Over the last few years, Indian fintech businesses have emerged as the pioneers of change. The industry has redefined the way financial transactions are conducted, investments are managed, and products are accessed. 

We are in the throes of a transformation due to the introduction of cutting-edge technologies like artificial intelligence, blockchain, and data analytics. As per the estimates, India’s fintech industry could be valued at $1 Tn, with revenues of over $200 Bn by 2030.

Alongside this story of innovation comes the need for good governance. According to the 2023 Global Innovation Report by FIS, 84% of Indian organisations are preparing for major impacts from Environmental, Social, and Governance (ESG) trends in their operations. 

Banks are making conscious efforts to achieve net-zero emissions and expand ESG-linked loans. Fintech businesses have begun riding this trend too. Fintech businesses that influence customer behaviour towards sustainable choices deserve a mention for their notable innovations. They are actively assisting in lowering carbon footprints by supporting eco-friendly brands, businesses, and practices. 

For instance, Doconomy developed the DO Black credit card, which records the carbon emissions of each purchase made with the card and establishes a cap on the overall carbon footprint. The card expires once the cap is reached and is no longer usable unless the user reduces their carbon footprint. 

Using Innovation To Drive Integrity

The RBI has been proactively working to address issues around data concerns through regulatory guidance. At the Global Fintech Festival 2022 in Mumbai, the Governor of the Reserve Bank of India Shaktikanta Das emphasised that “the sustainability of any fintech activity or business is about enhanced customer protection, better cyber security and resilience, managing financial integrity, and strong data protection”.

This becomes all the more important as Indian fintechs aim for a stunning client base of 1.4 billion people. This development comes with an increased level of risk, which affects both enterprises and the customers they service.

The good part is that fintech entities are actively leveraging analytics supported by machine learning, using methods ranging from network graph analysis for fraud detection to device spoofing prevention and image verification. To find hidden patterns of fraud and money laundering in real-time, financial institutions are increasingly using graph databases and analytics, according to research by Accenture. 

According to research by the Association of Certified Fraud Examiners (ACFE), businesses using sophisticated analytics, such as graph analysis, can spot fraud 40% faster than those that don’t.

The speed at which users are swarming to digital platforms increases the seriousness of regulatory problems. Therefore, every fintech company must fearlessly take on the task of navigating the complex maze of financial rules, which includes abiding by important industry requirements, such as know-your-customer (KYC) and Anti-Money Laundering (AML) regulations. The rules for payment platforms have become the North Star, providing fintechs with a well-defined direction to follow. 

RBI And Government’s Role On Data Protection

A double whammy of ethical problems and cybersecurity dangers arise when technology and money intertwine. A strong demand for ethical data practices has been made by the Reserve Bank of India (RBI). 

Steps For instance, the right to store Card-on-File data is exclusively granted to card issuers and networks. And more recently, the Personal and Data Protection Bill, 2023, passed by the Rajya Sabha, will help address the processing of digital personal data. 

The goal here will be to find a middle ground between safeguarding individuals’ data rights and the lawful requirement to utilise this information for legitimate purposes. Businesses will be required to respect the rights of individuals to access, modify, delete their data, and so on. 

The legislation suggests a penalty of INR 250 Cr for organisations that breach the established standards, along with a mandatory fine of at least INR 50 Cr. Additionally, entities are obliged to remove user data if it no longer serves its intended function.

Moving Toward A More Responsible Ecosystem

The RBI’s Payments Vision 2025, which is an implementation plan for India’s payment, delves into the blossoming of payment systems. According to the report, the total digital payments have increased by 216% and 10% in terms of volume and value, respectively, for March 2022 when compared to March 2019. 

On the other hand, usage of paper instruments has come down significantly during the same period, with its share in total retail payments registering a decline from 3.83% to 0.88% in terms of volume and from 19.62% to 11.47% in terms of value. 

Given these developments, the pivotal role of good governance cannot be overstated. It acts as a compass, steering companies through the currents of challenges and opportunities, enabling them to realise their objectives. By upholding values of integrity and accountability, governance not only safeguards the operations of fintech enterprises but also empowers them to navigate risks adeptly.

