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Good morning, ladies and gentlemen. Welcome to Infibeam Avenues Limited Q1 FY '23 Earnings Conference Call, hosted by Go India Advisors. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rajat Gupta from Go India Advisors. Thank you, and over to you, sir.
Yes. Thank you, Lizan. Good morning, everyone, and welcome to Infibeam Avenues Limited earnings call to discuss the Q1 FY '23 results. We have on the call with us today, Mr. Vishal Mehta, Managing Director; Mr. Vishwas Patel, Executive Director; Mr. Sunil Bhagat, Chief Financial Officer; Mr. Purvesh Parekh, Head Investor Relations; and Mr. Ravi, Corporate and Financial Advisor. We must remind you that the discussion on today's call may certain forward-looking statements and must be therefore viewed in conjunction with the risks that the company faces. We now request Mr. Vishal Mehta take us through the company's business outlook and financial highlights, subsequent to which, we will open the floor for Q&A. Thank you. And over to you, sir.
Thanks, Rajat. Good morning, everyone. Thank you for taking time to attend our earnings call today. I hope you would have seen our presentation, which has been uploaded on the exchanges as well as the company's website. In fact, we had a great start and a strong performance in the first quarter of FY '23 across all of our parameters that we monitor. Other confidence and strength and scalability of our business model and our strategy to focus on merchants and banks or digital payments and providing them with differentiated business offering, has been very rewarding. Over the years, we have always innovated well ahead of the curve and introduce products which have been pioneers in the fintech space. Our most recent launch, which is called tap-on-pay, CCAvenue TapPay, which was launched just last month is a revolutionary product, and it will be a game changer in the payment space. I will request Vishwas Patel to talk about it in detail. I will briefly discuss the performance for the quarter. We delivered strong performance in the standalone basis, which is the core India payment business and the platform business. All of our financial parameters, the revenue, EBITDA impact were at a record high. On a year-over-year basis, gross revenue has been up 95%. EBITDA was up 51% and PAT is up 137%. The performance has been driven by higher transaction processing volumes, which we call TPV and increase in take rates in payments business. EBITDA as a percentage of net revenue has risen to 64% from 60% year-over-year, which we had guided in FY '21. The total transaction processing volume, which comprises of digital payments, transaction processing as well as what we process on government e-Marketplace has record high at INR 87,218 crores for the quarter. I would like to inform you that the TPV number that we report excludes the UPI payments, which contributes to single-digit percentage to the payments transaction process and volume. Another interesting point to note is that this is the fifth consecutive quarter of growth in growth and net take rates in the India payments business just through payment processing alone. We have not yet undertaken any major monetization efforts. Gross take rates in India payments business were 78 basis points, and net take rate came in at 6.9 basis points, which has been steadily improving since the second quarter of 2022 when it was 4.8 basis points. Both the payment and industry mix contributed to this increase in take rate. We have in the last quarter of Q4 FY '22 disclosed that the share of credit options, which has increased to 45% and that continues. We continue to maintain 0 MDR payment options in single-digit percentage of the overall transaction processing volume, while other options constitute the rest, which includes net banking, debit cards, prepaid instruments, [indiscernible]. As far as government E-marketplace is concern. GeM has already crossed INR 50,000 crores on the 1st of August double the speed rate compared to last year FY '22. As far as the industry is concerned, I'd like to highlight that the outlook is quite positive. We believe payments transaction processing volume will continue to grow as there is a significant headroom and large untapped merchant and customer base. There are some legacy systems with banks and efforts by the government and the regulators to build on the sector in India to create financial inclusion. RBI through its most recent published Payments Vision 2025 report is aiming to triple the digital payments in India. Digital payments comprising of cards and prepaid instruments grew 35% to INR 20 trillion. And including UPI into GeM, it grew to INR 36 trillion, up 70% year-over-year. Given the first quarter statistics by RBI and extrapolating it for the full year, it is expected to cross INR 50 trillion in FY '23. Point-of-sale in e-commerce are expected to be equal contributors. Credit card trends are particularly encouraging. Credit cards have increased to INR 7.9 crores in June of 2022 from INR 5.8 crores in March of 2020, which is the pre-COVID level. Credit card value itself has shown a very strong averaging over INR 1 trillion in each of the months in first quarter. It averaged around INR 60,000 crores monthly in FY '20, the pre-COVID period, a growth of 67% in 2 years. We have been pioneers in our product offerings for online merchants over the last 2 decades and doing many of the industry first in the fintech space. We want to offer differentiated product offering in our other segments also. We want to grow our market share in payments by targeting offline merchants and generating higher cash flows and returns for our shareholders. Vishwas Patel will throw a few pointers and provide some insights on this. We are focused on building a frictionless financial technology company in the digital payment space, which should provide a seamless and holistic digital payment solutions to merchants, along with access to capital at a click of a button. Through our comprehensive offerings comprising of software platforms, payments and finance, we want to make the merchants digital, credible and hence, bankable and offer them financial services in the form of lending based on in-depth data analytics that we generate based on millions of merchants and their transactions. I will now hand over the call to Vishwas for his comments. Vishwas, over to you.
