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Seek, an automation platform for data analytics tasks, today announced that it raised $7.5 million across pre-seed and seed rounds that had participation from Conviction Partners, Battery Ventures and former Snowflake CEO Bob Muglia. CEO Sarah Nagy says that the funding will be put toward growing Seek’s team into the next year, particularly on the engineering and data science side of the company.

“I founded Seek last year, after working as a quant and data scientist for more than a decade,” Nagy told TechCrunch in an email interview. “I wanted to solve a pain point that I experienced over and over again throughout my career. I’ve often found myself feeling like a ‘human computer’ to translate between my less technical colleagues and the data they needed. For example, sales reps would send me messages asking me to pull some basic, but custom, statistics for our customers. It would frustrate me because it would take time away from the research that I wanted to be doing, that added long-term value to the business. From my colleagues’ perspective, it was also really annoying to wait a long time for me to manually get them the data.”

Seek’s core product is a natural language interface for data that can plug into existing data and communication tools, including cloud data warehouses (i.e., analytics databases stored in the public cloud), within a business. Users can ask questions of Seek they’d normally ask a data team across apps like Slack, Microsoft Teams and email.

Powering Seek’s search and cataloging features is a family of AI language models trained on data including ebooks, online articles and websites as well as proprietary data. The platform stores both questions and answers from users inside a knowledge base, so they can be found quickly. In this way, Seek becomes more “intelligent” at working with a company’s data the more it’s used, according to Nagy.

“What Seek is hoping to do for data teams is automate the mundane, manual work that must be done by hand as it has historically been too complicated to automate,” Nagy said. “As a former data scientist who used to do this kind of work, I know that my quality of life would have improved if these tasks had been automated, and the work that I could have done with the time saved would have produced long-term, fundamental differences in my companies’ strategy and product.”

There’s been lots in the news lately about AI that confidently presents answers that later turn out to be biased or factually untrue. When asked what Seek’s doing about it with respect to its own AI, Nagy said the company has a patent pending for a “control flow” to limit inaccuracies presented to users.

“I predict that, as the generative AI hype cycle plays out, more conversations will be had about the flaws in the quality of AI-generated content, and how users can protect themselves from any inaccuracies,” he added. “My hope is that we will become a thought leader when it comes to educating customers on how to maximize the benefits of generative AI while having the right process in place to handle its limitations.”

Seek falls into the category of enterprise search engines known as “cognitive search.” Rivals include Amazon Kendra and Microsoft SharePoint Syntex, which draw on knowledge bases to cobble together answers to company-specific questions. Startups like Hebbia, Kagi, Andi and You.com also leverage AI models to return specific content in response to queries as opposed to straightforward lists of results.

Despite the competition, nine-employee Seek has managed to sign on “household-name” customers, Nagy claims. He wouldn’t reveal revenue or name names, save saying that Seek’s roughly dozen clients — which range from “startups to the Fortune 100” — come from industries including business-to-business software as a service, fintech, direct-to-consumer and consumer packaged goods.

“Generative AI seems to be the exception to the slowdown in tech right now, and Seek has benefited from the explosion in popularity of tools like ChatGPT,” Muglia said. “[Moreover,] Seek was founded post-pandemic, and our users are knowledge workers who can work from home. As companies’ digital transformation initiatives accelerated during the pandemic, including more organizations adopting ambitious data initiatives, my hypothesis for building Seek strengthened.”

In the coming months, Nagy says that Seek’s focus will be onbuilding app integrations, making the onboarding process more automated and “continuing to improve our customers’ experience with our platform.”

Seek lands $7.5M investment for AI that answers domain-specific questions by Kyle Wiggers originally published on TechCrunch

There’s lots of people out there with their finger on the pulse of the business, who have ideas on how to build useful apps, but lack basic coding skills and the ability to put their ideas to work. What if those people could describe an app they wanted to build, then add connectors to common data sources, or even build a complex workflow – all without writing a single line of code?