The post India’s Fintech Revolution: Balancing Innovation And Governance appeared first on PayU Blog.

PayU Payments: Ensuring seamless transactions 

PayU recognizes the importance of these peak seasons when partner transactions hit their zenith. In the run-up to the festive sale season, PayU Payments, one of India’s leading payment gateways, steps up to the plate to ensure that partner brands enjoy a hassle-free experience when processing transactions.  

PayU Payments has honed its expertise in understanding the nuances of the Indian market. With a robust and secure payment infrastructure, they offer a range of payment solutions that are tailored to meet the diverse needs of businesses, be it startups, SMEs, or established enterprises.  

This level of customization allows brands to offer a seamless payment experience to their customers, which is vital for customer satisfaction and retention during the festive sale season. They also offer 24×7 monitoring and fraud prevention mechanisms, making the payment process secure and trustworthy. 

For an in-depth look at how PayU Payments prepares for the festive sale season and ensures smooth payment experiences for partner brands, watch these BTS videos.  

• The Inside Scoop by PayU | Preparations before the festive sale season

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• The Inside Scoop by PayU | The War Room story

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Get a glimpse behind the scenes and see how our dedicated team works tirelessly to make the shopping experience enjoyable for both businesses and consumers.

The post Festive Sale Season Success: How PayU Payments Delivers Smooth Payment Experiences for Partner Brands appeared first on PayU Blog.

Predictions indicate that by 2026, embedded fintech led by cutting-edge technology such as the following will lead to significant contributions to digital as well as traditional businesses:

Artificial intelligence (AI)

AI and ML (Machine Learning) contribute approximately $1 trillion annually to the global banking industry by uncovering patterns and insights. Privacy measures like federated learning enhance data protection and also offer tailored products and robo-advisors.

Blockchain technology

Blockchains ensure data integrity and synchronization. Notable applications that are likely to spread across sectors including real-time settlement and decentralized finance (DeFi).

Cloud computing

Cloud tech is expected to generate over $1 trillion in EBITDA for the top 500 companies by 2030, as per a study by McKinsey in 2021. It will boost platform integrity, encourage DevSecOps (Development, Security, and Operations), and support AI-driven applications.

No code and low code development platforms

No-code and low-code platforms simplify application development, automating audit trails and compliance. They will thus empower financial institutions and fintech firms to respond to market shifts.

Fintech in boosting business cashflow

Fintechs provide specialized software and algorithms to streamline financial operations, benefiting companies and consumers alike. Fintech-driven entities are thus emerging as competitive alternatives to traditional financial players. Enhanced customer satisfaction, increased conversion, targeted marketing, and financial inclusion are among the many core benefits as well. But beyond operations, fintech also enhances cash flows through cost efficiency, pricing interventions, and predictive analysis.

Imagine foreseeing the product market’s five-year outlook. Planning the next move, deciding on the marketing plan, and category expansion or customer retention becomes easy, knowing the projections of future demand metrics. This knowledge comes in handy with integrated fintech and AI-powered customer and market data analysis. The application and strategies don’t stop at predictive analysis; it spans the following as well:

Business analysis

Understanding your current business operations is vital to address shortcomings and seize opportunities. Fintech facilitates a rapid assessment of your existing state, a crucial first step in uncovering areas of improvement.

Identifying signals of change

Leading companies vigilantly track fintech activities across the value chain, including competitors and tech giants like Google, Microsoft, Amazon, and Alibaba. By assessing the certainty, implications, and timing of these changes with fintech tools, companies can proactively respond to fintech innovations, avoiding reactive approaches.

Enhancing customer experience

Enhancing the customer experience is paramount in fintech strategies. Harvard Business Review in 2023 reported a 5% rise in retention can yield 25-95% higher profits. Walmart, a top omnichannel retailer, hiring Goldman Sachs executives for finance division leadership highlights the importance of fintech for revenue growth.

Harnessing digital sales channels for sales growth

Fintech can harness digital sales channels for revenue growth. Customers preferably access trading, banking, and insurance services through apps, while messaging platforms like WhatsApp enable product purchases and account management. With over 2 billion global users, fintech recognizes the power of messaging apps like WhatsApp, where 175 million daily interactions occur, in helping businesses reach their customer base.