Thank you, Vishal. Good morning, everybody. So I will start with a new launch CCAvenue mobile app, which is the world's most advanced omnichannel payments platform with TapPay, which is India's first pin-on-glass solution, TapPay. For those who could not attend the event, we have put a video on YouTube of our entire event of the launch, including our corporate AV. CCAvenue TapPay is a breakthrough payment technology with pin-on-glass technology that will allow consumers to do transaction with an OTP even on amounts which are in excess of INR 5,000 limits set by RBI, not just on the merchant's phone but on their own phone as well. So this, we are also introducing CCAvenue TapPay a payment on inside some of India's major merchants checkout page. Consumers can select it as a payment option and tap their card on the phone for an instant checkout without having to enter the card details or remembering CCV. Payment instruments in our country sorted, but RBI's payment vision can be achieved only by improving payment acceptance infrastructure and providing holistic services to merchants. And what we are aiming to do is does that. We are building a frictionless fintech company, a comprehensive payment technology that will offer not only payment acquiring the payment issuance and all the relative infrastructure. This will make us the core part of the entire payment ecosystem, allowing us to build a long-term, sustainable, profitable business and create value for all in the system. We are going to build this infrastructure in a twofold manner. One, we have and are continuously engaging with the top banks to build topnotch launch infrastructure for them, that is not only scalable and robust; and Two, by offering CCAvenue mobile app with taxes each of our merchants and an app for free to point the payments to deep across India. Despite tremendous success of UPI, NPCI has mentioned that its reach is about 215 million customers. The target is for to reach around 1 billion people in India. And they say acceptance infrastructure has to be improved for deeper reach. This is where the CCAvenue omnichannel acts and aims to address the challenge of inadequate payments acceptance of infrastructure and eliminate barriers to similar digital adoption. For small businesses or large to the ease of its deployment and its probability to make it the best choice for many use cases, apart from it being 0 and low cost. The future of digital payment is growth-oriented and a massive unbanked and under bank population waiting to be covered. The value of digital payment is expected to reach threefold from USD 3 billion today to USD 10 trillion by 2026. There is a huge opportunity for us to scale and capture that opportunity. There is also a huge opportunity for credit as a country's credit stuffs with household debt that only 11% of the GDP, when you compare with the mature market like USA, which is at 84%. 40% of the MSCI credit in our country is still via informal channels. And that is where our lending platform trust revenue comes in, which will allow the banks to lend and our merchants to get the loans through our next-generation merchant data analytics. Today, cash still accounts for 72% of the total consumer spending. There is more than INR 29 lakh crores of cash in the market. Our aim is to make our country a less cash society. We see the analysis and expects 2 out of every 3 payment transaction would be digitized by 2026. And the digital payment market for post-merchant payments would be INR 2.5 trillion to -- from the INR 0.4 trillion in 2021. And B2B would become INR 2 trillion in 2026 from the INR 1 trillion in 2021. This all is very encouraging, and we will strive and continue to grow as fast and as well make next-gen technology to capture this. Vishal with this, would you like to add anything before we open up for Q&A.
We've been growing at about 8,000 merchants per day and which are a rich blend of offerings, which will allow us to boost our earnings across millions of merchants. All of our fintech solutions are also fueling our expansion to our goal of achieving a transaction processing value run rate of 7.5 lakh crore by end of FY '24. We are on the trajectory and confident of delivering this kind of performance going forward. Thank you.
Moderator, we can now open the floor for Q&A.
[Operator Instructions] The first question is from the line of Anuj Narula from JMFL.
My first question is…
Sorry to interrupt. Anuj, we are not able to hear you.
Am I audible now?
Sir, you're sounding very soft. Yes, this is better.
So my first question is like in terms of the recent expansion to Australia, how much would be the investments? And what are our growth aspects here? And what sort of competition do we face in other international markets of UAE? Shall I ask the second question now?
Sure.
Yes. So my second question is with respect to that TapPay and like how much market share do we expect to capture with the launch of TapPay as we plan to eliminate the cost machines? And how much CapEx would it incur? Any update on the e-commerce tie-ups would also be helpful on this?
Sure. Thanks, Anuj. So I will take the first question and also give you some background on the second one as well. As far as Australia is concerned, you are right, we have just announced an opening of our offices and a fully owned subsidiary in Australia. We think it's a very large market. And as far as the investment amounts are concerned, historically, we've been forward investing in the international markets. And we see the ROI coming up in less than 1 or 2 years. Fortunately, we've got payment solutions, which are globally scalable. You see in payments, all the card networks as well as all the technology infrastructure that we've built out they've all been built out on a global scale. We currently operate many ways in UAE, we are #2 player in UAE. And we've also opened up Saudi Arabia and U.S. So we believe that since technology is scalable globally, we have built out a model, which is called controlled box. That model allows us to create a team, who can actually work on a country to be able to build our volumes and generate traction there. The thing that we are very excited about as far as Australia is concerned, is that it's a very digital savvy society. And with regarding new solution, which is the point that you brought out in the second question, which is TapPay, these applications can be provided to even small merchants as well as larger merchants in that region. So as far as the investments are concerned, we believe that it will be sub $1 million in the first year, it will be about INR 7 crores to INR 8 crores of investment that we will make in that geography this year. And we expect that we should be able to launch and generate good amount of traction, given that a lot of technology that we've been built out is -- built out for global scale and not just for India alone. As far as -- I hope that answers the first question that you have.
