Something to discuss if you care to. Appreciate feedback or...

Something to discuss if you care to. Appreciate feedback or corrects to the possible extrapolations below.

I am attempting to appreciate the immense benefits of the Payment Switch that Findi get which is within the Tata ATM purchase announced in November last year. I feel this is a much bigger and under appreciated piece of the puzzle. My ChatGPT workings only. DYOR.

Cheers Anton.


Here’s a concise summary and recalculated overview incorporating all elements of Findi’s growth, acquisitions, and profitability potential, including the Tata Payments Switch, Bankit integration, and a ₹2 ATM interchange fee increase:

Strategic Fit of Bankit Acquisition

1. Alignment with Findi’s Operations

•Merchant Network Expansion:

•Pre-acquisition: 50,000+ FindiPay merchants.

•Post-acquisition: Adds 129,000+ Bankit merchants, tripling the network to 180,000 merchants, boosting transaction volume and revenue.

•ATM Integration:

•White Label ATMs: 4,600+ from Indicash (operated independently, revenue from interchange fees).

•Brown Label ATMs: 7,500+ managed in partnership with banks (lower infrastructure costs).

•Bankit merchants will also act as cash withdrawal/deposit points, increasing utilization of both ATM types.

•Geographical Coverage:

•Expansion to over 12,000 postal areas (pin codes), including underserved regions.

•Service Diversification:

•Bankit adds AePS, remittances, prepaid cards, and bill payments, complementing FindiPay’s existing services and boosting revenue streams.

2. Role of the Tata Payments Switch

•Cost Efficiency:

•Eliminates third-party processing fees for ATM and digital transactions.

•Estimated cost savings: ₹1.5/ATM transaction and ₹0.75/digital transaction.

•Increased Scale:

•Handles higher transaction volumes with the expanded ATM and merchant networks, reducing per-transaction costs through economies of scale.

•Interoperability:

•Supports multiple payment types (UPI, AePS, card-based), creating an integrated financial platform.

•Dynamic Pricing:

•Enables optimized fee structures for transactions in high-demand regions.

•New Revenue Streams:

•Processes non-ATM digital payments, including FindiPay transactions and POS/mobile app payments.

Financial Impact

1. Pre-Bankit Baseline (With Tata Payments Switch)

•ATM Network: 12,100 ATMs (7,500 Brown Label + 4,600 White Label).

•ATM Transactions (Annual): 917.8 million transactions.

•Revenue from ATMs:

•Cost Savings (Tata Switch):

•Digital Network (Pre-Bankit): 50,000 merchants; 30 million annual transactions.

•Revenue from Digital Transactions:

•Cost Savings (Tata Switch):

•Total Revenue (Pre-Bankit): ₹14.91 billion (AUD 268.25 million).

•Profit (Margin Improvement): ₹5.12 billion (AUD 92.16 million).

2. Post-Bankit Integration

•Expanded Digital Network:

•Adds 37.2 million annual transactions, increasing digital transactions to 67.2 million/year.

•Digital Revenue Post-Bankit:

•Cost Savings:

•Total Revenue (Post-Bankit): ₹15.93 billion (AUD 286.7 million).

•Profit: ₹5.36 billion (AUD 97.4 million).

3. With Proposed ₹2 Increase in ATM Interchange Fee

•Additional ATM Revenue:

•Financial Transactions (780.13 million/year):

•Total ATM Revenue Post-Increase:

•Profit Margins: Improves to 35%.

•Total Revenue (With Bankit and ₹2 Increase): ₹17.49 billion (AUD 314.83 million).

•Profit: ₹5.90 billion (AUD 106.26 million).

Summary of Scenarios

ScenarioRevenue (AUD)Profit (AUD)

Pre-Bankit, Without ₹2 Increase268.25M92.16M

Post-Bankit, Without ₹2 Increase286.7M97.4M

Pre-Bankit, With ₹2 Increase281.5M98.46M

Post-Bankit, With ₹2 Increase314.83M106.26M

Conclusion

1.The Bankit acquisition expands Findi’s merchant network and geographic reach, strengthening its position in underserved regions.

2.The Tata Payments Switch reduces transaction costs and enables scalable operations across ATMs and digital payments.

3.A ₹2 increase in ATM interchange fees could further boost profitability by leveraging Findi’s extensive ATM network.

Findi is strategically positioned for long-term growth in India’s financial inclusion market, with the potential for sustained revenue growth and margin improvements. Let me know if you need further details!