• Operational efficiency

Reviewing processes and financial flows can uncover savings by eliminating bank fees and payment delays. For instance, global firms can use embedded finance for quicker international salary payments, reducing friction.

In this dynamic landscape, where fintech and emerging technologies intertwine, niche financial sub-sectors have leveraged innovation. India’s fintech investment surge, with over $35 billion invested and the emergence of 18 unicorns, demonstrates the sector’s remarkable growth. With fintechs contributing $100 billion to enterprise value, embracing fintech is a strategic imperative. The convergence of fintech with financial and non-financial sectors promises sustained growth and innovation. As technology advances and consumer behavior evolves, the future holds exciting prospects for fintech, reshaping the financial landscape for years to come.

The post Leveraging Fintech to Boost Cash Flows appeared first on PayU Blog.

Achieving India’s ambitious goal of becoming a $5 trillion economy by 2027 hinges on liberating and empowering India’s small and medium business (SMB) sector.

Doubling the contribution of SMBs to our GDP, exports, and employment market depends primarily on equipping them with the right technological tools and solutions in the shortest time possible.

Fintech is already a key factor for boosting India’s MSME sector in Niti Aayog’s Strategy for New India@75. Two of the four focus areas—better credit availability and Industry 4.0 practices focusing on productivity boost—can be achieved only through greater fintech adoption.

Fintech—Unleashing the full potential of India’s SMBs

Affordable, customizable, scale-agnostic, innovative, and disruptive—fintech ticks all the boxes for enabling India’s SMB sector to maximize its growth potential.

At PayU, we focus on creating affordable tools to help SMBs leverage technology for growth.

• Creating new opportunities with disruptive technologies

SMBs are key to India’s economic growth because they facilitate the last-mile delivery of products and services, have a thorough understanding of the on-ground situation, and are best placed to anticipate changes in economic trends.

Using disruptive technologies like Artificial Intelligence and Machine Learning, fintech solutions can help SMB owners better utilize existing and new growth opportunities simultaneously. This can help SMBs use their strengths like agility, adaptability, and innovation to match or even overtake big firms.

• Data-driven decisions with analytics

Fintech solutions can help SMBs extract value from their most valuable yet under-utilized asset—data. Fintech can help SMBs better understand the links between their various functions and operations. Based on transaction volume, businesses can measure the impact of a recent marketing campaign on its sales.

SMBs can enhance efficiency using tools to track and analyze their key performance indicators (KPIs). Data-driven decisions will allow businesses to carry out a thorough cost-benefit analysis which can help improve customer experience and avoid clumsy experiments and costly failures.

• Fraud-proofing the business

Security breaches can impact the reputation of a business, besides causing financial repercussions. An ambitious plan to establish an omnichannel presence can falter unless the expansion is backed by a robust and scalable security infrastructure. Fintech allows SMBs to use cutting-edge technologies and solutions to improve security, prevent fraud, and enhance regulatory compliance without breaking the wallet.

Real-time analysis of payment metrics can help businesses avoid fraud, minimize risk, finetune their sales strategy, understand customers’ preferences, and identify infrastructural shortcomings all at the same time.

Fintech for SMB growth

Fintech combines the financial muscle of big banks with the agility of a startup to offer tactical and strategic solutions to businesses of all shapes and sizes. Technology allows businesses to get rid of the one-size-fits-all approach and deploy customized and targeted strategies.

With PayU, small or medium businesses can apply cutting-edge tech solutions to their core competencies to create a safe and enjoyable buying experience for their customers and, ultimately, a sustainable route to growth and profitability for the enterprise.

The post Fintech—Helping India’s SMBs Realize Their Full Potential appeared first on PayU Blog.

From facilitating digital payments to helping small startups become unicorns, fintech has unlimited potential to unleash India’s entrepreneurial prowess and transform the way business is done in India.