Yes. Yes.
As far as the second question around what is the opportunity for TapPay in India. See that is for the first time and across India, this is the only application which has got pin-on-glass certification. So what that means is that any transaction which is even above INR 5,000 can be transacted using TapPay which is the only application which has this kind of approval across all the bad networks. So we expect that we will be approaching -- it's already live across many of the implementation. A few thousand implementations have gone live already.
And we expect that a large number of channels, OEM brands in the mobile phone space. We believe banks as well as other financial institutions who want to cater to small merchants. We will be working very closely with these channels to be able to create a digital footprint for them. Because for all these merchants, if they are digital and they become credible and hence, they can get loans for that growth, we can give them wings to fly. And we believe that just because a merchant cannot afford INR 10,000 to INR 15,000 point-of-sale machine does not mean that we see however the credibility from them. And so acceptance like Vishwas mentioned in his speech, acceptance is a very large problem in India. If you allow any merchant to accept any kind of payments and back to without a piece of hardware, every merchant has a mobile phone or a smartphone, but every merchant may not have a point-of-sale machine. And if we are able to create that kind of an opportunity for a merchant, we believe that it poses a large part of our mission that we've built out this company for. So as far as the opportunity is concerned, we expect that we will be able to -- today, 99% of all transactions that we process are online transaction only. But in the coming 2, 3 years, we expect that at least 25% to 30% of the transactions that we process will also include offline, which is CCAvenue TapPay.
[Operator Instructions] The next question is from the line of Rahul Jain from Dolat Capital.
Congratulation on recent number. I just want to understand a couple of things. Firstly, on this net take rate that we have got in this quarter, it's slightly up now. Is it -- so I just wanted to understand the reasons behind it, one from a competitive landscape perspective that how this is going on a directional part? And how much of this is coming from the mix change advantage that we may have in some of the business?
Sure. So the take rates have improved. If you recollect in our prior calls, we had mentioned that as the industry looks changes, A lot of -- if you look at last year and since Q2 of FY '22, you will see the take rates improve quite a bit. So since it was -- if you look at pre-COVID versus now, most of the industries, including travel, entertainment, everyone else, they have started coming up to speed. And if you recollect, I just mentioned in the prior question that all our transactions, 99% of our transaction process are online, so as offline picked up, online also picked up. And since industry mix changes that we've seen a much better take rate than what we had a year ago. We also probably communicated that saying that we expect the take rates to improve quarter-over-quarter as we go forward. The competitiveness in the industry is definitely there. I also mentioned that in our TPV, the transaction processing volume, we don't include the UPI-based payments, which is actually a single-digit percentage of the overall payments because that is not where we get our commissions. So if you look at the overall perspective, we expect that the take rates will keep on getting better as we go through and build up. The competitive intensity in the industry is definitely there. It's more so in the UPI part of the ecosystem. We expect that as we build out more and more feature sets once that allow the merchants to improve their own sales and other opportunities and make it part of our offering to merchants, it creates more stickiness. It creates better analytics, and it also allows merchants to become more successful. And we believe that as we keep on building that up, it makes it more and more tenable. So we've also built out for the first time an omnichannel solution, one that offers online and offline both. And for the entire 5 million large merchant base that we have, we would be wanting to offer this kind of an experience with a single console at the back end. This is the only omnichannel solution across the country, where you can process your online transactions, off-line transactions and get reported into a single dashboard at the back end. So large chains, large institutions, large OEMs, we would want to tap into them. And even this kind of solution, it makes it very easy for anyone to then buy online, return offline and do whatever they want to be able to achieve a better experience. So we believe that in the next few quarters, we should see the take rates getting better in spite of competitive intensity.
Just a small follow-up on the same, sir, also if you could share some thoughts in terms of volume-led your ability to pull a better bit for you? Is that happening? And in what kind of peers -- not peers but partners where you are able to see larger quantum led ability to push for better world pricing?
See, if you look at the competitive intensity, it is significant in this country. So in other words, you have a lot of companies offering similar competitive rates. I think what we want to do is really go after the feature sets and the stickiness that we would want to create with our merchant base. In terms of volume, which is impacting pricing, what we realized is that we would want to pass the savings to other customers and our merchants to become more competitive in the industry. So volume does give us some edge. I think we've already got significant amount of volumes passing through us. If you look at our projection by FY '24, we expected to do a transaction processing volume of $100 billion. So I think that as far as the volumes are concerned, definitely, we are there. And any volume-related savings that we expect to achieve, we will pass on to the merchants.
[Operator Instructions] The next question is from the line of Gaurav Sharma from HSBC Securities and Capital Markets India Private Limited.
