Indian MSMEs go digital with payments, FinTech ecosystem provides

India is one of the leading countries globally that has seen a significant rise in digital transactions in the last few years, owing to forward looking government policies, innovative payment technologies and strong customer adoption of digital payments.

In January, a research from FIS (NYSE: FIS), a global financial services technology company, showed how Indian businesses are embracing the next generation in FinTech to help fuel new growth in digital channels despite current economic uncertainty.

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According to the study, a broad majority of businesses in India say they expect a major or moderate impact from each of these trends in the next 12 months: The key areas of fintech, like DeFi, ESG, embedded finance, the metaverse and crypto, will continue to attract investment from firms in the coming year.

Indian MSMEs are rapidly adopting digital payments over cash, with 72% of payments done through the digital mode compared with 28% of cash transactions. The rise in digital adoption presents prospects for further growth in the sector. As per data from the Ministry of Micro, Small & Medium Enterprises, as of 25th November 2022, the Udyam Registration portal registered 12,201,448 MSMEs.

FinTech tie ups show how much the MSME sectors seeks digital means of doing business.

In June, Nuclei, B2B SaaS startup, tied up with Oracle to help banks and enterprises with adopting newer technology solutions. In March, low code digital transformation platform Newgen Software, tied up with cloud banking platform, Mambu to leverage Newgen’s lending solutions.

Investors today want complete transparency with real-time insights and price discovery, something cutting edge technology and innovation can bring

In February, in line with its vision to support Indian MSMEs, DBS Bank India tied up with eSamudaay, a SaaS-based solutions provider, owned and operated by Nirmund Digital Distributions Private Limited.

Recently DBS Bank India also partnered with Gofrugal Technologies to help SMEs catalogue their products quickly and expand their sales channels via ONDC. Earlier, DBS Bank India launched a first-of-its-kind digital and paperless trade financing solution for freight forwarders that leverages Electronic Way (eWay) bill verification for digitalising and simplifying trade transactions.

Government policy has also been moving things along. In January, Hitachi Payment Services, an Indian payment solutions provider, received the in-principle authorization from Reserve Bank of India to act as a payment aggregator. The company is using an AI based platform to provide direct trade option for bonds, fixed income securities such as 54EC bonds, fixed deposits, and IPO which has helped in getting wider retail participation.

Payment Aggregators (PAs) are entities that facilitate e-commerce sites and merchants to accept various payment instruments from customers for completion of their payment obligations. PAs facilitate merchants to connect with acquirers.

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Another example is BondsIndia, SEBI Registered Online Bond Platform (OBPP), which has tech integration with the Indian Clearing Corporation Limited (ICCL) and BSE to provide real time online trade settlement i.e. no counterparty risk is involved.

Investors today want complete transparency with real-time insights and price discovery, something cutting edge technology and innovation can bring.