Financial inclusion and mainstreaming India’s unorganized sector

India just cannot become a $5 trillion economy by 2027 without focusing on key areas like increased financial inclusion and mainstreaming of India’s unorganized sector. India’s unorganized sector accounts for 50% of the country’s GDP and employs around 80% of our workforce.

While the size of the unorganized sector is a significant challenge. It also represents a huge opportunity that can accelerate India’s dream of becoming a developed economy. It all depends on how quickly and efficiently can it be brought into the mainstream.  

This transition just cannot be possible without greater and faster adoption of fintech solutions. Fintech democratizes access to financial products. It incentivizes businesses to join the organized sector. Instead of viewing it as an avoidable complication, fintech helps the unorganized sector recognize the move as a sensible and profitable business decision. 

Payment solutions and quick credit may be the most glamorous aspects of fintech. Other solutions like InsurTech and neo-banking can help a business grow to its full potential in the shortest time possible.

Technology as the great equalizer

The combination of technology and financial services creates a level-playing field where the ability of a business to innovate and adapt to changing trends becomes more important than traditional parameters like the firm’s location, size, or even the gender of its owner.

With fintech, a woman running a small business in a Tier-3 city can secure affordable working capital loans, strategic investment advice, wealth, and investment solutions, or just a safer and more robust payment infrastructure just like a multinational corporation located in a metro.

By supplementing and complementing traditional financial institutions and service providers, fintech can either solve or simply render irrelevant the numerous challenges and barriers faced by entrepreneurs in India. 

Catering to the masses and the niche as well

Fintech is inherently disruptive and innovation-centric, which means it eschews the one-size-fits-all approach when catering to its customers. 

This means each customer—whether a work-from-home freelancer, a gig worker, a startup entrepreneur, or a conventional salaried worker—is assured of solutions that help his or her business grow.

All disruptive businesses—from WhatsApp to Tesla—began as niche and unconventional ideas. Fintech has the bandwidth to cater to conventional businesses and their evolving needs and requirements as well as radical ideas that have the potential to transform the world as we know it.  

Solutions for the present and the future

Every business needs to focus on its short-term targets within the ambit of a clearly defined long-term vision or strategy. It needs to adapt to temporary challenges even as it equips itself to evolve to cope with paradigm shifts in the industry and the economy. 

Fintech is the best tool for this challenge because it too is evolving at every step. Fintech may be identified primarily with digital payment solutions that help businesses cut costs, improve customer experience, and strengthen regulatory compliance.

However, fintech’s true value lies in the fact that it is innovative and scalable at the same time. A business that is expanding its digital footprint can easily get secure tailor-made solutions for its unique requirements.

From aggressive strategies during economic booms to conservative yet growth-centric solutions during tough times, fintech combines the best of financial services and technological innovations to help businesses master the present and plan for the future.

PayU—Committed to the India Growth Story

At PayU, we are proud of the fact that more than 4.5 lakh merchants and businesses trust us as their fintech partner. However, what we regard as our biggest achievement is that this number includes businesses across the spectrum—from large corporations and new-age businesses to medium and small business owners.

We believe India’s $5 trillion goal is just the beginning and that India has the potential to achieve faster, more sustainable, and broad-based economic growth by leveraging the power of technology with the innate entrepreneurial talent hidden in every Indian.

The post Cracking India’s $5 Trillion Puzzle—Fintech and MSMEs Hold the Key appeared first on PayU Blog.

1. Seamless payments
   The availability of a wide range of payment methods, better success rates, reduced fraud, and exceptional service are all parameters that will govern the continued juggernaut that is digital payments in India. As the global case study for growth in new digital payment solutions, India will be at the forefront of exporting these frameworks and capabilities to a global audience.

