How cool would it be to get a loan for huge rent deposits? A fintech startup’s gamble into rentals

Paymatrix provides credit to tenants to make rental payments and lets landlord manage multiple payments on its platform
How cool would it be to get a loan for huge rent deposits? A fintech startup’s gamble into rentals
How cool would it be to get a loan for huge rent deposits? A fintech startup’s gamble into rentals

When Mukesh Chandra Anchuri moved to Mumbai to work with Indian Oil, he had to find a place to rent. And like any one of us would have experienced while renting a place, Anchuri had to pay a huge sum, of around Rs. 3 lakh, as security deposit – something which was difficult to afford or even arrange within a few days. This made Anchuri wonder why one cannot leverage their credit card to pay the security deposit. There was no platform either where one could use their credit card to make rental payments.

He soon realized there was a bigger issue here. Most often, in a bid to evade taxes, landlords ask for payments to be made in cash – be it rent or the security deposit. And almost always, security deposits are a huge amount of money. With the idea of streamlining this process of rental transactions, Anchuri, along with his Indian Oil colleague Anusha Kurupathi Parambil and his classmate Muralidhar Naik from Birla Institute of Technology, Mesra founded Paymatrix in November 2015.

Before actually starting operations, the team researched on around 2800 people to understand the pain points. What came out of the research was that tenants faced an issue of lack of access to credit for big-ticket rental payments. And for landlords, the pain points faced was the lack of a platform to be able to streamline payments received from tenants. Also, most tenants and landlords wanted a proper trail of transactions made.

Taking all of this into account, Anchuri and his team built Paymatrix, a platform that lets tenants pay rent and security deposit with access to credit and lets landlords streamline payments.

How does Paymatrix work?

If you are a tenant, once you register on Paymatrix, you undergo an identity check through KYC (Know Your Customer) process and can start paying rent through Paymatrix electronically. And not just through netbanking and debit cards, tenants can also use their credit cards to make payments. In case the tenant does not have a credit card, Paymatrix offers short term personal loans with an interest rate of around 11-16%. For this, the company has partnered with 4-5 banks and a few NBFCs.

Once the payment is made on the platform, the amount is credited into their account by Paymatrix.

And if you are a landlord, Paymatrix offers a dashboard to manage payments from multiple tenants, set payment reminder alerts and automate payments.

This generates an electronic trail of all transactions made between the landlord and tenants.

Additionally, Paymatrix also offers services of screening tenants and making rental agreements. “We have templates of the agreement online where the landlord has to fill in the required details and that of tenants. They just have to pay the stamp duty online and we get the document franked, authenticated and deliver it to their doorstep,” Anchuri says.

And in states like Karnataka, the startup is working to leverage the e-payment of stamp duty.

Paymatrix team: Co-founders Mukesh Chandra Anchuri, Anusha Kurupathi Parambil and Muralidhar Naik 

Every landlord on its platform can also screen potential tenants. Paymatrix offers a profiling service where a check is run on the tenant in terms of an identity, credit and psychometric analysis. “We charge as low as Rs. 150 per tenant and give a composite overview based on 182 parameters so the landlord knows who they are renting the house to,” co-founder Parambil says.

The company currently has around 4500 tenants and landlords on its platform and has its services in over 10 cities.

For every payment made on credit on Paymatrix, the company earns a convenience fee of 1.5-2.5%. It also earns through the rental agreement service and a subscription fee charged to landlords.

Paymatrix also has B2B model where it provides its services to commercial and co-working spaces. It manages rental payments for its incubator T-hub and manages rental collections for several other property management and real estate players in Hyderabad.

A big boost to Paymatrix has been the government’s move to dis-incentivize cash payments and the recent crackdown on fake rental receipts. Just earlier this month, an Income Tax Appellate Tribunal held that tax exemptions on house rent allowances cannot be given against fake rent receipts. According to a report on the Time of India, an assessing officer can now demand proof — such as leave and license agreement, letter to the housing co-operative society informing about the tenancy, electricity bill, water bill etc. — in allowing a lower taxable income as computed by a salaried employee.

“We are trying to bring all transactions that were once made by cash to an online platform thereby ensuring landlords are accountable for this income. We saw a considerable jump in our business after demonetization. More than tenants, landlords began taking to our platform as tenants were not able to make cash payments,” Naik, CTO says.

But Anchuri and his team recognizes the challenges that are still faced with landlords not wanting to disclose rental income. “Our target audience is very clear when it comes to landlords. We only target those in metro cities, those who hold multiple properties, are well-educated and can access the internet. They should be willing to optimize their tax liability,” Anchuri says.

In fact, Paymatrix also offers integrated tax filing services for rental income received by landlords.

Paymatrix has so far invested around Rs 50 lakhs into the business, which was bootstrapped. It also raised $40,000 funding and is now looking to raise an additional $300,000 for geographical expansion and to hasten up product development. It has also won awards like HYSEA 2017 for early stage consumer startups.

Road to scale

Going forward, Paymatrix wants to become a complete rental analytics player. Using the data points, it wants to be able to even create innovative financial products. For example, Paymatrix is working on a rental insurance scheme for landlords. This composite insurance protects landlords from potential default by a tenant or a mishap in the house. This also created opportunities for its partner banks and NBFCs.

Paymatrix is also looking at building a physical presence in the geographies it operates in, to be able to provide better services, especially to commercial clients.

Operating in a $4-billion market, Paymatrix sees an opportunity to introduce a lot more services. The 14-member team is currently seeing a 27% month-on-month growth and is recovering 70-80% of its operational costs. And with even government policies like the forthcoming Model Tenancy Act and the Benami Property Act working it its favour, Paymatrix hopes to break even within the next year. 

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