That’s what Blaze is attempting to do, an early stage startup from two women founders, who have already built and sold one company. Today the company announced the product is generally available for the first time, and also announced a $3.5 million pre-seed round.

“The problem we solve is enabling any team to build very custom, and also complex, highly secure applications and tools without needing code. And one of the really exciting pieces for us is that it’s also AI-powered,” co-founder and CEO Nanxi Liu told TechCrunch.

The AI-powered bits are natural language processing delivered via the OpenAI API, which enables users to simply tell Blaze what they want to do by typing a description, which the service then turns into code. Company co-founder and CTO Tina Denuit-Wojcik explained that it requires a great deal of pre- and post-processing on Blaze’s part to translate the typed commands into operational code, but the API helps drive it.

“The user can type just a few sentences, but we have to make it aware of all the context of the data, and other things that are on the page, how to connect and what actions are possible,” Denuit-Wojcik said.

As they build an application, users can drag and drop connectors such as ecommerce tools like Shopify or payments like Stripe. Other pre-built integrations include Airtable, DocuSign, Freshdesk, Google Sheets, Salesforce and others. The company has even built its own database called Blaze Tables.

Among the kinds of applications they are helping people build include document portals, customer success dashboards, inventory management systems and contract workflows.

The two founders have been working together for over a decade, having founded a digital signage company called Enplug in 2012, which raised $3.7 million (per Crunchbase) before being acquired by Spectrio in early 2021. Lui says she and Denuit-Wojcik were inspired to launch another startup, and began focusing on no-code solutions, based on their experience at their previous company where they recognized a need for such a tool.

The new company has a dozen employees to this point. As two immigrant women founding a company, they are acutely aware of the need to build a diverse and inclusive team. Plus, Liu says that the product itself will open up the sector to more people who are traditionally left out of tech jobs because they lack coding skills.

“I think it’s just as how we operate. We are very thoughtful about this. And we also are very thoughtful in terms of how this product can help more women who maybe don’t have the technical skill set, and now they can go build technical products,” Liu said.

Today’s $3.5 million investment closed at the end of last year. Flybridge Capital and MaC Venture Capital led the round with participation from a slew of industry angels.

Blaze makes coding more accessible with AI-driven, no code app builder by Ron Miller originally published on TechCrunch

Artificial intelligence startups, and (thanks to GPT and Open AI) specifically those helping humans communicate with each other, are commanding a lot of interest from investors, and today the latest of these is announcing a big round of funding. DeepL, a startup that provides instant translation-as-a-service both to businesses and to individuals — competing with Google, Bing and other online tools — has confirmed a fundraise at a €1 billion valuation (just over $1 billion at today’s rates).

Cologne, Germany-based DeepL is not disclosing the full amount that it’s raised — it doesn’t want to focus on this aspect, CEO and founder Jaroslaw Kutylowski said in an interview — but as we were working on this story we heard a range of figures. At one end, an investor that was pitched on the funding told TechCrunch that DeepL was aiming to raise $125 million. At the other end, a report with a rumor about the funding from back in November said the amount was around $100 million. The funding closed earlier this month.

The startup is also not confirming or disclosing other financials, but the investor source said that the $1 billion valuation was based on a 20x multiple of DeepL’s annual run rate, which was at $50 million at the end of last year. In the current fundraising climate, this is a pretty bullish multiple, but it speaks to the company’s growth, which the investor noted is currently at 100%, and the fact that DeepL’s breaking even and close to being profitable.

What is more definitive is the list of investors: DeepL said that new backer IVP was leading the round, with Bessemer Venture Partners, Atomico, and WiL also participating. Previous backers in the company also include Benchmark and btov.

DeepL primarily provides translation as a service to businesses rather than individuals, and its forte up to now has been working primarily with smaller and medium organizations.

Some of those have the potential for a lot of scale: DeepL powers translation on Mastodon, for example. This is a route that the startup is planning to continue, but the plan is to use the funding to expand that scope both to cover larger enterprises, and to build out new services, such as a Grammarly-style monolingual (same-language) writing improver that is in closed beta now and will be launching soon.

