The Indian payment ecosystem is moving at a rapid pace. Supported by the government’s efforts to reach the unbanked population and a regulator who encourages innovation, it has a conducive environment for the ecosystem. However, the journey towards a less-cash society is ridden with hurdles that we need to overcome as a whole.
Having built a series of innovative products and services, fintechs have turned out to be an unexpected disruptor. While demonetisation brought the spotlight on them, the accelerated adoption of digital payments1 during the current pandemic has made them take centerstage. As new-age customers demand agility and personalized solutions, fintechs continue to thrive making payment experiences seamless, intuitive, frictionless and more secure. However, with the advantage of experience and heritage, banks and larger financial institutions like Visa have been able to manage and move money with trust earned over the years. Hence, as fintechs continue to create new ways to pay, move money and drive digital payment adoption by using deep technology and a customer centered approach, established players can bring their strengths to deliver niche solutions together. Thus, both are parts of a whole – naturally interdependent and synergistic.
Visa has fostered innovation through strategic partnerships and investments in new payment technologies year after year, with the goal of enabling secure, simple and seamless commerce and by removing points of friction. As fintechs continue to create cutting-edge solutions to challenges faced by the industry, Visa has helped them leverage the power of brand Visa and reach where they want to while creating a better future for payments.
However, scaling businesses using advanced technology may not be easily accessible for all. To fill in this gap, we launched the Visa Everywhere Initiative (VEI), a first-of-its-kind global innovation fintech challenge, in India that seeks to solve payment challenges of tomorrow. For its debut in the country, the challenges posed to fintechs were tailored around the biggest roadblocks of today:
1. Digital issuance for driving access to payments and credit to ease customer onboarding and financial inclusion
2. Drive small merchant acceptance growth to ease onboarding of merchants and enhancing the experience of payments at points of sale
3. Digitally transforming B2B payments value chain by digitising account payables, receivables and supply chain financing for various sectors
Let’s dive deeper into the solutions and the top shortlisted fintechs of the VEI.
Driving access to payments and credit
India is a country of countries. On the one hand, we are a country of 850 million debit cards, and on the other hand we only have 45 million credit cards2 – even though 220 million debit cardholders in India are eligible for credit facilities.3 To address this issue of not having easy access to credit, banks require a solution which enables them to reach far and wide, and at the same time extend their product portfolio based on the customer profile. We saw solutions emerge that eased customer onboarding using emerging technologies and drove financial inclusion through payments & lending; conceptualized by Phi Commerce, Quantafic and India Lends – qualifying fintechs for the challenge on issuance.
Winning the first challenge, Phi Commerce, through Co-founder & CEO Jose Thattil, proposed an API-led debit card-based lending solution – considering the huge debit penetration in our country – for issuer banks to drive scalability of credit access to customers. The solution prompts eligible cardholders to select EMI/Installment option during online checkout. Phi Commerce has an omni channel payments platform, PayPhi, which processes integrated payments across online, offline & doorstep channels.
Easy onboarding of merchants to enhance the payment experience at points of sale
India has over 60 million small businesses4 but only 5 million card acceptance points as of May 20205. Also, in its Payment and Settlement Systems in India: Vision – 2019-2021, the Reserve Bank of India has set a target of increasing total card acceptance infrastructure to six times by the end of 20216. To participate in this journey, the focus of the second challenge was to bring smaller merchants into the digital payments ambit.
With solutions showcased by Payswiff, OneWallet and SpiderG, Payswiff won the challenge for their instant digital on-boarding and various value-added services solution to drive small merchant acceptance growth including a low-cost tap-to-phone solution. Led by Prabhuram Radhakrishnan, Founder & MD, Payswiff is a leading innovative fintech player providing end-to-end omni-channel electronic payment acceptance solutions to banks, SMEs and enterprise merchants.
Digitising B2B payments value chain
Around 63 million MSMEs contribute to about 38% of the GDP of India employing to more than 111 million Indians7, making the sector’s sustained growth and health important for the nation, more so after the Covid-19 crisis. Yet the B2B payment industry is fraught with cash dependence and inflexible enterprise management systems. To solve this issue, Visa challenged fintechs to innovate and digitize the payments value chain. Three contenders - Samunnati, Cashflo and NuPay were shortlisted for their solutions.
Samunnati won the third challenge based on their unique proposition of a card-based payment instrument for the agri-value chain players, with real time access to credit & seamless transactions across the value chain. Led by Nitin Chaudhary, founding member and Head of Strategy & Innovations, Samunnati that specializes in the agri-value chain, provides innovative and customised financial solutions to marginal, small & medium holders’, farmers, agri-enterprises and wholesale/retailers.
It was remarkable to see that the maiden edition of the Visa Everywhere Initiative in India saw over 400 registrations, the highest ever in Asia Pacific , innovating for a digitally and financially inclusive India. As the pandemic hit India and financial institutions witnessed unforeseeable challenges, it also accelerated India’s digital payments journey as “less-touch” became important. It is encouraging to see the solutions from the shortlisted fintechs address opportunities and challenges of today and tomorrow. We are excited to take some of these fintechs onward and help scale their solutions for adoption across the country.
1 Indians rapidly adopt digital payment routes amid covid-19 crisis: Study - Mint
2 RBI Bankwise ATM/POS/Card statistics – June 2020
3 Visa launches EMI platform for debit cards - Times of India
4 A wider circle - PwC
5 RBI Data
6 Payment and Settlement Systems in India: Vision – 2019-2021
7 MSME – GOI Annual Report 2018-19