This media story was originally published by Thimmaya Poojary on YourStory: https://yourstory.com/2020/08/fintech-startup-fampay-iit-roorkee-alumni
How does one inculcate the value of money and create wealth among children? This problem statement led two Indian Institute of Technology (IIT) Roorkee engineers to turn entrepreneurs right after their graduation.
Sambhav Jain and Kush Taneja started FamPay in mid-2019, and have embarked on a journey to provide an easy-to-use platform for children below the age of 18 to spend money with adequate supervision of their parents.
The Bengaluru-headquartered fintech startup is bringing cashless convenience to teenagers and their parents by offering a numberless debit card, thus enabling a secure transaction process, both offline and online. It is already backed by the likes of Sequoia, Y Combinator, and Kunal Shah of Cred, to name a few.
The trigger Both Sambhav and Kush were bitten by the entrepreneurial bug quite early, during their engineering days at IIT Roorkee, where they built a mobile app to be used at the college messes, which resulted in a dramatic reduction in wastage. “That is when we realised that we can build something together,” says Sambhav.
The duo interned at various startups during their final year of college and got a flavour of how these young companies operate, and it also bought a revelation. Kush says, “We never realised that we complement each other so well in terms of skillsets that we bring to the table. That is when we decided to build a startup together by discussing ideas and problem statements.” Sambhav and Kush decided to forgo the much coveted placement opportunity and decided to pursue their passion for building a startup.
During the placements season, the most common comment one is used to hearing at the campus is – ‘If I get this job, my life is settled’. Sambhav says, “We used to question ourselves on how can somebody's life be settled when they are looking at just the salary package as there are many other things to be considered.” This led to intense discussions between the co-founders, and they looked at how they could address this issue. Kush says, “It was very difficult for them to differentiate between wealth and money.”
After intense research, they realised that children, especially in the age group of 12-18, need to be taught about financial literacy early. However, Sambhav and Kush did not know how to start, as the world of finance is a massive and complex sector, and takes years to get a foothold into it. They started meeting random people at malls and other shopping locations, and asked parents how they provide money to their children. They realised that 80-90 percent were giving cash to their children.
Sambhav says, “It is then we realised that it is an interesting problem to solve, and this gave birth to FamPay, where one can provide digital financial access to teenagers.” However, the start was not particularly easy, as the financial sector is a highly regulated entity. After discussing with their college seniors, Sambhav and Kush applied for the famed Y Combinator platform and got selected in June 2019.
From here, there was no turning back for Sambhav and Kush as Y Combinator provided the much needed access in terms of mentorship, opening doors with important organisations, and lastly how one goes about building a startup. FamPay went about building its product, a numberless card for financial transaction, for about three months. It was here they had to get a banking partner and also be connected with an organisation like National Payments Corporation of India (NPCI) as their technology platform was digital.
“We were questioning ourselves on why there should be numbers on the card and make it more secure without them,” says Sambhav.
It took Sambhav and Kush a lot of effort to convince many players in the ecosystem that this would work as just in case the card was lost, there would not be much security issue as everything is stored in the cloud. Kush also points out the manufacturing nuances, where they had to ensure that the right card has to reach to the correct person.
How does it work?
FamPay’s numberless product FamCard is given directly to the children only after the consent of the parent. FamCard works like a digital wallet and parents can add money to the card, which can be used like a debit card by the children anywhere, without the need to set up a bank account. It is also a very transparent process as all the transactions made by the children can be tracked by the parents.
“As it is numberless, all the details are on the app. One can tap, copy and even swipe it at a PoS,” says Sambhav. Every transaction through the card is protected with device locks like fingerprint, Face ID, pattern lock or PIN. There is also no fear of card information getting disclosed in case it gets stolen or lost, and the card can be paused, blocked, and managed on the app.
In addition to the card, the teenagers are also given their own unique UPI ID. Kush says, “The secret sauce of FamPay is that one gets every access to everything just like a bank account without actually owning it.” The business model of FamPay is like a typical fintech company where it gets a certain commission for every transaction.
COVID-19 brought fresh obstacles for the startup. FamPay had to defer the launch of its card due to the drastic change in the market conditions, where spending had come down. Even from a manufacturing point of view, it had to temporarily shut down their operations.
Kush says, “There may have been reduction in spending, but some of it was happening. At the same time, we also built a saving feature on our platform.” He further says, "We also built a saving feature on our platform which has picked up really well during the pandemic."
FamPay then started testing out with a few hundred users and started getting a good response. Hence, in the month of July, FamPay went live and has witnessed more than 30,000 downloads. The startup has tied up with IDFC First Bank as its banking partner, and the card is operational on the RuPay network. There are other players in the market, especially banks, which also provide similar cards to children, but what makes FamPay stand out is its technology edge.
FamPay raised $4.7 million in seed funding in March this year from Y Combinator, Venture Highway, Sequoia India, and Global Founders Capital (GFC). Neeraj Arora, ex-WhatsApp; Kevin Lin, co-founder, Twitch; Vladimir Tenev, co-founder, Robinhood; Kunal Shah, Founder, CRED; and Amrish Rau, CEO, Pine Labs, also participated in the round. Sambhav and Kush say they have many more milestones to reach.
Sambhav says, “The idea is to give digital access of finance to as many people as possible.” Kush adds, “We want to open our target audience to the businesses.” However, both of them strongly believe there is much to learn, and they want to grow along with the teenagers as they move into adulthood.