Sir, a couple of questions from my end. Since we will be entering into the working capital and accounting business also. So just wanted to know the time line when you will be in sharing the same and what will be average ticket price on same? And second is like since some of the players, I hope that you will be entering -- you will be providing the capital as well as the platform for these services. But on the other side, some platform-based competitors, which are leveraging on the large bank customer database tying up with the banks employing, they are getting the benefit of this customer base. So how do you see that challenge the completion from them?
Sorry, can you repeat the question? You are slightly not audible. I'm sorry.
Okay. So my first question was like since you are entering to working capital and merchants content. So just wanted know the time line for the thing this time will be initiating the same and what will be the average ticket price you will focus advance from? And second is, since some of the players, which are just showing the platform in merchants, they are leveraging on the customer database of large banks having some hires and so providing the loans. So how do you see the competition from them since you will be losing your own finance to provide the plans?
The answer that I'll tell you that we don't expect to put our own finance to in our own balance sheet to be able to fund any -- whether it is invoice discounting, bill discounting or any loans, what we will do is, we will act as a platform in every case where we would be able to connect the merchant with the necessary financial institutions, whether it's a bank or an NBFC, then we will be able to earn a small piece of that transaction. The classic example is, what you would see as a DSA, where you would earn a small traction on every transaction is what we would want to cater to. So as far as the strategy for us is concerned, our strategy is that we will work with very large platform implementations to be able to give that kind of an opportunity where merchants can avail loans from financial institutions. The 2 largest frameworks that we are essentially catering to in India, one of them, of course, being government E-marketplace, we also had more than a few million merchants of our own that can potentially leverage the opportunity to get attractive loans and offerings. So we are going to continue building up that portfolio. As you can tell, we already have crossed more than $500 million in terms of other settlement loans that we give to our merchants. That's one more part of financing that we offer, which has already been very successful, and we have 0 NPAs so far in that mutually. So I think there to be -- we have a scientific approach to approaching this. We expect that for all the settlements that we do, we expect that maybe we will be able to cross more than $1 billion of financing there. And then we will work with that some of the implementations that we have, they are ready in terms of platform implementations. They already have a few billion dollars of GMV or PPV that they process. So to your second point, which is some streamers can leverage our setups to be able to do this, that is any ways work in progress through the trust avenue framework. And we expect that in any of these implementations, we will be able to help them process more than $1 billion of loans in this coming year.
[Operator Instructions] The next question is from the line of Amresh Kumar from Geosphere Capital.
Sir, just one question from my side, you said that you will be not using your own capital to build this lending business. So can we assume that you are not going for any kind of NBFC license in the future?
It's reasonable to assume that in near future, we would not be going for such licenses.
Okay. And sir, second question is this on tap technology. So just trying to understand what is the pain point that you are trying to solve here for your customers? And are you trying to take away -- do you think that it is the cost of the cost machines for your merchants, which is a big problem for them or something else?
I'll tell you, which basically, the objective is that merchants they had sales both in the online world as well as the offline channel of their own. And the one pain point that merchant faces that not all merchants have access to a point-of-sale machine because you see QR code-based payments are different than card-based payments. And while some multi-NAT QR codes, like, not everyone has a POS reader, there are more than 700 million RuPay cards, which are out there. And if you look at the number of consumers in the UPI framework there may be 150 million, 200 million. So I think that there's an opportunity for merchants to be able to accept payments in any shape and form.
And if you are able to create an opportunity for merchants to accept payments across any channel, whether it is QR code-based, linked-base, whether it means card-based, credit card, net banking, whatever you talk about, then it allows them to be able to cater to more consumers. Now what we are trying to solve is acceptance for the merchant, which is merchants and consumers can be issued a card. Issuance is not as much of a problem. There are 700 million RuPay card, there may be in more than 1 billion more cards. So I don't think that issuance is that much of an issue. We expect that acceptance is going to be a bigger issue in India, which is what we are catering to and which we would like to solve. Now the second part in this is that if you are able to digitize most of the transactions for the merchants, and you provide an interface for them to be able to conduct their business online as well as offline because right now, there is no omnichannel solution. This is a second problem that we want to solve, which is that the merchant will have a different provider for online and different provider for offline point-of-sale machine. And for a point-of-sale machine, they will, of course, have a cost of point-of-sale, and they would want to go and make sure that there's paper roll or maintenance, there is Internet connectivity for the POS machine. There are so many other issues that continue playing this industry. And what we would like to do is to be able to offer an opportunity whereby whether it is pre-bundled onto their phone or it comes across as an application that can potentially just get downloaded and be able to use it. You can imagine that there will be millions of kiranas, who can potentially benefit out of such an implementation. Even a QR code can be accepted onto the app, and it is their own. They don't have to be limited by one POS machine. There is no queuing. So we expect that there will be many, many more opportunities that potentially and use cases that can be solved using this. But from a macro level, what we would like to solve is 2 things, acceptance on a very, very large merchant base that don't have access to point-of-sale machines, acceptance for all the merchants who have a point-of-sale machine, but don't want to go through the maintenance and the hassle of being able to conduct our business. And an omnichannel solution, whereby there is better credit rating for the merchant that can potentially be offered a much larger opportunity to be able to take loans to grow their business. Because once you have both online as well as the offline digital payment solution in for merchants, it gives you a much better analytical position to be able to offer larger opportunities and loans to such margins, which is what we'd like to solve.
