Rau met Shailendra Singh, the managing director of Peak XV Partners (formerly Sequoia), for coffee. The subsequent conversation left Rau surprised—it was Singh who pitched an idea.
“I have significant ownership in a company called Pine Labs. If you want something that’s truly yours, I’ll hand you the keys. You can run it as you see fit,” Singh told Rau.
Sequoia, at one point, held around 50% in Pine Labs. Back then, the company was mostly known for selling point of sale (PoS) terminals and PoS-based payment solutions that allowed merchants to accept credit and debit card payments.
Rau deliberated on the idea for a while. Building a company from scratch would take four to five years. But Pine Labs, which started in 1998, was already a known platform with the potential to grow faster. With a valuation of $1.6 billion, it was already a unicorn or a company valued at over a billion dollars.
“Having sold my first startup, my motivation was not money. My motivation was to build the most respectable fintech company from India,” Rau told Mint, sitting in his office in Bengaluru’s Koramangala neighbourhood.
In 2013, he co-founded Citrus Pay, another payments company, and sold it to Naspers-owned PayU in a cash deal worth $130 million in 2016.
Rau decided to take the keys from Singh and joined Pine Labs as CEO in March 2020.
Four years after that, Pine Labs is valued at about $5 billion and is India’s fourth most valued fintech company, behind PhonePe ($12 bn), Razorpay ($7.5 bn) and Cred ($6.4 bn). Reportedly, it is considering raising about $1 billion in an initial public offering (IPO). According to a Bloomberg report, Pine Labs may seek a valuation of more than $6 billion in the IPO, the largest by an Indian fintech firm since One97 Communications Ltd, the operator of Paytm, raised approximately $2.5 billion in 2021.
What exactly did Rau do to grow Pine Labs into the fintech giant it is today? In short, a lot has changed since he took over. While Pine Labs has its hits, there are significant misses, too.
Missing links
Unlike Vijay Shekhar Sharma, Paytm’s founder, or Ashneer Grover, the former managing director of BharatPe, Rau can come across as less charismatic and more measured when he speaks in public.
He graduated from a little-known college, Shah & Anchor Kutchhi Engineering College, in Chembur, Mumbai. And his career didn’t begin with a flourish either—he started by selling automated teller machines (ATMs).
Rau interned at a newly opened branch of Siemens called Siemens Nixdorf. “They were into passbook printers and ATMs. As luck would have it, I ended up making the first sale for the company ever in India, and they retained me after the end of my three-month internship,” he recollected.
Rau is a fintech bully. It’s a good thing because you are competing with a lot of bullies. He is hardworking and ruthless.
— An executive
Selling ATMs, nonetheless, set up his career in financial services, and today, he is counted among the ‘veterans’ of India’s fintech industry. According to former employees Mint spoke with, Rau is a hands-on leader with a sales mindset, a legacy he inherited from Siemens. One former executive described him as a “fintech bully”.
“It’s a good thing because you are competing with a lot of bullies. He is hardworking and ruthless,” the executive, who didn’t want to be identified, said.
It didn’t take long for the fintech bully to identify the gaps in Pine Labs’ business, once he took over. Pine Labs started 25 years ago, founded by Lokvir Kapoor, Rajul Garg and Tarun Upaday. While Kapoor is the executive chairman at Pine Labs, the other two founders have moved on.
The company was an early player in the digital payment solutions space and focused on processing debit and credit card transactions through its PoS machines. In fact, offline payments continued to be the company’s strength when Rau joined. But that strength was also its biggest weakness.
“As soon as I took over, in March 2020, the pandemic hit. Stores in India shut down for a long period of time, and my fear turned out to be correct,” Rau said. “I realized that I needed to change the business; Pine Labs needed multiple lines of businesses.”
The online stack
As Rau was coming on board, Pine Labs acquired a gift card technology startup called Qwikcilver for $110 million. To begin with, the new CEO decided to focus on this business. Qwikcilver is today one of the largest subsidiaries of the company, generating 20% of Pine Labs’ overall revenue—Pine Labs has doubled its revenue since 2020-21 to ₹1,588 crore in 2022-23.
The more pressing need was to build an online business. Rau took two strategic calls.
“I brought in a team from PayPal, and engineers from that company started to build our product stack for online payment gateways. At the same time, we also acquired Setu,” Rau said.
PayPal is an American payments company that pioneered the digital wallet. Setu is a company that helps businesses quickly launch fintech products.
Pine Labs launched its online business with payment gateways in 2021. And it recently launched UPISetu, a UPI-focused platform for businesses and developers.
Online contributes to less than 5% of the company’s overall business today, but Rau thinks he can compete with rivals such as Razorpay, Paytm and PhonePe going ahead. “In the online payment space, now that our tech stack is ready, we want to go ahead and connect aggressively with e-commerce companies, financial services companies, government institutions and small education institutions,” he said.
The online side of the business is growing at 100% year-on-year but the offline part is growing much slower, at about 20% a year, he added.