2. Access to credit
   Affordable formal credit will be a key lever in enabling the aspirations of millions of Indian consumers and merchants. With an explosion in data and alternate assessment methods, consumer credit penetration through traditional products like cards will soon be upgraded with affordability options and use-case based underwriting. Some of these use cases will be rolled out on new platforms like credit on UPI, further unleashing the potential of existing scale. Merchant credit demand is also going to be serviced through better systemic integration of data, cutting across payables, receivables, and their history with bill and tax payments.
3. Technology that unifies
   Enabling technology that bridges consumer, merchant, and bank interactions at scale, helping unlock authentication, back-end clearing, and settlement while retaining a high availability and lower stress on existent systems will be key as the future of commerce unfolds. The successful build of this backbone, with the policy drive towards “digital India infrastructure” through programs like UPI, ONDC, OCEN, AAF, and Digital Data Protection will all yield in newer business processes and models, ushering in the growth of commerce streams.
4. Safe and trusted ecosystems
   RBI, is a global case study in enabling consumer protection at the core while giving systems the flexibility to expand elastically. The successful role of the regulator’s vision and commitment to building the safety and trust of digital payments in India is largely responsible for our global payment’s leadership directly. Their collaborative approach, adherence to transparency, and experience in dealing with a rapidly evolving ecosystem are second to none, and we look forward to a continued emphasis on the core of what commerce should be – 100% trust.

PayU stands at the forefront of driving the commerce revolution in India

I am proud to say that, at PayU, we have built an established track record of pioneering several initiatives not just under these four pillars but also in the intersection of these disciplines. We will continue to invest and double down on further driving the efficiency, scale, and adoption of digital commerce in the country.
In conclusion, while the other ASEAN Tigers (SG, HK, TW, KOREA) roared in the not so distant past, it is time for India, with its sustainable, inclusive, and resilient businesses and process to continue to roar not just into the 22nd century but well into the 3rd millennium. And we will do so at scale, on the strength of our consumption and the combined might of the Indian entrepreneurial spirit!

The post The Roaring Indian Tiger: Pushing into the Future of Commerce on the Back of Fintech appeared first on PayU Blog.

The Association of Certified Fraud Examiners reports a yearly 5% revenue loss due to fraud across organizations. Hackers adeptly exploit changing work patterns, necessitating adaptive defense strategies. However, Artificial Intelligence (AI) and Machine Learning (ML) emerge as game-changers, analyzing data to detect patterns and anomalies, bolstering cyber resilience and proactive risk management.

Amidst the ascent of every sector on the technological spectrum, fintech companies confront distinct cybersecurity hurdles due to data sensitivity. Prioritizing robust measures thus becomes paramount to safeguard customer information and financial operations. Employing cybersecurity trends is vital, strategies for which include:

• Secure banking platforms:

The BFSI sector should and is embracing secure banking platforms, harnessing encryption, multi-factor authentication, and secure communication channels. These fortify customer access and shield sensitive financial data.

• Fraud detection and prevention:

AI-powered fraud detection systems gain traction, scrutinizing real-time transactional data to unveil anomalous patterns. Machine learning algorithms identify potential fraud, curtailing financial losses and bolstering customer security.

• Data roptection and compliance:

Adherence to stringent data privacy regulations like GDPR and PCI DSS is essential. Robust data protection measures and compliance nurture customer trust and avert penalties.

Across sectors, organizations can proactively counter cyber threats using robust cybersecurity that integrates technical and non-technical measures. Evolving threat landscapes demand new, adaptable strategies. Some include:-

• Proactive threat intelligence

This initial line of defense comprises constant digital surveillance, understanding emerging threats, and pinpointing potential vulnerabilities within the organizational framework. Robust threat intelligence programs are pivotal in outpacing potential dangers, enabling enhanced readiness and responsiveness to potential cyberattacks.

• Comprehensive data security and protection

Data protection necessitates multifaceted strategies. Robust authorization and authentication management, extensive data backup strategies, and disaster recovery plans ensure data resilience, even in the face of breaches or system failures.

• Blockchain for enhanced security

The decentralized and immutable nature of blockchain bolsters security and transparency. Its applications span secure identity management, tamper-proof data storage, and verified transaction validation. Organizations can tap into blockchain’s potential to fortify cybersecurity defenses.

• Embracing zero trust architecture

In a cloud-dominated era, Zero Trust Architecture upends traditional trust paradigms. Rooted in the principle of least-privileged access, it mandates context-based trust assessments for users and applications. Such context hinges on factors like user identity, device security posture, and requested service. By presuming hostility by default, zero trust architecture enables strengthen security across various network environments without demanding architectural overhauls.