It will also continue to invest in R&D. As we have previously noted, the company’s model was originally trained on a database of over a billion translations and queries, plus a method of double-checking translations by searching for similar snippets on the web. This is then housed on a supercomputer that both provides translations but continues to learn and improve as well.

Right now, Kutylowski says that around 60-70% of the company’s staff are engineers, and they are focused on building more tech on a range of timescales from short-term with commercial focus, to medium and longer-term “moonshots” and breakthroughs in language modeling for its own sake. Despite the pressure on deep learning these days — investors want returns and commercial end points — the latter of these, the moonshots, remain a priority for the company — something DeepL has been able to retain because it’s been growing its core translation services (sold on a “pro” tier and also offered in more limited formats as a “free” tier).

DeepL is indeed in a fortunate position. A lot of startups have been struggling to raise rounds, and those that have say that there’s been a lot of pressure on valuations as a result of that, but Kutylowski said that the rising tide for AI-based language services has helped DeepL on this front.

“What I liked about 2022 was the rise of AI in everyone’s perception,” he said, adding that AI has “more or less become like a typical tool” rather than a novelty. “From our perspective that’s great, allowing us to make an entry into more markets and making usage of our tools more commonplace. It feels like we’ve moved on from, ‘Do I trust AI?’”

The company has long competed with the likes of Google and Microsoft on the translation front — with the smaller upstart often comparing favorably to these Goliaths. Notably, neither of these are investors, and Kutylowski very much declined to comment on whether either of them, or any other big tech company like Amazon (itself very big on AI and with obvious use cases for strong translation tools) had ever approached it for investment, partnerships or acquisitions.

Now DeepL might potentially have another kind of competitor on the horizon in the form of OpenAI, which is spinning out a number of very high-profile AI-powered tools and changing the public conversation on how they are used, for better or worse. And which itself is reportedly in the market for a fundraise — $10 billion at a whopping $29 billion valuation led by Microsoft.

It’s not clear how and if OpenAI might build its own translation services, or whether it could team up with a third party. Kutylowski said that for now there are “no concrete plans” on how or if DeepL would ever work with Open AI, and what form that could take, but he noted that the language models that DeepL uses are similar to those OpenAI uses, and that the two companies have a number of customers in common. “They want to intermingle them together,” he said.

In the meantime, DeepL’s plan is to continue improving the services it already provides.

“We are always in race mode on the translation side of things,” Kutylowski said. “We are accustomed to big adversaries, and part of our culture is to push forward through that.”

DeepL, the AI-based language translator, raises over $100M at a $1B+ valuation by Ingrid Lunden originally published on TechCrunch

In 2011, Jordi Torras, a former Oracle VP, had a realization: companies weren’t optimizing their search technologies as well as they could be. He founded Inbenta to solve this, providing professional consulting services while simultaneously developing an internal AI toolkit for search optimization.

Over the years, Inbenta transitioned from consulting to providing conversational AI as a service — inclusive of AI-powered chatbots, knowledge management and search engine tools. This proved to be a wise move — Inbenta’s customer base has grown to over 250 brands across industries including financial services, travel, ecommerce, insurance, auto and telecom.

In a sign that investors approve, Inbenta today closed a $40 million funding round led by Tritium Partners, bringing the startup’s total raised to over $60 million. Torras says that the new cash will be put toward people, processes and platform R&D to — in his words — “position Inbenta for the anticipated explosive growth in the conversational AI space.”

“Inbenta is developing a comprehensive platform that tailors AI-driven solutions across industries and use cases for the needs of all enterprises,” Torras continued. “We’ve spent over a decade fine-tuning our proprietary and patented AI toolkit globally, in 35 languages, perpetually advancing it through billions of customer interactions.”

Inbenta offers four main products: Chatbot and Messenger, Knowledge and Search.

Chatbot and Messenger — both chatbots — can be built into existing websites and apps (e.g. WhatsApp, Facebook Messenger and Slack) to provide answers to customer questions. They retain conversation histories, automatically escalating complex queries to human agents or a ticketing system, and leverage automation to handle tasks like securing bookings, scheduling meetings and modifying orders.

