Credit and debit cards have saved most of us from the trouble of carrying cash in our wallets, allowing us to carry on with our transactions seamlessly. Unfortunately, that’s not the case for all. For those with limited buying power, getting any form of card or withdrawing cash is not really easy. Reserve Bank of India’s 2009 data also suggest that 41 per cent of India’s population does not have access to formal financial services and that only 6.8 per cent of villages have bank branches.
Sensing this gap Intrex India (Intrex), an Essel Group company with diversified interests in businesses such as media, packaging, entertainment, technology-enabled services, infrastructure development and education, came out with Itz Cash Card. “As more than half the population of the country do not have access to proper banking set up, we found it a niche market for a prepaid card as an alternative to cash,” says Naveen Surya, Managing Director of Intrex. Itz Cash Card is a multi-purpose pre-paid card that facilitates consumers to shop online, book railway tickets, recharge mobile cards, buy Internet connection packages, play online games and even pay utility bills. This card also aims to fill the gap that the rural and the economically weaker section of the society have without the facility of a credit and debit card.
There was a gap in the market for a multi-purpose card that can be used to make a variety of payments instead of being a single end card like a phone card or a calling card,” says Naveen Surya.
The journey so far
Established in 2004, Itz Cash Card’s annual gross turnover has touched Rs. 1,700 crore within a span of five years. It was primarily devised to solve the flagship company Zee TV’s challenge in collecting cable rentals and subscription charges through cable operators. Subash Chandra, chairman of Essel Group, asked the company’s think-tank to device a financial solution something akin to MTNL’s calling card, which gives a customer an effective alternative to cash without the hassles of using a credit or debit card and the inconveniences of online payment frauds.
Since then, Itz Cash has evolved into a multipurpose prepaid card that can be used by individuals and businesses. “Micro payment was a problem as majority of the population did not use debit or credit cards and almost 100 per cent of the transactions were cash driven,” says Surya. “This gap led us to devise a multi-purpose card that can be used to make a variety of payments instead of being a single endcard like a phone card or a calling card,” he adds.
Intrex had already achieved prominence with e-commerce in the B2B space. And Intrex saw an immense potential for a multi-purpose card like Itz Cash card whereby a consumer can meet his payment needs through a variety of electronic channels like mobile phones and Internet or through an IVRS phone call or traditional terminals at the retail outlets.
Easy to acquire
Unlike a traditional credit or debit card, which requires customers to prove their financial credibility to acquire one, Itz Cash works on a fairly simple concept. One just needs to walk-in to any of Itz Cash’s franchisee counters and procure a card by providing the cash equivalent. The USP of the card is that they work well both for the retailers as well as the consumers. “There is no credit risk for the retailers and a common man has the option to disburse payments as per his requirements,” Surya adds.
In less than five years, the company has a 2,000 strong distributor network along with 25,000 franchise centres that operate in over 2,000 towns and villages across the country. The distributors manage over 2,500 retailers. While the retailers and the consumers are benefited by it, the e-commerce portals have seen the maximum benefit with increasing Internet users having access to e-purchase. The risk-free option that this card offers is definitely a win over online transactions with credit or debit cards. And to facilitate online payment options, the company has roped in players like The Indian Railways, mobile players, electricity board, and other telephone players as its partners. The company has added a bouquet of services at competitive prices and gives Itz Cash card users a range of promotional schemes and benefits.
The primary challenge was to educate and make consumers aware of an alternative payment mode. “We realised that if we need to make the card available to a large number of people we had to follow the proven path shown by the FMCG distribution model,” reminisces Surya. The company offers the distributors a discount margin structure similar to FMCG product companies. Intrex guarantees its distributors around a 20 percent discount in list price, which acts, as a sufficient incentive. The margins on the business are shared by both retailers and distributors. However, no built-in costs are transferred to the customer. He only pays for certain mandatory service charges like railway bookings.
Today, with nearly seven million active users of the card, Surya explains, “Our ability to address a need and devise a simple user-friendly financial product has managed to create a niche for ourselves”. “Itz Cash has empowered a large customer base, which was not privy to any other form of payment other than cash,” he adds.
Intrex has received two rounds of funding so far. The first was USD 10 million in 2007 from Matrix Partners, Mumbai and Intel Capital, Bangalore. The second round of funding was in June 2009 for the same amount from New Delhi-based Lightspeed Venture Partners. Surya envisages that these funds will be utilised to expand its services by roping in more channel partners and by reaching out to a larger percentage of the unbanked population. The company has already added new services to its existing bouquet offering you an option for almost every payment need that you may face in your day-to-day life.
Itz Cash Card is not only diverse with its multi-purpose options but also in its customer profile. For governmental and utility services it targets the middle-of-the-pyramid customers. For certain other services like Internet downloads, which cost not more Rs.250, it appeases a totally different segment. And with the majority of the rural population still waiting for banking services, Itz Cash Card has tremendous potential waiting to be unleashed there.