• Leveraging automation and orchestration tools

The ascendancy of AI-powered security automation streamlines mundane tasks like patch management and incident response. Machine learning algorithms infuse efficiency, freeing human resources for more strategic undertakings.

• AI-driven penetration testing and vulnerability management

AI and ML are revolutionizing penetration testing and vulnerability management. These technologies automate unauthorized access simulations and vulnerability assessments, expediting these processes and augmenting their precision.

• Elevating employee awareness and training

Undoubtedly, human vigilance is pivotal. Cybersecurity awareness training empowers employees to fortify the human dimension of security. For remote workers, especially, vigilance against phishing, social engineering, weak passwords, and compromised networks is imperative. Training encompasses phishing recognition, robust password practices, privacy preservation, compliance adherence, identification of insider threats, defense against CEO/wire fraud schemes, and safeguarding data in transit.

Businesses can choreograph secure digital realms through orchestrated cybersecurity practices. Besides, the governments globally are also keen on adapting to the shapeshifting needs of cyber security measures. In August 2023, the Indian Parliament passed the Digital Personal Data Protection Bill, 2023. This encompasses the purview of personal data breach and rightly sets the grounds for ‘legitimate uses’ of data processing. While the organizations are gearing up their defense lines against cyber threats, the government is following suit as well with adaptation of AI and ML technologies.

In the near future, however, AI and ML are seen spearheading the symphony of orchestrated cybersecurity practices, shaping future strategies with automated expertise. Autonomous security systems guided by AI and ML’s decision-making prowess stand as the cornerstone. These technologies refine Security Operations Centers (SOCs), automating tasks, analyzing diverse data, and furnishing real-time threat insights. Furthermore, the fusion of AI and blockchain offers decentralized security, spanning identity management, data sharing, and payment systems. Technological evolution bears both convenience and advanced threats—but the threat landscape will remain navigable with updated tools and strategies consistently.

The post Adaptive Strategies for an Ever-Changing Cyber Threat Landscape appeared first on PayU Blog.

Here’s everything you need to know about ONDC and Vansh’s experience on the network.

What is ONDC? Did you hear about it?

ONDC, or Open Network for Digital Commerce, was set up by the Government of India’s Department for Promotion of Industry and Internal Trade. It is a private non-profit company founded in April 2022. It is an open network made of open protocols. Like the Unified Payments Interface (UPI), ONDC allows sellers and buyers to be part of a larger network that can be accessed through their preferred e-commerce applications and platforms. Any seller on a platform registered with ONDC will be visible to buyers across other platforms on ONDC.

The network aims to:

• Enable interoperability through data sharing over all registered platforms to boost inclusivity and healthy competition
• Promote e-commerce on the back of minimal public digital infrastructure
• Be scalable, keeping India’s growing population in mind
• Ensure data localization within India to secure seller and buyer data
• Make digital commerce more accessible to small businesses in any part of the country
• Improve buyer experience and improve decision-making with increased choices and pricing options
• Be conducive to innovation in digital commerce

The network allows local goods and service providers from any segment, like logistics, travel, eateries, groceries, and fashion, to fulfil buyers’ needs quickly and transparently. Take Vansh’s example. When his local buyers place orders, he delivers them the same day. This improves customer satisfaction, as his buyers don’t have to wait for days to get their orders.

ONDC aims to unify all digital commerce platforms and buyers rather than directly competing with them. However, interconnectedness and decentralization can help tackle big players’ monopolization of specific market segments. This will also allow smaller businesses and platforms to get a level playing field in the Indian e-commerce ecosystem.

How to register your business with ONDC?

ONDC is already present in over 270 cities like Delhi, Bengaluru, and Coimbatore and will soon be available in other parts of the country. There is no specific ONDC app currently, but an ONDC website exists. Any business, big or small, can join the ONDC to leverage the power of e-commerce for its growth. Here is the 10-step process for joining the ONDC:

1. Learn more about ONDC and its functioning
2. Choose the role you want to play on the network
3. Fill up and share your participation form
4. Plan the implementation after completing the NP profile form
5. Initiate implementation after completing the onboarding formalities
6.  Start testing the staging
7. Complete verification and certification
8. Complete technological development and compliance to move on to the Pre-Production Environment
9. Meet all the technical, operational, and regulatory compliance checklists to move to the Production Environment
10. Go live

Click here to learn more about the ONDC registration process.