Knowledge similarly supplies answers to common questions. But it’s not a chatbot — rather, it’s a sort of proactive knowledge base that can suggest contents for forms, auto-complete requests and predictively search for information. As for Search, it indexes data from different sources such as product catalogs and uses algorithms to tackle search queries, auto-correcting typos and spelling mistakes.

Like Chatbot and Messenger, Knowledge and Search can be embedded in most apps and webpages.

“From an enterprise perspective, Inbenta helps firms automate customer interactions, reduce the need and cost associated with human intervention and create an always-on channel for sales, marketing and HR,” Torras said.

One might wonder how Inbenta’s AI was developed given that some chatbot vendors have a history of training their algorithms on user data without those users’ knowledge or consent. Torras says that Inbenta’s AI — which is “curated by a team of experienced analysts and computational linguists,” he claims — is “fully anonymized,” with controls to let users delete their data from the platform if they wish.

With its portfolio, Inbenta is competing for market share on a number of fronts. In the chatbot space, the company has rivals in Quiq and Ada, which deliver customizable, AI-powered chatbot services to brands. Inbenta’s Knowledge product competes with offerings from startups like Sana, while Search squares off against Hebbia’s document indexing tool.

Torras declined to reveal Inbenta’s revenue when asked, making it tough to gauge the company’s traction. Matt Bowman, the managing partner at Tritium Partners, didn’t express concerns — not that he would, given that he’s an investor. But in an emailed statement, Bowman stressed what he sees as Inbenta’s differentiator: “multilingual capability that requires zero data training and is perpetually improving with each interaction.”

“Being highly configurable across use cases and industries, Inbenta allows customers to get an immediate return on investment while having a platform that can meet future needs as usage expands,” Bowman added.

Dallas, Texas-based Inbenta has over 160 employees currently. It plans to grow that number to more than 200 by 2024.

Inbenta, a provider of AI-powered chatbots and more, lands $40M by Kyle Wiggers originally published on TechCrunch

Samsung announced today that it’s holding the next Galaxy Unpacked event on February 1 at 10.30 AM PT/1.30 PM ET. The company will expectedly announce the S23 series of phones at its first in-person event in three years. The South Korean tech giant is hosting this event in San Fransico with a “Get ready to share the epic” tagline.

While Samsung’s press announcement just had a GIF indicating multiple camera arrays, it posted teasers on Weibo hinting towards high-megapixel sensors and improved low-light photography. The first teaser said “Wow-worthy resolution is coming soon” while the second teaser said, “Stunning night photos are coming soon”.

Samsung used a 108-megapixel sensor in S22 Ultra last year. The teasers posted by the company indicated that it could use Samsung’s own 200-megapixel sensor — which was launched last October — in S23 Ultra.

The company’s latest phone is likely to be powered by Qualcomm’s latest Snapdragon 8 Gen 2 processor. While there might be small design changes and spec bumps across the lineup, it won’t be as drastic as deciding to dedicate a slot for S-Pen in S22 Ultra and effectively retiring its Galaxy Note lineup.

Just like the last year, Samsung is letting customers reserve the new flagship device without hearing about it in exchange for $50 of Samsung Store credit. Thankfully, buyers will have a choice to not buy the device at all.

Samsung is strategically placing this event right between the Consumer Electronic Show (CES) in Las Vegas, which just concluded, and the Mobile World Congress (MWC) in Barcelona, which is scheduled for February-end.

Last week, the Korean tech company posted its results for the quarter ending December, registering record low profits in the last eight years. The company blamed the economic downturn and lower demand for smartphones as core reasons for these numbers.

Samsung is holding its next Galaxy Unpacked event on February 1, teases camera improvements by Ivan Mehta originally published on TechCrunch

Last year was when we all got the wake-up call about longevity. From major reports published on the impact of longevity by the National Academy of Medicine and McKinsey to every leading newspaper, public discourse highlighted how our global healthcare, financial and housing infrastructure was failing to serve a rapidly growing older adult population.

