Abhijit Bose, the CEO of Ezetap, shrugs off Apple CEO Tim Cook's recent trip to India. He isn't worried about the American smartphone behemoth moving into his mobile payments business. "I've said I'll pick up any Silicon Valley CEO at the airport and drive him anywhere they want," said Bose, whose Bangalore-based company (No. 3 CNBC Disruptor 50) is on track to handle $1 billion in transactions this year.
With 900 million mobile phone users and a sophisticated biometric digital ID issued to every citizen, India is increasingly attractive to companies that provide mobile financial services. According to a recent report by GrowthPraxis, a market research firm in Bangalore, the market for mobile-enabled payments in India soared from $90 million in 2012 to $1.4 billion in 2015. Indians opened more than 200 million new bank accounts in the last two years, roughly equal to the number of households in the United States. Now 250 million Indians have access to broadband Internet.
The mobile payments market in India has taken off after years of anticipation as broadband networks, and high-speed 4G cellphone networks have become more commonplace, said Amit Goel, co-founder of GrowthPraxis and managing director of LTP, a financial technology research site.
Ezetap has benefited from this explosion of connected consumers by offering an end-to-end payment system, including its own Square-like point-of-sale terminal that plugs into a smartphone. Bose said Ezetap handles an average of $2.5 million daily and 1.5 million to 2 million transactions each month, with volume growing 25 percent to 50 percent a year.
He differentiates Ezetap from other players by its exclusive focus on merchants. While most competitors (including Apple) operate on the consumer side, he said Ezetap is single-minded. "Our job is to help bring merchants into the mobile internet world. "
Bose, an engineering graduate from Cornell University with a Harvard MBA, is part of a highly experienced team. He worked for Siebel, Oracle and Intuit before lunging into India's start-up ecosystem. Chief technology officer and co-founder Bhaktha Keshavachar spent time at Intel and Sharp. The company has raised $35 million in four rounds from investors as varied as American Express and venture capital firm Social Capital.
Bose said his team has created a flexible payments platform that will handle a broad range of transactions. "A merchant or business has to be able to handle anything a customer wants to use, regardless of who walks in with what: a mobile wallet, a credit card or a PayPal account," said Bose. "How do you create a very seamless commerce operating system — interoperable, scalable and future-proof? That's what we do."
By emphasizing the ways its products can improve a merchant's processes rather than individual transactions, Ezetap has positioned itself as software-as-a-service provider. Bose said he makes money by charging a monthly fee to merchants rather than a fee per transaction.
Anupam Rastogi, a principal at Nokia Growth Partners (NGP), who closely follows the Indian mobile market, said Ezetap is well positioned to benefit from India's shift toward digital transactions. Rastogi, whose firm is not an investor in Ezetap, likes the fact that the company provides everything from a point-of-sale device to workflow management tools around payments. "It's a good strategy," he said.
Bose isn't worried about Tim Cook, because he believes Ezetap has a formidable lead over potential foreign competitors in the complex Indian market. The most conventional aspect is the enterprise sector.
Take Amazon, for example. The largest mobile companies and insurers in India are all Ezetap customers in this category. But the broadest and potentially most lucrative market is the so-called bottom of the pyramid, what Bose calls the financial inclusion market. "It's not about how you allow a person to buy a cappuccino in a store," he said. "It's about how do you create a fully functioning bank in a village of 10 people."
Ezetap has global ambitions. In fact, when the company was founded in 2011, Bose and his partners worried that the Indian market was taking off too slowly. They launched an initiative in Kenya to demonstrate the potential for their products outside their home country. "There was a roll-up opportunity in the sense the digitization and third-world problem is not just an India problem," he said. "It's an Indonesia problem. It's a Kenya problem. It's a Malaysia problem."
His company provides payment services to the biggest distributor of cooking oil to restaurants in Kenya, but he concedes that Ezetap has refocused on its home market since the use of mobile payments has soared. "We've doubled down and tripled down on India," said Bose.
He thinks new entrants, even Apple, will have a long learning curve. "You have to get in and understand the market," said Bose. "If you try to replicate your business model here, it's not going to work." Then there is the role of government. For example, Uber had to agree to take cash for its car-paging service in India, something they do nowhere else.
Apple has had difficulty becoming a factor in the Indian market because of the high price of its iPhones. The Indian government, under pressure from competitors, rejected Apple's request to sell refurbished iPhones. The California phone maker could face an additional requirement to produce its phones in India under an Indian government policy that encourages local manufacturing. Also, Apple Pay is based on a "near field communications" or NFC chip that requires holding the device near a terminal that triggers the payment.
Goel at GrowthPraxis thinks NFC payments solutions are cumbersome because they require special equipment. He noted that products like Apple Pay have been slow to make inroads even in the U.S. market. "The ideal is a payment-acceptance app with no special hardware," said Goel.
Apple declined a request for an interview about its plans for India. Instead, a company publicist pointed to comments by CEO Tim Cook during an Indian TV interview asserting his interest in the Indian market. "We're looking at what to do there," said Cook. "We've met with some of the banks to understand their perspective on mobile payment, and I think there is an interesting opportunity there and I'm very encouraged with what I have heard."
In the NDTV interview, Cook indicated he was aware the Indian market was different. "We want to deeply understand the market here and if there is something unique that's needed. We also want to do that and so we are about making the best products in the world that enrich people's lives and so we are not going to rest until we do that an A-plus way."
While Apple figures out what to do, Bose and his colleagues are furiously working to widen their lead over potential competitors, foreign and domestic.
— By Joel Dreyfuss, special to CNBC.com