SMBs are oddly underserved and face numerous barriers to growth. Small merchants face difficulty in accessing formal credit, poor infrastructure and utilities, antiquated and informal operating methods and low access to marketing platforms, compounded by the digital and technological knowledge gap.
This is where fintech platforms can act as enablers and accelerators, bridging the gap through technological solutions.
Massive internet and smartphone penetration and some of the lowest data rates in the world have made it extremely easy for Indian SMBs to access sophisticated technology, and digitise their businesses very simply, at very low costs. It has allowed even SMBs from smaller towns or small scale business owners like kiranas to connect with increasingly digitising consumers easily, without cost heavy investments. This can be as simple as printing out a QR code!
Last year, mobile payments exceeded ATM cash withdrawals for the first time, a clear indication of the direction the Indian consumer is headed. To tap into this digital consumer, smaller merchants need to offer digital payment options and simplify transactions at both the front end and back end.
At the back end, this would entail simplifying the processing and issuing bulk payments, split settlements, chargebacks, and instant refunds. For small businesses, digitising their systems to accept and process digital sales transactions streamlines the entire payment process, resulting in a slew of advantages.
For example, it simplifies accounting and reconciliation, offers convenient sales monitoring, a topline view of inflows and outflows and valuable insights from this overview.
At the front end, payment options need to be as varied as the diverse customer base. Fintech platforms can offer SMBs omnichannel payment options, keeping the customer at the heart of the payment experience.
This is great for customers, allowing them to move effortlessly between offline to online, while also streamlining the payment process and improving integrations with the backend systems for the merchant. Omnichannel solutions allow merchants to get a sense of the consumer as a whole and develop more effective sales strategies.
Through the platform approach, fintechs can keep adding value to the merchant experience, in turn leading to benefits for customers.
Large aggregators can create or compound existing partnerships to help smaller merchants access benefits such as rewards and loyalty programmes, BNPL, and affordability solutions.