While this demographic data is not new, from kitchen table talk to Congress, there was a heightened call for urgency and immediate action.

At Primetime, we observed this wake-up call beyond the research and media attention. First, our deal flow of early-stage businesses in the sector increased from 70 in Q4 2021 to 120 in Q4 2022. And, we were one of only three dedicated funds investing in aging and longevity when we launched in 2020, but we are now aware of at least six more agetech funds in formation, in addition to many other existing funds keen to expand their team to cover the sector.

We are very optimistic for 2023 as we see incredible founder momentum, untapped areas to build new businesses and a window to an increasingly tech-accessible, rapidly growing consumer market.

Here are our top predictions for the longevity industry in 2023.

Health span is the new life span

The COVID-19 pandemic had a dramatic impact on older adult behavior with regard to technology usage, penetration of telemedicine and remote health monitoring, early retirement and financial insecurity. Sadly, one of the harshest implications of the pandemic was that life expectancy in the U.S. declined to 77 from 79.

This year will shift the conversation from “life span” to “health span” — how we live healthier for longer.

While telemedicine usage has declined from its peak during the pandemic, the new average is much higher than before the pandemic. We are particularly excited about companies that will accelerate the growth of 100+ primary and specialty-care telemedicine startups by managing their technology, patient payments and reimbursement, as well as provider acquisition and certification.

In an effort to prevent costly hospital visits, the past few years have seen a proliferation of startups offering supplemental health plan benefits for older adults — from transportation to home modification.

Predictions for the longevity industry in 2023 by Ram Iyer originally published on TechCrunch

Flights across the U.S. – including potentially all that fly through any domestic U.S. airspace – are delayed this morning as a major system outage means the Federal Aviation Authority (FAA) can’t send out key hazard notices to commercial pilots. The FAA says it’s working to resolve the issue, but the widespread impact continues as of early Wednesday morning.

The agency said at just before 6:30 AM ET on Wednesday that it was “working to restore its Notice to Air Mission Systems” via Twitter – an alert that came after many passengers were already reporting delays to their flights at airports across the country. The Notice to Air Missions System provides key real-time updates about potential flight hazards, as well as any airspace restrictions in place.

Flights across the country appear to be grounded as they wait for the system to come back online. United has confirmed that it has “temporarily delayed all domestic flights” pending further updates from the FAA. International flights going into the country are also impacted according to user reports via social media. The agency said via its own account that it has ordered airlines to pause all their flights domestically until 9 AM ET, as it works “to validate the integrity of flight and safety information” after earlier noting that it has started to bring elements of the system back online.

The FAA issued a failure notice for the system early on Wednesday, though no cause has currently been given.

This story is developing…

All U.S. domestic flights grounded as key FAA system goes down by Darrell Etherington originally published on TechCrunch

Pennsylvania-based nonprofit health provider Maternal & Family Health Services has confirmed cybercriminals accessed the sensitive data of close to half a million people.

MFHS revealed last week that it had been hit by ransomware that exposed the personal data of current and former patients, employees and vendors. The healthcare giant said it was made aware of the incident on April 4, 2022 but admitted that may have been initially compromised as far back as August 21, 2021.

When asked by TechCrunch at the time, MFHS declined to confirm how many individuals were affected. However, a notification from the Maine attorney general’s office this week reported that a total of 461,070 people, including 68 Maine residents, are affected by the breach.

In a letter sent to affected residents on January 10 — more than nine months after the organization was first alerted to the ransomware incident — MFHS said that attackers accessed sensitive data including names, addresses, date of birth, driver’s license numbers, Social Security numbers, usernames and passwords, health insurance and medical information, and financial information. The attackers also took credit and debit card numbers, the notification said.

It remains unclear who was behind the ransomware attack, if MFHS paid a ransom demand, and why the non-profit didn’t disclose the incident sooner. MFHS didn’t immediately respond to TechCrunch’s questions on Wednesday, and it doesn’t appear that any major ransomware group has yet claimed responsibility for the incident.