In terms of sheer market size, playing in both offline and online makes sense. The India PoS terminals market is estimated at $33.26 billion in 2024, according to Mordor Intelligence. As for online, the country’s payment gateway market was valued at $1.6 billion in 2024 and is expected to reach $3.2 billion by 2033. UPI payments, online and offline, have been growing fast, recording about 131 billion transactions with a total value of ₹200 trillion in 2023-24, the Indian government recently stated.
Taking it to the world
One clear priority for Rau is exports—take Pine Labs products to international markets. Ever since he joined in 2020, he worked on accelerating this strategy.
Pine Labs has teams in California, Singapore and Australia. The company has just hired an executive to head its European markets. “200 of our employees are based outside India and are building our businesses in those markets,” Rau noted.
The company’s international business has been growing at about 50% a year, and Rau projects it will increase, going forward, on the back of its US and European forays. While Europe is just starting off, the US business began about six months ago. In the next five years, 40% of Pine Labs’ revenues could be generated from international markets as compared to the current 13%, Rau projected.
“I think what we have built in India is totally ready for the most mature markets around the world,” he said.
Pine Labs is, therefore, selling in international markets the same solutions that have worked in India—PoS systems, payment processing services, and merchant-centric solutions such as loyalty programmes and gift cards.
In PoS, the company earns a commission on each transaction and by selling PoS terminals to merchants. It charges merchants a fee for each transaction processed through its online payment gateway services. And for its software as a service (SaaS) offerings, such as customer loyalty programmes, it charges merchants a subscription fee.
Slow but steady
Pine Labs has the first mover’s advantage in PoS terminals and the offline pie. Nonetheless, its fortress is getting raided—new entrants are threatening to chip away at the company’s market share.
“Pine Labs has great relationships with banks, and they can compete in the offline space, but they should have never let Paytm and others scale,” a former Pine Labs executive who didn’t want to be identified, said.
What did the executive mean?
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Paytm entered the PoS space in 2020. While Pine Labs continues to be a leader in the enterprise and mid-market segment, Paytm has rapidly expanded in offline payments targeting small merchants, an area Pine Labs did not focus on.
Emerging competition in the offline business also includes Razorpay and PhonePe.
“Pine Labs, a major player in PoS transactions, ventured into payment gateway and online payments while Razorpay, a leading online payments player, acquired Ezetap to enter the PoS business,” Abhilasha Jaju, director of BFSI vertical at 1Lattice, a market research and consulting company, said. PhonePe launched its PoS devices last year.
The former executive quoted above said that Pine Labs has been slower when it came to innovation, citing the example of UPI-based payments, where it took a long time to make its presence felt. On the other hand, Paytm’s early adoption of UPI and the widespread use of its wallet made it a leader in online transactions. Pine Labs has also ignored the extended UPI ecosystem—stuff such as soundbox—the executive pointed out. A soundbox is a device that provides instant audio confirmation of payment transactions for merchants. Paytm first introduced it in 2019.
A former executive said that Pine Labs has been slow when it came to innovation. He cited the example of UPI-based payments, where the company took a long time to make its presence felt.
Pine Labs launched UPI on PoS machines in 2020. Rau said the unit economics of soundboxes don’t make sense. Nonetheless, he admitted that five years back, executives at Pine Labs believed that the company would play solely in the non-UPI space.
“Five years back, I could take a position and say, let’s see where UPI reaches. Now, it has become central to my strategy, as almost 40% of my transactions on PoS are UPI transactions. UPI is right at the centre of the future, and I cannot look away from it,” he said.
Pine Labs also has some catching up to do when it comes to the consumer segment. The company did make an acquisition on the consumer side—Fave—but the purchase hasn’t worked out, according to two former executives at the company.
Fave, a Kuala Lumpur-based company, integrates digital payment solutions allowing users to pay via mobile wallets, credit cards, or bank transfers. Pine Labs had acquired the company in an all-cash deal worth $45 million in 2021.
We have never been a brand that consumers connect to. That’s a natural evolution we have to make as a company.
— Amrish Rau
Rau said that Fave’s business requires heavy cash burn to grow, typical of consumer businesses. The markets have changed since the acquisition was made, and the company prefers to conserve that cash. “We’ve kept that business at a steady state, not really being able to put significant cash into it,” Rau said.
But the CEO does realize the importance of a consumer-facing business, the missing part in what is otherwise a well diversified portfolio now. That part could be the company’s next growth story as it heads towards the IPO. “We never had a consumer app. We have never been a brand that consumers connect to. That’s a natural evolution we have to make as a company,” he agreed.
While some former employees said Pine Labs is slow in innovating, market analysts view it differently—the conservative approach may work better when the company goes public.
“Compared to Paytm, Pine Labs has diversified streams of revenue and a robust business model. This provides a stable revenue model and hence is less risky than Paytm’s consumer-centric model which relies heavily on digital wallets and UPI adoption,” said Manoj Dalmia, CEO at Proficient Equities, a trading services company.
“Paytm’s IPO had a significant price drop because of high expectations and, profitability concerns. Learning from Paytm, Pine Labs will approach valuations in a realistic fashion and this will reduce the post-IPO volatility risk,” he added.
Rau can take heart from that statement.