By Sameer Chugh, Co-founder & Director, Mosambee

India is on the cusp of a transformative digital payment revolution. A decade ago, it wasn't easy to imagine a world without cash. In fact, cash was king. However, the introduction of simple, convenient and secure solutions have drastically changed how billions of Indians access and interact with money. The advances in digital payment solutions that support low-value payments have made us a champion in real-time payment.

The exponential growth in digital payments has demonstrated the impact simple innovations can have on remote areas in the country. And, the omnipresent pandemic gave the much-needed push to take these solutions to the last mile operations. With every aspect of digital payments evolving, Digital India is poised to contribute 2.2% to the global digital payment market by 2023.

Building a financially inclusive digital economy

Digital payments have become much more than a convenience — they can accelerate business growth. Beyond ease-of-transaction, there are many economic benefits to building a financially inclusive digital economy. For MSMEs, adopting reliable, accessible and low-cost payment infrastructure can improve digital adoption and help gain access to institutional credit for further business expansion.

Moreover, digital payments can help unlock new revenue streams, help manage finances, increase the consumer base and explore more tools to automate operations. Merchants that can leverage payment infrastructure can get a competitive advantage through deeper insights.

The fintech companies in India have realised the potential of digital MSMEs and are increasingly building solutions that can change the face of small businesses. They understand that they need to address individual pain points to drive digital transformation while also keeping in mind their larger goal to develop a solution that addresses all the pain points under one roof.

Small innovation making a big difference

Even the slightest improvement in payment infrastructure can significantly boost small businesses. For instance, the evolution of the PoS machine from computer-driven cash register to mPoS and SoftPoS. That’s precisely why there’s a significant improvement in simple yet innovative payment solutions being offered to small businesses in recent years. It can be as basic as creating awareness about digital payments. The exponential growth of Phonepe, PayTM & GPay serves as the best examples. Phonepe kept merchant acceptance at the heart of their strategy and focused on building solutions that can empower consumers as well as merchants. In just 5 years since launch, Phonepe facilitated 22.4 billion transactions to date across 19,098 pincodes and saw a whopping 1.4 billion merchant payments in three months. The best part is nearly 80% of their transactions come from tier 2, tier 3, tier 4 cities and beyond.

The strategy worked for companies like Zyadashop and Dukaan as well, albeit for a different product altogether. Zyadashop’s young founder, Satyajit was baffled by the process employed by small local merchants, trying to sell their product online. His simple idea was to help merchants learn the basics of e-commerce. He introduced an application for small merchants to create an online store for their products online.

Yet another bottleneck in integrating digital payment infrastructure was inability to accept all kinds of payments. Mosambee endeavoured to resolve this problem with solutions like Tap on Phone service which enables merchants to accept all digital payments including Credit/Debit Cards without the requirement of a card machine. This purely digital app reduces merchant operating costs on rentals and maintenance of POS machines.

Today, merchants are not only able to offer digital payment modes but also facilitate easy EMIs to improve consumer experience. There are solutions like digital khatabook that allow merchants to manage every process digitally from accepting payments, recording transactions, and credit management.

Most of these initiatives are immensely successful and receive the much-needed policy support like Digital India policy from the Government of India. These policies are not only helping fintech develop solutions but also helping companies shape the future of digital payment like accepting digital payments without internet connectivity.

However, while India is leading a strong position in the global payment space, it is yet to explore the potential of transforming the manual, disconnected and unorganized retailers to achieve financial inclusion. We might find it challenging to become a completely cashless society until we develop an ecosystem that ensures financial services and easy credit is made visible and available for vulnerable and low-income sections through digital mediums.

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