The digital payments market received an unprecedented boost in 2020 when the pandemic forced people to shift to online means to conduct transactions and avail services like healthcare and education. United Payments Interface (UPI) has grown to include up to 2.7 billion transactions in March 2021. The market has shown its immense potential and is still growing, so it hardly comes as a surprise when players from other sectors take an interest in it. On Tuesday, merchant commerce platform Pine Labs acquired Fave, one of the fastest-growing consumer fintech platforms in South-East Asia, in an all-cash deal worth $45 million.
This acquisition will help Noida-based Pine Labs expand across Indian and South-East Asian markets. It will also enable Indian consumers to use Fave’s payment app to make transactions at nearly 5 lakh physical retail points and merchants powered by Pine Labs, said Amrish Rau, CEO of Pine Labs. Fave has over 6 million consumers in South-East Asia.
Consequently, the acquisition would reinforce Fave’s position in the South-East Asian market. Fave, which counts Sequoia India, China-based SIG Asia Investments and Indonesian venture capital firm Venturra Capital as its investors, had added Pine Labs as an investor in Fave last July when both formed a strategic partnership. Both start-ups will now be able to expedite their growth and unlock immense consumer opportunities across domains of retail, food & beverage, fashion and FMCG.
“For long we have seen that the experience of consumers making offline transactions is often broken in the sense that unlike online payments it is difficult to organize discounts, loyalties, cashback schemes on a single platform. With Fave, we’ll solve two important pieces: for our merchants, it’ll improve engagements helping them bring their consumers back to the stores, and for consumers, it’ll bring together all payment experiences on one app where they can unlock the best values for their purchases,” Rau said.
Fave helps offline merchants attract repeat users, by enticing buyers to pay through its system (using a QR code) in return for benefits like cashback and loyalty points. The catch is that users can only use these benefits at the same business in the future. Thus, there is a high chance that they will return to the store to claim their benefits, thus helping the merchant secure a repeat customer.
The company saw an exponential rise in demand over the last year, as users started seeking alternative modes of payments since cash can become a source of transmission. Now, with this acquisition, Pine Labs and Fave look to revolutionize the markets.
Rau added that Fave was on the way to get a UPI certification from the National Corporation of India (NPCI), following which it will be able to launch its payment app in the country in the coming months.
Post the acquisition, the roles of Fave’s founders will be expanded to lead the overall consumer platform for the group across Asia. The company, which will hire over 100 new employees in South-East Asia and India to advance to accelerate cashless payments and smart savings across the region, will continue to introduce new smart payment features via the Fave platform, unlocking new ways to maximize joy and value in every shopping experience for consumers across Asia.
Joel Neoh, co-founder and CEO of Fave, said that he was excited to work with Pine Labs to continue Fave’s expansion across Asia. “Pine Labs has been a great partner and investor for us, and it only made sense for us to join our synergies together and work towards our shared vision of building a truly global consumer and merchant platform. India has the digital advantage with young demography, a growing aspirational middle class with rising disposable income and increasing digital savviness. We are confident that the APAC e-payments landscape will continue to achieve exponential growth in the coming decade. Together, we will be stronger, faster and better,” he said.
Fave is not Pine Labs’ first acquisition – it had acquired Amazon-backed Qwikcilver, a gift card technology start-up, for $110 million in 2019. Pine Labs, which has seen a growth of 171% in UPI transactions since the pandemic, is looking to merge with and acquire more start-ups in its expansion campaign.