How advanced payment ecosystem is helping small businesses transition online

By Sirish Kumar
Money, and the way we access it is undergoing massive overhaul currently. Helping India transition to becoming a digital and cashless economy, these payment solution providers are accelerating India’s stride towards standing at part with the leading economies across the globe. While at macro level we have India transitioning towards the digital economy, at a micro level we can witness the same shift happening across small scale businesses.

There are currently, more than 1.3 million SMEs in India, with the number growing ever week. The figure takes further prominence as these SMEs have employed over 40% of Indian work force, especially at a low skill level and contributes 45% to total manufacturing output of India. However, the productivity of these enterprises is still low, owing to their lack of technical affluence. With e-Commerce industry slated to touch $38 billion mark in 2016 itself, as per ASSOCHAM reports, it is a huge loss of potential opportunities, by not registering an online presence.

Last year, Google India targeted at giving online presence to 20 million SMEs in India, while launching its Google My Business app. But the story doesn’t end there! After realizing the potential in the market, various payment solution providers (PSPs) are now working in close tandem with MSMEs, helping them transition online. The one thing all PSPs have in common, along with providing highly digital and secured systems for carrying our monetary transactions, is their efforts in educating the user base. Today, digital payments and e-money is poised towards enjoying a cult status and a significant amount of credit goes to payment solutions providers, for undertaking massive awareness drives, advertisements and digital campaigns.

And yet, the role of payment solutions providers isn’t limited to only creating awareness amongst the users. It is often a part of their business models to help new users transition online. Several key players are working closely with the banks and utilize the best of technological innovation to streamline, fast track and automate the on-boarding processes. Typically, these efforts have played a pivotal role in reducing the paperwork, addressing concerns and getting more small scale sellers and merchants online. In fact, several payment solution providers have automated the on-boarding process to be concluded within 100 minutes straight.

The technological innovation isn’t reduced to speeding up the on-boarding process. To further extend their services and empower small scale businesses, several payment solutions have a template or a Business API which can be integrated with the existing models utilized by small businesses. These unified APIs and other tools immediately allow businesses to transition online and start accepting and managing payments digitally. The initiatives such as UPI, Aadhaar and mobile based authentication will enable more unbanked population to be part of the formal economy.

These APIs have evolved over the years, withstanding cyber threats to data security and hence also offer an evolved anti-fraud and secure solution. Furthermore, understanding how the digital world is evolving, payment solutions also assists small business owners in kick-starting their venture in the online world, increasing the outreach in the digital domain, social media and otherwise.

In fact, owing to the unique business models focused at solving problems, different companies working within the ambits of digitalizing payments, have also come to extend support to the unbanked sections of population. A lot of small scale businesses, especially the ones hailing from rural India, tier II and III cities do not have bank accounts for various reasons. However, there are now solutions available that enable unbanked SMEs in riding on the wave of digitalization regardless. The opportunities have further swelled after the introduction of UPI by the Government. Now, any user possessing Aadhaar Card or mobile phone can perform the online transactions, without much ado.

Since transitioning to the digital domain can be critical for the new users, several payment solutions providers have come up with integrated models, unifying offline and online transactions. In fact, several players are present at different retail touch-points to be accessible by remote users and assist them in making the transition.

Lastly, there is another unique way in which payment solution providers are helping SMEs, not only transition online, but also grow and expand their services. Several payment solution providers have entered into close association with money lenders, hence facilitating easy loan disbursement to SMEs. As the business grows and expands over time, especially after transitioning online, this line of credit plays a pivotal role in ensuring the potential of SMEs to meet the increasing demand. This builds a trust network between SME and such ecosystem of electronic payments and lending. These payment providers should partner with banks and schemes such as Mastercard, Visa and RuPay to lower transaction costs.

While top-notch payment solutions providers are doing their bit in developing an entire ecosystem and helping small businesses transition online, we also need to acknowledge the steps taken by the government in leveling the playing field and introducing an array of policies favoring the same. While the Make in India campaign positioned India as the leading destination for manufactures products, the Digital India campaign was instrumental in shifting frames of rural India, especially when it came to viewing the technology. Central bank and the government has worked in tandem to bring more than a billion users on Aadhaar cards, a key step for many people to join the formal or organized economy . This will allow all individuals or entrepreneurs with a phone and Aadhaar card to make or receive payment seamlessly in the near future. This is more revolutionary than Apple Pay launch.

Today, the merchants and small business owners in the tier II and III cities are not only digitally more aware, but also are more ambitious. Since sky is the limit, they no longer shy from transition on-cloud, not only to touch the limits, but to push it further. Given the age of disruption that the startups have introduced in Indian economy, what remains to be seen is the extent to which the ecosystem would further solidify itself in times to come.

The author is CEO and Co-Founder,

Updated Date: Jul 13, 2016 13:17:17 IST