Hyperlocal startups like Grofers, Pepper-Tap, TinyOwl reduce use of petty cash via prepaid cards

GURGAON | BENGALURU: The next time you order grocery from an online retailer, the delivery boy may swipe a debit card at the nearest kirana store or petrol station. In order to control leakages and reduce cash handling, grocery and hyperlocal startups in India have started handing out debit cards and virtual wallets to delivery boys.

Grocery delivery and hyperlocal startups such as Grofers, Pepper-Tap, TinyOwl, RoadRunnr and Parcelled have started using cards from a Bengaluru-based startup, Happay, which offers prepaid expense management solutions.

"Each delivery boy at our company delivers about 20 orders per day with an average value of about Rs750-800. We want to reduce cash handling by giving all of them a prepaid debit card," said Ashneer Grover, CFO at Grofers India. Sequoia-backed Grofers which has over 3,000 delivery boys across India, has started giving Visa-based cards from Happay, preloaded with cash to station managers at its 150 hubs across India.


The managers withdraw cash from ATMs and hand it over to delivery boys. "We eventually want to move to a scenario when cash of the exact amount gets loaded automatically on to a delivery boy's debit card as soon as a grocery order is received," said Grover.

Incentives will also get auto loaded on such cards in case an executive makes a timely delivery.

While ICICI Bank, Axis Bank, SBI and ItzCash also offer pre-paid cards, there was a lack of tech solution which provided an instant solution to deposit, withdraw cash or provide expense analytics for an employer.

Started in 2012 by IIT Kharagpur graduates Varun Rathi and Anshul Rai, Happay has raised about $500,000 from Prime Venture Partners. "I have even given about 15 debit cards to my father who uses them to manage his cloth trading business in Kolkata," said Rathi. Happay has tied up with Ratnakar Bank, which takes an identification document from an employer to process its prepaid cards.

The difference between Happay and bank's solutions is the app and web-based solutions by which an employer can limit a card sensing overspending by an employee.

"In a country like India, a lot of orders are usually cash on delivery and cash-management is a tough task. To solve this, we are going to tie-up with Novopay, which has a merchant network across the country and kirana stores can effectively act as cash-deposit centres," said Rajesh Rebala, General manager, Operations at Swiggy, which has over 2,500 delivery boys in India. Bengaluru-based Novopay is backed by Vinod Khosla of Khosla Ventures, father of the Pentium chip.

PepperTap has also started using debit cards to manage daily operational expenses.

“We have improved our reimbursement process. We also have a digital repository and a greater control on all expenses,” said Kriti Srivastava, Manager – Marketing at SAIF Partners and Snapdeal backed Peppertap. “We also give Happay cards to our expansion team who go to new cities to launch operations,” she said.

Logistics company Parcelled has also started using prepaid debit cards to reduce petty cash. “We are using over a 100 cards right now at our hubs. Instead of maintaining petty cash in the hub, one can use these cards like like paying Rs 80 to a vendor who delivers water at the hub,” said Xitij Kothi, Founder, Parcelled, which is backed by logistics firm Delhivery.

With RBI handing out a license to wallets such as Paytm, a combination of virtual wallets and prepaid debit cards is expected soon. This Diwali, payment wallet Oxigen is expected to hand out corporate gifts via its virtual wallet to employees. “An integration of wallets and prepaid cardswill reduce the problem of cash management for ecommerce startups,” said Grover of Grofers.