So very helpful here this explanation. Sir, do you have a tie-up with the bank at the back end for rolling out this world's best, as you say, the payment mechanism? Or what are we trying to do here?
Vishwas, do you want to take this?
Yes, yes. We do have every acquiring piece needs the bank, who had the tie-up with the merchant. This we have launched in partnership with RBL Bank. We have our own acquiring base, through which the bank has sponsored the card networks. So we have launched it with RBL Bank. The whole idea here is that, look, today, the point-of-sale terminals less than 5.7 million components for around 150 million SMEs in our country, right? So point-of-sale terminals is not very expensive INR 10,000 to INR 12,000 battery, as Vishal pointed out, giving them paperless, training the merchants and imagining 3 or 4 city or a town in Arunachal Pradesh or Assam or Tamil Nadu or other states.
So it's very difficult to service very difficult to hear. Here what we have given a solution is that merchants, sorts of the kiranas have a phone. We are turning that phone into a POS terminal, right? And it's very simple and if we're giving them an all-encompassing 200-plus payment options. So it's not just tapping a credit card or debit card, but it has also a static QR code, just like what you see printed on kirana today, where there any potential customer get the scan that QR into the transaction as well as it has in-built sound box also after the transaction, kirana can hear that a transaction is successful in multiple languages, which is compatible, which are local. So what we are trying to solve here is that not only grow the acceptance based from the current 5.7 million POS terminal to the 150 million to use the opportunity. We want every street card vendor, who want every -- the use cases are enormous because it has a user management, if a restaurants has around 10 or 12 delivery boys, all the 10 or 12 delivery boys on their phone can download the app and it is multiple users and the parent app can show all the transactions where the money is collected and notifications appropriately. So use cases are huge. If we see acceptance today, there are like -- I was sitting with the team, there are more than 1 million schools in postdates which are not accepting fees online. So payment acceptance such like what is commerce, any product services sold and payment made. So this kind of an app can make -- help that enablement. Student paying to its tuition teacher, right, that has to digitize. The tuition which are paying -- paying to a kirana store for buying his biscuit or whatever, that has to be digital, not go to an ATM, withdraw cash and then pay the money through distinct to the kirana. Kirana paying to his distributor has to be done digital, distributor paying through the manufacturer has to be digital, manufacturer paying his taxes to the government should be digital. So all those every leg of a commerce cycles is there and if you make certain easy acceptance, where your own mobile phone becomes a point of an acceptance terminal. That is a breakthrough transformative technology, right? It is much cheaper and better and more options than a physical POS. And it's more and more advanced in our simple QR code based on a kiranas, It's a very transformative technology. And I think we have quite an how India's first certified bit pin-on-glass on this thing, and you will see in the coming quarters, the take rate and other things, the acceptance of the service.
So my last follow-up on this is very interesting in this app is. But one of the large competitors who has spent so much money in rolling out some of the physical POS all across India, you would also be looking very closely at your application. And do you think that how much time it will take for them to copy this innovation?
Sure thing. Yes, anything you be build a couple of months down the line, they will also follow and copy and see that's the case, what we have always been leading for the last 20, 22 years, like we invoiced at SMS and voice mail 20 years back, right? But until then, you also have to understand that we have the whole ecosystem ready. We have like 6.4 million merchants where we'll be rolling it out. Like if you say in hospitality, we have Taj, Oberoi, IPC, Lemon Tree, all those -- and another 2,000 hotels. So these hotels where these merchants are already on-boarded onto devices done, these are the first low-hanging fruits that who will be going and offering where we are offering all our solutions now. And doing deep integrations with their existing systems and we know this merchant and they are track record of this. So having an ecosystem, similarly, yes, went and when they come, they might go to their merchants, but we -- since we are for sales are more advantage, right? And there is this thing. So let's see how it pans out.
I will also add to that, that we are somewhat built as a payment infrastructure company, not a payment provider alone. So what we do as a payment infrastructure company is to give it to merchants that we have, and we also give the framework to banks, you know that some of the banks, including Kotak Bank, OnPay as well as HDFC solutioning comes through us. So as we have built out more as in U.S., there is a company called Stripe, which is more of a payment infrastructure, not just a payment solution provider. So we are been going to give our offering and our framework to many of these merchants that are already on our platform, the millions of merchants that Vishwas talked about, but also to the ecosystem that we cater to.
The next question is from the line of [ Unnati Baviskar ] from K.R. Choksey.
Yes. So when the [indiscernible]. Yes. So I have a couple of questions on the financial side and then also want to get some understanding around what is the share of all these new businesses to the total revenue. So you've been talking about the TPVs going very strong, and they have been very strong, approximately 100% kind of year-on-year growth is resident in the last 4 quarters.
