Merchant commerce platform Pine Labs on Thursday said that it is acquiring Bengaluru-based Setu, an API (application programming interface) infrastructure provider, for around $70-$75 million. This is the third acquisition announced by Pine Labs this year, the company said in a statement.
As an agreement under the terms of the acquisition, Pine Labs will acqui-hire around 100 employees of Setu on a full-time basis.
Setu was founded in 2018 by Sahil Kini and Nikhil Kumar. Its APIs and software bundles are used by hundreds of businesses to offer better onboarding, payments, deposits, lending and data empowerment for their end customers.
Setu works with account aggregator partners that are classified as non-banking financial companies (NBFCs) operating under the NBFC-AA licence from the Reserve Bank of India. They enable the consolidation of all financial data of users at a single location and allow users to access services quickly. These account aggregators operate under the NITI Aayog’s consent-based data-sharing framework, called the Data Empowerment and Protection Architecture (DEPA).
Setu has seen strong demand for its APIs that are being used across diverse industry verticals today, including startups, retail enterprises, banks, insurance and lending companies. Setu’s existing and emerging use cases cut across multiple digital ecosystems, from Aadhaar eSign to BBPS bill payment, payment collection integration via WhatsApp, FASTag payment collection and more.
“Setu will make an incredible addition to the Pine Labs platform for a few reasons. Embedded financial services and open banking are going to be the way forward and the embedded finance market value is expected to exceed $138 billion by 2026, as APIs are intensifying the competitive fintech landscape. Setu helps their customers, merchants, and brands build beautiful experiences, so consumers can engage with payments and financial services on their terms,” said B Amrish Rau, CEO, Pine Labs, in a statement.
“We believe democratisation of technology will yield better results when it comes to making financial products accessible to all and therefore have our APIs open for the developer community. Pine Labs’ network of merchants and issuers coupled with our API integration prowess will help achieve great results in personal finance management, monitoring loans to predict default rates, credit underwriting, and several other areas,” added Sahil Kini, co-founder and CEO at Setu.
PineLabs, which is backed by prominent investors such as Sequoia Capital, Mastercard and others, offers a full-stack merchant commerce platform operating across India and Southeast Asia. Typically, Pine Labs’ target segments are large merchants, compared with SMEs for its peers. Its business model consists of fixed rental for POS machines and bundling value-added services (analytics, billing and reconciliation, EMI financing, loyalty programmes, etc).