As long as Chillr was riding on IMPS it didn’t have competition


And now it is in the middle of seeking a sale. It has two big suitors in the form of caller identity service, Truecaller, and one of India’s largest private sector banks, HDFC Bank, confirmed three sources close to the development.

It could be a few months till full details like valuation emerge, as the two companies involved will need to do due diligence and put a price tag on the deal.

Nonetheless, Chillr’s potential sale is a signal of things to come. Kunal Walia, the founder of boutique investment banking firm Khetal Advisors, says consolidation in this space is inevitable. Because:

  • Peer-to-peer payments are still a small market with very low margins, leaving little room for many players
  • There isn’t much differentiation in service
  • Paytm* is a market leader with an unassailable lead
  • The original “WhatsApp for Money”

Chillr launched in 2015 with a simplified and easy-to-use layer over a banking transfer standard, Immediate Payment Service (IMPS). IMPS allowed people to transfer funds to others using an account number linked to a mobile number.

But then, only a year later came other funds transfer standard, Unified Payments Interface (UPI), whereby money could be sent to another person using just an email id-equivalent called a ‘virtual payments address’. UPI was vastly simpler than IMPS.

Then, in November 2016, the Indian government demonetized over 85% of the currency notes in circulation. As most cash got sucked out of the economy, people flocked to digital payment startups. The government too got into the act and launched BHIM, a money transfer app based on UPI.

Impact of the demonetization

The one-two combination of UPI and demonetization became a survival test to pick out the fittest. Chillr didn’t exactly finish first.

Chillr’s original vision was to become the “WhatsApp for Money”. For Indian startups seeking funding, “Whatsapp for X” was the new “Amazon for X”. Except that Whatsapp and Amazon were both not just present in India, but dominant as well.

Anyhow, with that kind of a pitch, Chillr was able to raise $6 million in a Series A round from Sequoia in 2015, within just eight months of its launch. One reason for the funding was a dearth of quality peer-to-peer payment apps, other than wallets of course. What also helped Chillr was that at a time when fintech startups had almost no standing with banks, it launched with HDFC Bank as its first partner bank. This meant the bank’s 40 million-strong customer base were potential Chillr users. If they chose to.

Most didn’t.

Even then, Chillr managed to reach almost 2.5 million transactions worth about Rs 500 crore a month. But with 75 employees, the Mumbai-based company has come to a point where its funding is drying up, said a former senior employee.

Walia says companies like Chillr are what he often calls as ‘Businesses in Search of a Business Model’ (or BOMB). “The success or failure of Chillr is not so much a comment on the P2P space in India as it is on the lack of a clear strategy that allows any significant margins to be made from such a play,” he says.

So, at a time when WhatsApp is itself coming for your money, what chance does Chillr have in being a payment app?




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