But then, do you believe that in the first quarter of '23 this last quarter, the quarter-on-quarter growth has kind of slowed down and what could be the reason for it? And secondly, on the NTR side, the NTRs have been moving up for the past 3, 4 quarters, and that's really great. But why is it not resonating in the gross margin because gross margins are still volatile, if they are not in line with the NTRs improving. So that is the second question.
And third is the express settlement that you've been talking about that it's been really doubling up, tripling up, wherein you don't have any kind of book credit risk. So what kind of margins do you make on it? And what kind of a share do you have of it in the total revenue as of now if it is sizable revenue as of now, you can share it? And second, you also what is the share of the overseas revenues overall to the total revenue? And do you make better margins over there compared to the domestic revenue?
Sure. So I can take a few questions, and then Vishwas can add in. See, as far as the overall quarter-over-quarter growth is concerned, you see we have been somewhat slightly marginally better in terms of the digital payments space. And as far as you know that the government E-marketplace is also something that we cater to. So GeM and that should also answer some of the margin question as well that you have as much. So usually, Q4 is a very large quarter for GeM and others. And you will see that Q1 also, there is significant traction but not as much as Q4. Q4 may there's usually a 40%, 50% increase over the other quarters. But this time around, it continued on in the first quarter as well. And as a result, you will see that there is a marginal improvement, both in terms of overall Q1 last year versus Q1 this year because in the first quarter alone, GeM able to perform INR 50,000 crores worth of -- in August -- sorry by August, it is INR 50,000 crores, Q1 was also very strong. So we expect that this trend will continue on in the subsequent quarters as well, both in digital payments as well as the infrastructure that we provide from the platform perspective. So that is one reason why you would see that quarter-on-quarter, you would see a little bit of growth in some of that in certain parameters. But I think it has been very strong compared to the first quarter of last year. And normally, if you look at it, Q3 is the strongest quarter for digital payments because of the holiday season. So Q1 and Q2, you will see growth in Q3, there is phenomenal growth. Q4, so there has some amount of seasonality, but it somewhat -- because there is a underlying growth in both the platforms and the payments business that you don't see the impact this year, and we expect that it will continue on for the remainder of the year. So again, you would -- it's reasonable to expect that Q3 will see a significant improvement as well in the digital payments business compared to the first 2 quarters of '23. As far as the take rate is concerned, I've explained in the earlier question as well. We think the take rate is actually going to keep on seeing improvement in the digital payments business because of the fact that the mix has changed, tender is behind us, sort of an uncertain event that happens around tender that we should expect that they should continue on building up for the remainder quarters of this year. International as a part of our business is less than 10% of our overall revenues. But interaction is significantly growing. The take rates in international definitely are better compared to the take rates in India. Many times in the international geographies, we record only the net take rate and not the gross take rates because of certain specific rules that apply to specific countries, whereby we are able to position it as a net take rate and not growth. But we expect that international in the next 2 to 3 years should be at least 30% of our overall business. So as we increase our GMV, one can -- it's reasonable to assume that international will be at least 30% of the overall business that we cater to. So with take rates as well as opportunity because the vision that we have for digital payments is contactless and borderless, and if you take that vision and we work towards achieving that vision of ours, then we would want to make sure that anyone who is in any countries to get the regulatory approvals as well as all the compliances should be able to transact through the banking channels without actually any friction. So yes, international is a significant opportunity for us. Fortunately, our entire payment infrastructure framework is built out in such a way that it is globalized. We don't have to build out for the region. Everything is horizontally scalable as well as globalized. And all of our relationships with card networks and everything else are also global in nature. So we think that with this kind of a vision of borderless and contactless, we should continue building up. So hopefully, that answers the question that you have if I miss something you can let me know.
Yes, about the express settlement as where it has reached in terms of its contribution to the overall revenue? And also what kind of gross margins do you make on express settlement?
I will tell you we don't segment growth settlement out, the expense settlement, sorry, as a separate line item, we have opened it up to a select set of merchants actually to be better precise, it is less than 5% of our merchant base that we've opened the express settlement to. And in the last several quarters, we wanted to track and trace it and we're happy to let you know that we've got 0 NPAs so far in terms of express settlements, while we have processed a few hundred million dollars of settlement, now actually in terms of express settlement. So the opportunity to expand it is significant because 95% of your merchant base can see we provided with this kind of an opportunity. In terms of contribution, I can tell you, while I don't have segmental for you, but what I can tell you is that it's reasonable to assume that we make about anywhere from 1 to 3 bps a day.
And as I think about the NTRs is proving an [indiscernible]. Yes, sorry. Yes. So what I meant to ask again is that while the NTRs are improving, when do we see the impact of it and as you getting in the GPM on a regular basis or on the consistent basis, because right now, although the NTR has improved to 6.9 basis points, the GPM has kind of come down to 17.6% kind of level from 20.8% in Q2. So can you just give us an understanding around how you see this trajectory of GPM will be like going forward?
So in terms of -- if I repeat your question in terms of gross margins, is that your question?
Yes.