Hackers stole data of 460,000 individuals in MFHS ransomware attack by Carly Page originally published on TechCrunch

Bad news for Google in Germany — where the antitrust watchdog has issued a preliminary statement of objections over its data processing terms and said it’s currently planning to require the tech giant to provide users with more choice over what it does with their information.

The Bundeskartellamt, or Federal Cartel Office (FCO), has been investigating Google’s T&Cs for processing user data since May 2021.

At issue is how Google collects and connects user data across multiple services — and whether it offers users sufficient choice over its profiling of them for ad targeting. This has landed on the radar of the antitrust regulator since a lack of choice for consumers can negatively affect competition.

“The Bundeskartellamt has reached the preliminary conclusion that, based on the current terms, users are not given sufficient choice as to whether and to what extent they agree to this far-reaching processing of their data across services. The choices offered so far, if any, are, in particular, not sufficiently transparent and too general,” the FCO writes in a press release. “According to the Bundeskartellamt’s current assessment, sufficient choice particularly requires that users are able to limit the processing of data to the specific service used. In addition, they also have to be able to differentiate between the purposes for which the data are processed.

“Moreover, the choices offered must not be devised in a way that makes it easier for users to consent to the processing of data across services than not to consent to this. General and indiscriminate data retention and processing across services without a specific cause as a preventive measure, including for security purposes, is not permissible either without giving users any choice. Therefore, the Bundeskartellamt is currently planning to oblige the company to change the choices offered.”

A year ago the German regulator confirmed the adtech giant falls under a special abuse control regime that was passed as an update to domestic competition law at the start of 2021 — aimed at digital giants with so called “paramount significance across markets” — allowing the FCO to take proactive measures to correct anti-competitive practices it identifies. That means the German competition regulator is already empowered to order corrections on Google more efficiently than would be possible under traditional ‘ex-post’ antitrust laws.

In a statement, the watchdog’s president, Andreas Mundt, added: “Google’s business model relies heavily on the processing of user data. Due to its established access to relevant data gathered from a large number of different services, Google enjoys a strategic advantage over other companies. Google’s practices must be measured against the requirements under the new competition rules for large digital companies. The company has to give users sufficient choice as to how their data are processed.”

Google will now have an opportunity to comment on the FCO’s objections, as its administrative proceeding continues — and the tech giant could either try to justify its practices to the regulator or offer suggested remedies to alleviate its concerns (as it did to seek to settle an FCO probe of its News Showcase product last year).

A final decision on the matter expected this year, per the Bundeskartellamt.

Google was contacted for comment on the statement of objections. Update: A Google spokesperson said:

People expect us to operate our business responsibly — by both maintaining product experiences that put users first and updating our services continuously to meet the expectations of regulators. We’ll continue to engage constructively with the FCO to try and resolve their concerns.

If the FCO presses ahead, and requires that Google offer its users a meaningful choice to refuse cross-service tracking, it could have broad significance — given the future of ad targeting looks set to be tied to processing of so-called first party data (aka, data collected by a company from its own users).

(Reminder: Three years ago, Google announced a plan to deprecate support for third party tracking technologies in its Chrome browser and switch to (it claims) more privacy-preserving alternatives for ad targeting (aka its “Privacy Sandbox” proposal). That project is ongoing — under close regulatory supervision by the UK’s competition watchdog.)

Google’s planned deprecation of support for tracking cookies has triggered competition complaints from regional publishers and marketing industry players — who are concerned the shift will further entrench its dominance of online advertising, given how much first party data its business gathers by tracking and triangulating usage of popular web services like search, YouTube, Google Maps and on mobile via Google’s Android platform.

This suggests that any regulatory mandate that makes it harder for Google to join-up first party data — and beat against its ability to build superprofiles of its own users by tracking them across multiple mainstream services it owns — could be highly significant in shrinking its competitive advantage in a post-tracking cookie world.

