC (business correspondent) agents. In just its first year, it aggregated 38 services on PoS, Web and SMS and crossed 60,000 touch points. “We were appointed as the BC for SBI and today, we are one of the leading contributors in terms of footprint and volume of business,” claims Saxena. From then on, in the banking services space, Oxigen Services has grown by introducing white label merchant services on banking portals such as SBI, ICICI, HDFC, Citibank and the likes, connecting directly with NPCI for instant money transfer to over 60 banks (June 2013).

Shortly after, it also became one of the first companies to connect wallets with UID and introduced a better version of its PoS devices, called OxiSmart and Oxishaan, with the latter targeted at rural regions. “We did a demo of Aadhar for money transfer though a PoS device and completed a pilot in the Bihar and Odisha region for a biometric transfer service,” adds Saxena.

The process of rediscovery

2009 also marked the emergence of heavily funded newer players in the wallet space and Oxigen Services had to consider its banking and consumer product verticals and redesign it to keep its business on a profitable growth path. “Apart from rebranding ourselves as Brand Oxigen, we re-launched our wallet business as Oxigen Wallet (earlier known as Oxicash Wallet) in late 2014 and positioned it as a product with a larger goal; to enable financial inclusion and digitise payments in India,” shares Saxena. Furthermore, it re-branded its money transfer service Oxicash Money Transfer as Oxigen Money Transfer Service. Although the comapny fell behind with the aggression displayed by Paytm and Mobikwik, it banked on the robust foundation it had established with the offline network of retailers and banks to push forward. “There are 20 million credit card and six million debit card holders in India and according to a data released by RBI, 90 per cent of debit cards are used only to draw cash. So, our proposition was, can we create an infrastructure where we can bring cash onto the digital platform?” reflects Saxena. And that, in turn, became the key positioning for Brand Oxigen.

Since its launch in 2014, the wallet division has diversified into various segments in the offline and online market, to promote digital payments in the country. For example, in the ecommerce space, it launched an assisted ecommerce model for Big Bazaar called Oxigen Big Bazaar Direct. Through this, customers can order Big Bazaar products on the Oxigen Retail website and either have it home delivered (by Big Bazaar) or pick it up from their nearest retail outlet. It also launched Visa Prepaid, a virtual card powered by Visa, through which a customer can purchase or make transactions across any e-commerce site. “Today, each e-commerce player has introduced their own wallet and a customer can’t use one wallet’s money on another site. Hence, our prepaid card is designed in way that it is agnostic to service provides and e-commerce companies,” notes Saxena.

The money trail

Till date, Oxigen Services has raised over US $65 million through promoter capital and external funding. South Africa-based Blue Label Telecom which entered a JV with the founders of Oxigen Services made an initial investment of Rs. 20 crore in the business, which was followed up by Citi Group’s funding in 2006, investments by Microsoft in 2008 and an infusion of two further rounds of promoter capital totalling about US $15 million.

More recently, in November 2015, the company began talks to raise US $200 million from strategic investors, to build its new brand, Phi Enterprises. While the new division will manage the online business (the consumer wallet), Oxigen Services will handle the offline business, which includes money transfers, BCs, retail distribution and the rest. “We just completed the demerger and in the first phase we have raised close to US $50 million, of which US $10 million (received from our partners in South Africa) has already been invested in equity and the rest will be tied-up through an arrangement we are in the process of firming up,” shares Saxena. To raise the rest of the money the company has appointed an investment banker who, Saxena claims, has already begun talks with a few strategic investors.

Saxena bases the demerger to two factors; one, not all investors prefer to invest in both online and offline businesses and two, the organisational culture and nature of business of online and offline is different. “For example, the online business is consumer wallet and more marketing driven. This requires more young minds in the business. Whereas, the offline business is distribution led and requires a team comprising an older crowd,” he notes.

Upon delving into his plans for the venture he reveals that the company is looking to create an ecosystem of online suppliers for its wallet and introduce a chat platform which will give customers frictionless access to many mom and pop stores. “We want to use our experience of working with small retailers to bring them to an online environment where customers can access them easily,” says Saxena.

With a clear goal of creating financial inclusion through its banking services division and customer-centric payments division, Oxigen Services has a plan in place to leverage on its solid foundation to compete in the long term with younger competition in India’s wallet space.


The Oxigen Sketch

2004: Founded the business as a JV with South Africa-based Blue Label Telecom. Infused Rs. 20 crore as promoter capital.

2006: Secured US $11.5 million funding from Citi Group Fund. Went aggressive on retail wallet engagements.

2008: Secured US $32 million from Microsoft Corp. Launched first mobile wallet for customers.

2009: Became bank correspondent (BC first with SBI) and built connectivity to bank portals and international aggregators.

2011: Microsoft exits business. Stake equally sold between Blue Label Telecom and Indian promoters (Oxigen Services).

2012: A year since launch of SBI Mobile Wallet, SBI MobiCash and improvised PoS terminal for retailers, OxiSmart. Signed Yes Bank & ICICI Bank for BC. Launched OxiShaan, PoS terminal for rural India.

2013: Integrated with National Payments Council of India (NPCI) for instant money transfer through Oxigen’s Mobile Wallet. Rebranded as Brand Oxigen.

2014: Re-coined OxiCash Money Transfer Service as Oxigen Money Transfer Service and Oxicash as Oxigen Wallet.

2015: Aggressively leveraging on banking services and retail services division to fulfil larger goal; enabling financial inclusion and digitising payments across India.

2016: Actively seeking strategic investments to scale business.

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