UPI now handles about 24 billion payments a month and most of us paid for something with UPI today without a thought. A cup of coffee, a Rapido ride, a bag of vegetables. It has led to an explosion of consumer spending across categories. Till 2017, digital wallets before UPI did ~260 mn P2P payments a month and now UPI does about 9 billion. Similarly, debit and credit cards at shop counters did 441 mn and UPI now does over 15 billion transactions. All of this in the span of a decade!
While on one hand UPI has solved payment acceptance for business owners, however business spends are still not done via UPI. This is because business owners have no control over who spent the money or on what, and whether they were allowed to make that expense. Cards were meant to fix this problem, but fewer than one in ten shops accept them. As a result, over 75 mn MSMEs in India make only around 150 mn payments a month on prepaid cards and wallets, with the majority spending still done in cash.
CotoPay is solving exactly this problem by building business-centric payment instruments on the UPI rails with their partner banks and NPCI. A business issues these payment instruments to any employee’s mobile number and it appears inside the UPI app the person already uses, locked to a purpose, a merchant, an amount and/or a date. No new card, no new app, but giving business full ability to approve and fund only specific spends ubiquitously.
This ability combined with the company's AI agentic platform called CotoAgent, helps reconcile and close the books of accounts for the business. No more fake or padded bills, inappropriate spends, policy violations or cash leakages. In fact, CotoAgent will eventually check the bill even before the money moves, deduct anything out of policy and pay only the approved amount. Each new agent then opens a new service. Vendor bills lead into accounts payable, then come travel, cash forecasting and, in time, credit for a business whose every rupee is tracked.
Ramp, the American company, showed what spend management looks like when software controls spending before it happens. India needs the same, but cards are the wrong rail here and UPI is the right one. We also think the Indian version can be AI native from day one, and that is what excites us the most.
The first use case CotoPay is targeting is for fleet expense management, as a truck driver still gets cash for diesel on his intercity trip. Our channel checks suggest 5-8% of the diesel a fleet pays for simply disappears and with the company's solution, fleet owners can control trip spends, prevent thefts & pilferage. In fact, the company already has multiple large fleets using the solution with thousands of redemption transactions happening weekly. The solution is also applicable to field sales teams, store managers and any business that hands someone a phone and a budget.
The team behind Cotopay is why we backed it at pre-seed, as they have been involved in the development of the e-RUPI payment instrument and have a very strong hold on the ecosystem, as well as regulation surrounding the same. Aviral was part of the early BharatPe team, Vidit ran the P&L for Sunfeast biscuits at ITC and Uzair has worked on large scale digital public infrastructure projects including Aadhaar, IRCTC and CoWIN. Between them they cover payments, selling and technology. We are excited to partner with Aviral, Vidit and Uzair to change business spends in India forever! You can learn more about CotoPay at cotopay.in.