And while any FCO order to Google that reduced its ability to join up usage across different services would only apply to its business in Germany, the European Union now has a similar ex ante update to competition regulation — in the form of the Digital Markets Act (DMA) — which could end up applying (broader) obligations and/or restrictions on how Google processes data right across the bloc.

The DMA, which came into force last November and will start to be applied this year, applies a set of up-front rules to the core platform services of tech giants that are designated as Internet gatekeepers once the European Commission makes those designations.

That work will take place in the coming months — and Google is widely expected to be subject to the pan-EU special abuse regime — although it remains to be seen which of its services may be designated as core platform services under the DMA.

It’s worth emphasizing there is some difference of approach between the German special abuse regime and the DMA. So the FCO’s action here likely won’t be exactly replicated by the Commission’s application of the DMA. But while the latter — a pan-EU regulation — will have primary application once it’s fully up and running, national regimes (such as the one the FCO is applying here against Google) can continue to be applied in parallel provided that specific rules on conflicts are observed (so, basically, use will need to be complementary).

That suggests Google is unlikely to be able to rely on the DMA to wiggle out of any more fulsome restrictions applied to its business in Germany — which is also the largest consumer market in the EU. So the FCO’s intervention remains a significant one.

The regulator’s press release notes that its proceeding against Google is based on its assessment of German competition law — but it also suggests the DMA is “likely to apply to certain Google services in the future”.

“While the DMA also includes a provision which addresses the processing of data across services, this applies only if so-called core platform services, which still have to be designated by the European Commission, are involved,” it adds. “The present proceeding based on the national provision under Section 19a GWB partially exceeds the future requirements of the DMA. In this regard, the Bundeskartellamt is in close contact with the European Commission.”

Google users not given sufficient choice over its data processing, says German antitrust watchdog by Natasha Lomas originally published on TechCrunch

India will spend nearly $320 million to promote cards on RuPay and for low-value UPI transactions, the latest in a series of moves by New Delhi to fuel the growth of its homegrown payments network.

New Delhi approved a plan Wednesday to spend $318.4 million for the promotion of RuPay debit cards and low-value person-to-merchant transactions on UPI during the period of FY 2022-23.

“Under the said scheme, acquiring banks will be provided financial incentive, for promoting Point-of-Sale (PoS) and e-commerce transactions using RuPay Debit Cards and low-value BHIM-UPI transactions (P2M) for the current financial year FY 2022-23,” it said in a statement.

The Narendra Modi-led government’s move is an attempt to assuage the concerns of banks that have questioned the financial viability of the UPI network. UPI, a six-year-old payments network built by a coalition of banks, has become the most popular way Indians transact online today. The payments service fetches money directly from banks, removing the reliance on any intermediary. But it operates on zero merchant discount rate, tiny fees on transactions that is one of the main sources of income for banks and card companies.

“Various stakeholder in the digital payments systems and the Reserve Bank of India (RBI) expressed concerns regarding potential adverse impact of the zero MDR regime on the growth of the digital payments ecosystem. Further, the National Payments Corporation of India (NPCI) requested, among other things, for incentivisation of BHIM-UPI and RuPay Debit Card transactions to create a cost- effective value proposition for ecosystem stakeholders, increase merchant acceptance footprints and faster migration from cash payments to digital payments,” New Delhi said.

RuPay is India’s homegrown card network, which is promoted by the National Payments Corporation of India, a special body of RBI that also oversees UPI payments. The central bank, which has pushed international giants Visa, Mastercard and American Express to store Indian data locally in the country, has made a series of attempts to expand the reach of RuPay in the South Asian market.

RuPay is the only payments network whose credit cards today support linking to UPI. But even as RuPay has made significant progress in making inroads with debit cards, credit cards on its network are struggling. Several banks, including HDFC, has shown little interest in issuing RuPay credit cards because it is eroding their profit-making ability, according to two people familiar with the matter. Tata Neu’s RuPay credit card, issued by HDFC, doesn’t support linking to UPI, for instance.

India to spend $320 million to promote homegrown payments network by Manish Singh originally published on TechCrunch