Currency Switch Impact | Despite demonetisation boost for digital payments, investors wary of fintech firms

The government’s demonetisation scheme is expected to drive up digital transactions and could also boost fintech. Surprisingly, though, investors don’t seem to be warming up to the idea. Data from Tracxn Technologies shows funding in the fintech space has dropped by 60.84% in 2016 so far. Just $459 million has found its way into fintech businesses, down from $1.2 billion in 2015. More money came into ventures at the seed stage but all other segment pulled in less than they did last year.

Mobile payments and lending sub-sectors account for 80% of the investments. Paytm raised $105 million followed by MobiKwik ($90 million), InCred ($74 million), FINO PayTech ($38 million), NeoGrowth ($35 million), Capital Float ($25 million) and CitrusPay ($25 million).

Rishi Gupta, MD, FINO PayTech , feels start-ups should perhaps not have burnt the kind of cash they did. Nevertheless, sustainable businesses will attract funds, he said. Nitin Gupta, Co-Founder and former CEO of PayU, believes lending and mobile payments continue to attract investments. “However, lending will become more important than mobile payments given the cash they’re burning,” he said.

Meanwhile, IMPS transactions jumped 126% year-on-year between April and August this year to Rs 1.28 lakh crore. Transactions including RTGS, NEFT, IMPS and prepaid instruments totalled Rs 120.78 lakh crore in September.

Source: Financial Express