India has more than 120 Mn online shoppers (as of 2018). Today, with an added layer of multiple payment options, with the advent of fintech players, the checkouts on online platforms are faster than ever. However, a lot of engineering goes into the process from the time a customer checks out to the actual transfer of money to the merchants or sellers. And the time lag in this reconciliation in the accounting ledgers is a big pain point for businesses, since it results in lack of clarity about the revenue earned and the revenue pending.
Thanks to the rise of fintech business models and the application of artificial intelligence, machine learning and data analytics, tech startups are able to intervene and help businesses bring in efficient reconciliation methods. Bengaluru-based fintech SaaS startup Recko is looking the disrupt this space.
“The finance department on the merchants’ end is continuously dealing with this complexity of matching the right amount to right order, returns/ replacements and a lot of orders also move between months. All they have excels, spreadsheets and traditional ETL (extract, transform, load) tools which are cumbersome and error-prone. This is where we come into the picture,” said Saurya Prakash Sinha, Recko cofounder and CEO.
Built around the purview of offering financial security to the companies with high volumes of transactions such as ecommerce platforms, insurance providers and banks, Recko aims to automate the entire reconciliation process. Being an independent third-party transaction reconciliation layer, it ensures that each transaction is accounted for and all settlements can be done in a timely manner.
“This also helps when customers have to be refunded as we use many different ways to make a single payment these days (including wallets, vouchers, gift cards, net banking and CC),” added Prashant Borde, cofounder and CTO at Recko.
As claimed by the founders, Recko reconciled transactions worth $2 Bn in the first 12 months of operations. Their clientele includes companies such as Grofers, Dunzo, FreshMenu and Meesho. It also has several monetisation models in place based on volume and per transaction charges depending upon the requirements of the client. After raising seed funding of $1 Mn recently, the company is now looking to expand its team, scale-up operations and venture into unexplored sectors for new business.
Recko: Putting AI At Play
Being a new-age startup, Recko is primarily using technology to solve business problems in the area of payment reconciliation, with AI models playing a major role.
To understand this in a clear manner, let’s see the major gaps the company is trying to address:
- High volumes of unstructured data
- High manpower utilisation
- Lack of transparency and traceability of transactions
- Increased costs and time consumption in reconciliation
To solve these, AI comes into play at multiple levels. First, algorithms help in getting meaningful information and analysis from for than 80% of data, which is kind of crucial in financial domain, since, without data, fintech models would be running on low fuel.
Further, most companies often set aside a certain revenue error percentage to account for reconciliation write-offs because they can’t trace an error back to the source. To address this gap, Recko automates the reconciliation process, allowing the transaction data to be traced throughout its entire lifecycle.
It is able to do so by connecting with the payment gateways, banks and merchant order management systems through APIs and helping businesses track receivables and identify settlement discrepancies.
This helps in reducing the manpower investment by 50%-60% as claimed by Recko.
“We also create insights around data which is within or moves away from the baseline, affecting the behaviour of the regular transaction. This helps in understanding any positive or negative deviations in a timely manner, without affecting the end accounting processes,” added Sinha.
Tapping The Global Market Through India
Globally the key players in payment reconciliation market are Autorek, Oracle Corporation, Treasury, Datalog, Cashbook, Adra Software (Trintech), ReconArt, Inc., Fiserv, Inc., among others. Many are operational in India as well. However, like in many other sectors, a one-size-fits-all solution is simply not possible in the context of fintech in a diverse market such as India. Recko seems to be working on the same principle by targetting internet-based businesses.
Being focussed on solving payment reconciliation mainly for internet companies, India has been a good starting point for Recko, since internet companies are just starting to understand the challenges in reconciliation and are looking for ways to tackle it. “But we intend to build a global company and want to become the default solution in the market for transaction reconciliation. After India, the US market is what we have set our eyes on,” said Sinha.
However, for now, Recko is totally focussed on the Indian market. Sinha also emphasised on the fact that India offers volume and wherever there are payments, there lies data.
“Creating efficiencies at the reconciliation level will automatically create an improved payment infrastructure of the country. For us, things are much better now and team-wise also we are doing good. The idea is how fast we can walk, right.”