Facebook co-founder’s B Capital leads $10M investment in Indian payment startup Mswipe

B Capital, the investment firm from Facebook co-founder Eduardo Saverin that is backed by BCG, has stepped into India after it backed smart point-of-sale company Mswipe in its first deal in the country.

The U.S.-Asia fund is investing $10 million into Mumbai-based Mswipe alongside DSG Consumer Partners in what is an extension to a Series D round announced this summer. Originally pegged at $31 million, the addition extends the round to more than $40 million.

Mswipe was founded in 2011 and it has now raised a total of $65 million from investors.

The company’s mission is to widen the availability of financial services in India, but rather than going after newer tech like consumer wallets, Mswipe has stayed focused on the humble point-of-sale device.

The company makes POS devices that are more lightweight and affordable than traditional service providers, while it cuts out middlemen to offer its own customer services to reduce complication and cost. Mswipe founder and CEO Manish Patel told TechCrunch that his firm focuses on providing a reliable service that avoids the traditional (and somewhat unreliable) telephony network that others use. It initially targeted under-represented SMEs and mid-sized retailers but today it also caters to larger customers.

“We are so efficient that [our POS] works even on a basic 2G connection,” he explained. “Merchants prefer stable to fast, you need reliability.”

Patel said that Mswipe currently has POS devices with over 290,000 merchants across India, with 15,000-18,000 new signups each month. Those figures, he added, make it the fifth largest in the industry but he believes it can take fourth place over the next six months.

While the likes of Paytm, MobiKwik and Ezetap have accrued tens of millions of customers for mobile wallet solutions, Singh believes that India’s 900 million credit cards are a more viable option for financial inclusion, but they are hugely underserved by a lack of acceptance at retailers.

“The number of POS terminals [in India] was pathetically low when we started out [at just 800,000] — it didn’t take a genius to figure out something was wrong and that it was ripe for disruption,” he explained.

Today, he argues that with just 2.5 million terminals across the country, more progress is needed.

“Even Turkey [with a population of 80 million] has more terminals than India,” Singh added. “Terminals are still where they were 15 years ago and it’s about time someone did something about them.”

While he appreciates the progress that the likes of Paytm have made, Singh is adamant that the absolute numbers aren’t moving the needle across India yet.

“We’ve watched with very curious interest with all the froth on mobile payments. In India, the primary store of money will always be a bank account. You have multiple means of accessing your account, but once money is in the digital wallet, if it has to move back into your bank account it has to ride [financial] rails and it will cost you,” he explained, adding that, for now firms like Paytm have covered that cost.

He also explained that, in his mind, fewer than 200 million of India’s smartphone users are “truly online” 24/7 which makes relying on an app for payments unrealistic for the majority of the country.

That said, Mswipe POS terminals do accept payment from digital wallets like Google Tez, Samsung Pay and UPI, the Indian government backed payment protocol. Beyond payments, Mswipe also offers inventory management and other basic business services in addition to SME financing options.

The deal sees Saverin join the Mswipe board.

B Capital has a total fund size of around $180 million and offices in California and Singapore. Its deal to date have included logistics startup Ninjavan in Southeast Asia, Singapore’s CXA insurance firm, healthtech companies SilverCloud Health, Evidation Health, and Bright.md.

Note: Article updated to correct that Mswipe is based in Mumbai not Bangalore