Why get on ONDC? Benefits for sellers and buyers

Technologies enabling e-commerce have completely changed how goods and services are sold and bought. It also creates space for numerous other stakeholders, like e-commerce platforms and payment aggregators, that make doing business and buying much easier and seamless. ONDC allows all these players to interact on an open, decentralized network to make e-commerce more robust in India.

Here are the broader benefits of joining ONDC for sellers and buyers:

• Sellers
  • Take your business online with minimal set-up costs
  • Become visible to more buyers
  • Improve product discovery
  • Lower your cost of doing business even while expanding
  • Get more options for business services like software tools, logistics, packaging, etc.

Let’s build on the earlier example from Vansh’s business. One-day delivery within the same city is a standard expectation today. But what about fulfilling orders from locations other than where your business is situated? Vansh had the foresight to tie up with a logistics partner he found through ONDC. Now, he provides fast and reliable deliveries even outside his city. His buyers can track their orders and get timely alerts, increasing customer trust and loyalty.

• Buyers
  • Discover more sellers and their offerings, increasing choices
  • Get quality products and services with speed through local sellers
  • Better customer experience due to improved service and transparency

Transforming e-commerce in India

ONDC is a big step in addressing the gaps and challenges related to e-commerce models other than those based on an open-network system. As mentioned, it establishes merchant-friendly practices and provides massive opportunities for businesses of all sizes and types to benefit from digital commerce. This allows even the smallest businesses in India’s remotest parts to participate in its e-commerce revolution.

The post ONDC: The Future of Inclusive E-Commerce in India appeared first on PayU Blog.

MSME challenges to accessing credit 

The majority of MSMEs in India are in rural areas, and many are involved in services. They don’t always have assets like offices or equipment. Without proper documentation of proof of business and collateral, it is difficult for MSMEs to get secured loans. MSMEs may also lack a well-established credit history or operating history, making it difficult for banks to gauge their creditworthiness. Their challenges also include meeting strict eligibility criteria, lengthy and cumbersome application processes, and high interest rates.  

Depending on their location, industry, and other granular factors, MSMEs may also face challenges unique to their individual businesses. Traditional banks may cannot usually cater to such specific requirements or disfavor small-ticket loans due to high operational costs and lower returns. This pushes MSMEs to resort to informal credit sources with very high borrowing charges and repayment terms, making them more vulnerable to financial risks. 

Limitations of Traditional Lending 

MSME’s lending challenges are directly related to the limitations of traditional lending structures. Traditional banks need to catch up to MSME’s evolving credit needs and preferences. The major limitations of traditional lending structures are: 

• Lack of flexibility: Whether it is types of credit products or repayment terms, traditional lenders may not have the technological capability to adapt quickly to MSME credit needs. 
• Long loan processing time: Banks typically take a long time to process loans. MSMEs typically have limited time and resources, and delays in getting financing can have a significant impact on their business operations. 
• Lengthy documentation: Traditional lenders usually require hefty paperwork to provide loans, often leaving MSMEs feeling frustrated and disempowered. 

• Lack of transparency: Not providing adequate details about credit products makes it harder for businesses to compare and make informed decisions when looking to borrow. 
• High charges: Charges such as interest rates, processing fees, etc., may be high, as traditional lending processes generally involve high operational costs. 

Imagine this scenario: A small business less than a year or two old with close to no credit history applies for a loan worth 50 lakhs. First, they may not have enough data about the business’s finances or credit history. They may also be unable to provide substantial evidence of the business’s growth potential. Even if this business is eligible for the loan, the bank may take weeks to process the application and release the funds. Thich means crucial time to react to changing market scenarios or urgent business needs is simply lost. 

