MoneyTap evaluates the user’s eligibility in less than 4 minutes after which it provides an instant, real-time decision on the application, along with the amount he/she is eligible for

MoneyTap, an app-based consumer lending startup headquartered in Bangalore, has raised a total of US$12.3 million in funding led by Sequoia Capital India, with participation from existing investors New Enterprise Associates and Prime Venture Partners.

With this funding, the fintech startup plans to improve credit accessibility for new segments of customers, partnering with six new banks and non-banking financial corporations (NBFCs) and expanding to 50 cities in India by the end of 2017.

MoneyTap was founded by serial entrepreneurs Bala Parthasarathy (formerly with Prime Venture Partners), Anuj Kacker and Kunal Varma. The startup works in very close partnerships with various banks and other financial institutions to make the credit-lending process quick and painless.

MoneyTap, currently available only on Android, is targeted at salaried individuals and self-employed professionals earning more than INR 20,000 (US$311) per month. The app evaluates the user’s eligibility in less than four minutes after which it provides an instant, real-time decision on the application, along with the amount they are eligible for.

Using the credit line, consumers can choose to borrow as little as INR 3,000 (US$47) or as much as INR 500,000 (US$7,780) or up to their maximum eligibility limit. Customers can decide their own EMI plans with flexible payback periods, ranging from two months to three years. Interest is paid only on the amount borrowed and rates can be as low as 1.25 per cent per month. The credit limit also gets topped up once EMIs are paid back.

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MoneyTap has partnered with RBL Bank to provide its customers instant decisions and instant access to money, 24/7. All financial transactions such as billing and repayment are directly dealt with the bank but through the MoneyTap app using secure APIs, thus ensuring 100 per cent secure transactions.

Since its launch in September 2016, MoneyTap claims to have attracted over 300,000 users. The majority of users have a monthly income of INR 30,000-40,000 (US$467-622) and are aged between 28-32 years. The firm is on target to issue credit lines worth INR 300 crore (US$47 million) by the end of the current fiscal year.

The Indian consumer finance market is estimated to grow at a compounded growth rate of 18 per cent to become a US$1.2 trillion opportunity by 2020. Reports also suggest that it is also one of the most under-penetrated markets for lending, with close to 70 per cent of the population being underserved by institutional lenders. Penetration of unsecured personal loans has been extremely poor in India with the organised credit presence at around 1 per cent in the country.

According to central bank RBI’s data of August 2016, in a country of 1.2 billion Indians, only 26.4 million have credit cards. Comparatively, there are about 600 million active mobile phones in India and mobile banking transactions rose from INR 4,185 billion in 2012 to INR 5,243 billion in October 2016. All this data points out to the fact that consumer-lending startups such as MoneyTap, supported by financial institutions, can serve a huge creditworthy but financially excluded customer base previously overlooked by the lending businesses.

Also Read: This startup has just raised US$32M to provide credit-on-demand to SMEs in India

Abheek Anand, Principal at Sequoia Capital India, said: “Consumer credit in India is highly under-penetrated and is a complex problem to solve. MoneyTap combines an experienced team with a thoughtfully designed product – and their strong early traction is a testament to the efficacy of their approach to address this massive market opportunity.”

Recently, Lendingkart Finance, a digital lending platform for small and medium enterprises (SMEs) in India, secured US$7.8 million (INR 50 crore) in debt funding from YES Bank, India’s 4th largest private sector bank.

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Image Credit: MoneyTap

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