At the gross margins, it's been -- it's reasonable to expect that we will continue to invest in places, which have a potential for us. We are optimizing for the long term, and we'll appreciate we don't optimize for a quarter. But we expect that about 4, 5 quarters ago, we had mentioned that, yes, we should see an improvement in take rate. We have a strong assumption and we validate our assumptions and we want to make sure that we can continue delivering on that with the line of sight. So in terms of stabilization and improvement, it's reasonable to expect that you will -- while we will invest in certain areas, which includes the CCAvenue TapPay and others, which have a huge potential for us to be able to offer a very differentiated positioning. Gross margins will be similar or slightly higher going forward. We think it stabilized sort of uncertain event like a pandemic.
Maybe just one point I'd like to add here, Purvesh here. Gross margin for our India payments business has actually improved on a quarter-on-quarter basis. So with the 19% increase that we've seen in the net take rate, the gross margins have also improved in the payments business. And overall, the 90% of our core business, which is our India payments and platform would be recording standalone. There also, if we see the gross margins have improved, but the EBITDA margin itself has gone up to 64% of our balance sheet. So there is a significant improvement here with respect to the operating profit as well and at the net margin level.
[Operator Instructions] The next question is from the line of [ Ayushi Shah ], an individual analyst.
I have 2 questions. And my first question is regarding the capital raising plans of the company. So my understanding is that we have around INR 208 crores is cash guidance currently, and we incurred around INR 62 crores of amortization expenses as of March '22, is it actually kind of non-cash expense. Now in the press release issued yesterday, you have stated that because NPVs major CapEx cycle is behind them. The company is now focusing on our focused growth strategy for the next 3, 5 years. So let say to understand why we would need to raise funds at all if we are in your words consistently converting EBITDA into free cash and are almost a debt-free company. So if you could throw some light on that?
Sure, Ayushi. So in the past, we have mentioned that we have a significant opportunity to work on the express settlement piece, which they require certain amount of working capital. Express settlement is 0 NPA and in that, what we are doing is to be able to offer merchants an opportunity to get the cash faster when the process through us. When we open up the offline space as well as online space that becomes one place that we think could be a potential. Second is that as far as our platform business, we think start-ups is a huge opportunity in India. And selectively, we will evaluate making investments in such start-ups that allow us to strategically open up and expand our own horizons. So there are a lot of things which are slightly experimental in nature. But what our internal buyers so that you know is always to build and not to buy. But when we find something which is very interesting, which allows us to expand our opportunity that we will selectively make investments. These are old calculated bets one that potentially allow us to grow. Historically, also, we believe that as we have made such opportunities viable. If you look at Go Payments, which is one of our subsidiaries, if you look at UIC, which we did last year, which has actually resulted into the CCAvenue that day, the transaction size was about INR 75-odd crores, and we were able to offer a very differentiated play. So our perspective is that, yes, we are very happy that we are in this position where we have a business model that generates returns and is profitable, but we also want to make sure that we continuously innovate, and we want to get the right people with the right framework and build-in technology, which can strategically improve the offering that we have, which is the reason why we would evaluate opportunities from time to time.
Sir, just to get some more clarity on that. So basically, the capital rating point really for hiring new employees as well as the new investment opportunities there?
Yes, it's reasonable to assume that. Yes, so it will be to our investments and growth.
All right. Okay, sir. And sir, my second question was that being an investor in the company, I'm highly interested in its growth and that we are progressing by rates and bonds in almost every segment we enter the [indiscernible] payments, but that growth has intersected in the market share. So the shareholders are therefore not benefiting from the company's advancements. Sir, so what is the reason behind this lagging market cap growth? I'm not saying that like the promoters by shares of the company or anything, but why don't we that any big reputed investors on hold? Or is that like a strategy behind keeping the market cap at this level?
So I would let you know that, we, of course, as an investor, we also want that our investors make good returns. And I'm also the investor in the company. So I think I share the sentiment that yes, we would want to actually do much better in terms of the performance. But do you see it's a market and the markets will, of course, will go based on execution. As well as we continue to execute, our focus has always been to execute. And as we continue to execute, we hope that the markets will see through it and be able to reward the performance of execution. Historically, we have not been focusing too much on optics, but more on execution. So but selectively now, we are also looking at trying to talk to people about what we do and not sell or convince any of the things that we do. But the other performance should show up when there may be latencies, both ways in execution and markets, we expect that they should correct itself as we build out going forward. There is no strategy by I would say. We don't participate at all in these discussions. As far as the opportunity for the growth as well as the opportunity to look at international growth as well, we selectively evaluate office release from time to time. And for the right reason, I'm sure that the Board will take the right decision.
So that does make sense. And sir, you maintain that…
We request you to return to the question queue. So the other participants can participate. The next question is from the line of [ Anil Nahata ], an Individual Investor.
Congrats on a very good performance this quarter, very heartening to see the net take rates improving as well as the growth on the payments side. I have a couple of questions. One is to understand slightly better. If you look at the net take rate and the transaction process volume at a net revenue level, it reaches to somewhere around INR 59 crores to INR 60 crores. So there is a delta of INR 14 crores of net tech revenue there. Similarly, it used to be in the earlier quarter, slightly higher than this. I just need to understand what is this business is delta INR 14 crores of which used to be slightly have? And so where are we heading in margin terms on this business?
