Payment innovations strengthen small merchants in India

By Sameer Chugh, Co-Founder and Director of Mozambee

India is on the cusp of a transformative digital payments revolution. A decade ago, a world without cash was not easy to imagine. Indeed, cash was king. However, the introduction of simple, convenient, and secure solutions has dramatically changed the way billions of Indians access and interact with money. The advances in digital payment solutions that support low value payments have made us masters at real-time payments.

The exponential growth of digital payments has shown the impact simple innovations can have on remote areas of the country. And the ubiquitous pandemic gave much-needed push to bring these solutions to the last mile. As all aspects of digital payments evolve, Digital India will add 2.2% to the global digital payments market by 2023.

Building a financially inclusive digital economy

Digital payments are much more than a convenience – they can accelerate business growth. In addition to the simplicity of the transaction, building a financially inclusive digital economy offers many economic advantages. For MSMEs, the introduction of a reliable, accessible and inexpensive payment infrastructure can improve digital adoption and help gain access to institutional credit for further business expansion.

Additionally, digital payments can help unlock new revenue streams, manage finances, grow the consumer base, and explore other tools to automate operations. Merchants who can leverage the payment infrastructure can gain a competitive advantage through deeper insights.

Fintech companies in India have recognized the potential of digital MSMEs and are increasingly developing solutions that can change the face of small businesses. They understand that they need to address individual vulnerabilities to drive digital transformation while keeping an eye on their overall goal of developing a solution that addresses all of the vulnerabilities under one roof.

Small innovation that makes a big difference

Even the smallest improvement to the payment infrastructure can make a big difference in small businesses. For example the development of the PoS machine from computer controlled cash register to mPoS and SoftPoS. Precisely for this reason, there has been a significant improvement in the simple but innovative payment solutions offered to small businesses in recent years. It can be as simple as raising awareness about digital payments. The exponential growth of phone, PayTM & GPay serves as the best example. Phonepe kept retailer adoption at the center of its strategy and focused on developing solutions that can empower both consumers and retailers. In just 5 years since its launch, Phonepe has enabled 22.4 billion transactions via 19,098 PIN codes and recorded a whopping 1.4 billion merchant payments in three months. The best part is that almost 80% of their transactions come from Tier 2, Tier 3, Tier 4 cities and beyond.

The strategy worked for companies like Zyadashop and Dukaan also, albeit for a completely different product. Zyadashop’s young founder, Satyajit, was amazed at the practice of small local traders trying to sell their products online. His simple idea was to help merchants learn the basics of e-commerce. He presented an application for small traders to create an online shop for their products online.

Another bottleneck in integrating the digital payments infrastructure was the inability to accept all types of payments. Mozambee tried hard to solve this problem with solutions like Tap Phone Service allowing merchants to accept all digital payments including credit / debit cards without the need for a card machine. This purely digital app reduces the operating costs for dealers when renting and maintaining POS machines.

Today, merchants can not only offer digital payment methods, but also enable simple EMIs to improve the customer experience. There are solutions like digital khatabook enabling merchants to digitally manage every process from accepting payments to recording transactions to credit management.

Most of these initiatives are immensely successful and receive much-needed political support such as the Digital India Policy from the Government of India. These guidelines not only help fintechs develop solutions, but also help companies shape the future of digital payments, such as accepting digital payments without an internet connection.

Although India holds a strong position in the global payments space, the potential of transforming manual, disconnected and disorganized retailers has yet to be explored in order to achieve financial inclusion. We might find it difficult to become a completely cashless society until we have developed an ecosystem that ensures that financial services and simple credit are made visible through digital media and made available to vulnerable and low-income groups.

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