Advantages of fintech-based MSME lending 

Fintech companies leverage technologies like artificial intelligence, machine learning, and big data analytics to assess credit risk and streamline the lending process. Here’s how fintech lending help overcome the MSME credit gap: 

• Paperless and contactless processes enable quicker loan approval and disbursal times. This even allows MSMEs in remote parts of the country to get fast, reliable credit. 

Suppose you have an MSME based in a far-off village in North East India. It will be much easier for you to get credit from a fintech company as it may have a smooth online onboarding process that includes digital documentation and video KYC. 

• They can develop innovative, easy-to-use, and tailored credit solutions based on MSMEs’ specialized capital needs industries, such as real estate, technology, and healthcare. 
• With fintech lending, you can typically apply for a loan online in just a few minutes and receive a decision within hours or days. This, combined with the lower overhead costs associated with online financing, makes fintech lenders an attractive option for MSMEs looking to access capital quickly. 

• They require minimal documentation, making it easier for small businesses with limited credit and operational history to access credit. 

Fintechs have the ability to provide a more nuanced assessment of your business’s creditworthiness. They use data such as transaction history to predict a business’s future cash flow potential. Using this, they can gauge a business’s financial health and potential for growth and quickly provide small-ticket loans for urgent capital needs. 

• They can identify targeted financing opportunities for MSMEs, helping them fuel their business growth when needed. 
• They can partner with banks to help MSMEs avail of big-ticket loans. 

Banks have wider networks and lending capacity. Fintechs have the technology for alternate credit assessment methods and improved customer experience. By combining their strengths, fintech companies can facilitate the last-mile delivery of lending services to underserved MSMEs. 

• Fintech lending also offers greater transparency and flexibility, with many lenders providing clear information about their loan products, interest rates, and fees. You can easily compare offers and choose the financing option that best meets your business’s unique needs and circumstances. 

Lending-first approach to closing the MSME credit gap India 

Fintech companies that follow a lending-first approach can effectively address the unique challenges associated with MSME lending. It combines crucial factors such as a business’s intent to borrow, credit score, profitability, reach, scalability, and ability to adjust to changing market scenarios. This includes developing innovative credit assessment models that holistically evaluate the credit risk associated with small businesses, streamlining the application process to reduce delays and administrative burdens, and offering transparent, flexible MSME financing options that are more accessible, secure, and fuel their growth. 

The post How Fintechs are Paving the Way for Effective MSME Lending appeared first on PayU Blog.

 Let’s break it down to understand what this move means for banks, businesses, and end-consumers. 

How does offering credit lines via UPI to consumers affect banks? 

As mentioned earlier, banks don’t need to issue credit or debit cards to provide customers with this type of credit line. One, this saves them a significant amount in disbursal and distribution costs. This move also allows banks to develop new-age credit products catering to consumers’ evolving needs. Third, banks can extend this offering to non-customers (potential customers) using their interface to make UPI transactions. 

How does offering credit lines via UPI to consumers affect businesses? 

Suppose you are a business that already accepts UPI payments from customers. Basically, having the option to pay for purchases using credit lines via UPI makes buying extremely convenient and more affordable for your customers. This can mean higher revenue for your business by increasing sales, ticket sizes, and customer delight. 

How does offering credit lines via UPI to consumers affect consumers? 

Consumers, especially those who find it difficult to get traditional credit, will significantly benefit from this move. This is because credit lines via UPI use modern, alternative methods to determine one ‘s creditworthiness. They also don’t need to hold a credit or debit card to avail themselves of this credit product. It also rids them of the need to carry multiple credit and debit cards. Lastly, they get the convenience of UPI and the advantage of credit to fulfil all kinds of purchasing needs. 

Let’s sum it up with an example 

ABC Bank is offering pre-approved credit lines of up to Rs 50,000 to their existing and potential customers. They look at data like transaction and credit history linked to bank and UPI accounts to create a list of customers eligible for this offering. Now, merchant XYZ already accepts UPI payments for purchases on their online store. This merchant starts allowing their customers, who are also customers of ABC Bank, to purchase products using credit lines via UPI. The customers are very happy as they now have better purchasing capacity and the convenience of digital payments to buy their favorite products. Even the bank and merchant are happy as this leads to more business. 

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