We're a payment infrastructure company, and not just being payment solution provider. So whenever we provide infrastructure to some of the companies and banks and many others, I'd mentioned that we want to provide opportunities for them so that we can reach out to the larger ecosystem. So there are certain things like Kotak account that goes through Kotak Bank. Banks cannot offer all different payment options to their users. And so what we do is that we allow them to build up on our solution and provide it to merchants. And that may be one of the reasons why you would see whatever that small delta is in terms of the processing volumes. But I can come back to you on exact specifics once I did the numbers. So that is one reason why you would see because you can think of us as more of a stripe. There is a company which is based in the U.S., they not only provide their own solutioning, but they allow others to build up on top of their own platform frameworks. And as we continue evolving, we want to continue building up in that format because why channels will compete with each other, we want to be the backbone provider of the channels. And we will expect that that should continue being our focus going forward, a lot of APIs that have been opened up, and one can build out innovative solutions on top of our APIs. And we think that, that must be perhaps what you're referring to. If you have any other questions, I can get into specifics.
Yes. So maybe I will take it offline with your Investor Relations team and I understand it's slightly better. So that is one point. On the second side, I have a couple of questions. I mean, see, you've given a guidance for the revenue, net profit and all. And I believe the way you are setting up, you're going to blow past that revenue target any given space. One of the questions I have, and that is the most interesting area that you have spoken about in the last 2 calls, and I also believe it to be seen, is this TapPay thing that has been launched now. What kind of internal benchmark if any, if you can share? Are you expecting this business to grow to over the next 4 quarters? Any kind of a range that we can think of that this is what is the reason that you are looking at?
Yes. So TapPay is the solutions that we have launched recently. And there are 2 things that will happen, we believe, in the next few quarters. One is the number of cards that have been issued, which are going to be NFC-enabled, it should get to maybe 70%, 80% in the next 12 months -- because historically, cards were not NFC enabled, not all cards were NFC-enabled. And we expect that in our discussions with card networks and card providers, our expectation is that in the next 6 to 12 months, India will be a society where any card, which has been issued will be an NFC-enabled. So there is going to be a transition given for cards that are not NFC-enabled are becoming more and more NFC-enabled in India, #1. Number 2, that as we build out some margins, there will be merchant that don't have point-of-sale machine, those are very -- that are water alone on the ground, and we can offer set solution into such merchants and for merchants who are using our platform at the moment because there are anyways processing to us. Those are the ones which are quick wins for us. In terms of the processing volume, like I said, 99% of all volumes in Q1 in the 99.5% above overall online transactions. Offline market is a larger market in many ways compared to what online does today. And while online is increasing at a rate which is much faster. So we expect that there's going to be a crossover. What Vishwas mentioned that 72% of the transaction even today are cash-based. And so if you are able to offer a solution, which offers all these different elements, I think it makes it very worthwhile. So this year, our target is that in a single-digit percentage transactions will be through CCAvenue TapPay. And next year, in the year after, we expect that about 30% of the transactions will be definitely through the offline channels.
30%?
Yes.
That's huge. And that is like…
And the transactions that we process will be through offline channels through CCAvenue. Because, see what TapPay does is it somewhat mask the line between offline and online. Fundamentally, it's a point-of-sale machine, which is more like it's -- I think of it like a fast point-of-sale solution, but it's on the phone. With all the security and how the feature sets, which will build out, which is approved by all card networks, through authentications and many other ways. So yes, we expect that -- I'm not sure whether you followed, but there's an event, which is online. We don't want to perhaps bit to my Investor Relations would reach to you. But that's where we have a unique solution, and it's patent pending, we filed for a patent, whereby you can -- a consumer can make a payment while they're on a website, shopping for an airline ticket, they can cast their own phone and make a payment, which is the first in the world, nobody has done that. If you are in an online website and if you are shopping for a ticket, you will be able to tap your own phone and make the payment, which will go through online. So that is something that we have just recently patented and we would want to -- so that's where I said that that offline will become a significant portion, it will [indiscernible] that is a better way to place.
Yes. Absolutely agree. And I mean see, this is -- no, I'm just making a follow-on comment, nothing else, and I'm done with this comment. When we see in many, many places where there are multiple servers, but they have 1 or 2 machines like restaurants, like all these petrol pumps. I mean these are natural targets for TapPay, right? Each of these people have a mobile phone, all of the competent, all the servers in the restaurant, and all of them can be enabled and they can move away from cost machines to this thing. So I mean, I can understand logically also this is an extraordinary opportunity and all the best for it.
Thank you.
Ladies and gentlemen, due to time constraint, that was the last question. I now hand the conference over to the management for the closing comments.
Thank you all for your participation, and we look forward to getting comments and suggestions from you every now and then we'll keep you updated on the progress. Thanks so much.
Thank you. Ladies and gentlemen, on behalf of Go India Advisors, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.