Digital Playbook for SMBs: Quick and easy ways to take SMBs online and enable digital payments

On SMBStory’s Digital Playbook for SMBs, Vikas Varma, COO - South Asia, Mastercard, explains how and why SMBs should come into the fold of the formal economy through digitisation.
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Digital contactless payments are here to stay. Small businesses, kiranas, and merchants have learned the importance of digitising their business, transacting digitally, and enabling online shopping amidst the pandemic-led lockdown.

Mastercard, the US-based leading financial services corporation, is seeking to leverage its network, insights, technology, and partnerships to help Indian SMBs quickly adapt to this new way of transacting digitally. In India, it has committed Rs 250 crore over the next five years to help reboot and energise SMBs.

In a video interaction on SMBStory’s Digital Playbook for SMBs on ‘Quick and Easy Ways to Take SMBs Online,’ Vikas Varma, COO - South Asia, Mastercard, says,

“A lot of these SMBs are completely new to digital. They may have never transacted digitally. Making their user experience seamless, safe, and secure is a critical success factor for the uptake of digital payments by SMBs. If the solution is clunky, takes training, breaks down frequently, or costs a lot — it will be met with resistance. Taking SMBs online is about keeping the solutions simple, modular, and affordable.”

Through digitisation, SMBs can come into the fold of the formal economy, enabling them to get access to formal credit and other financial services, Vikas adds.

It can also address their current credit gap by providing transactional and behavioural baseline data for digital financial service providers to extend loans with easier access and at a lower cost. This can help SMBs expand their businesses and continue to provide employment, revenue, and growth for the nation.

Growing demand for digital payments

The technology for digitising purchases and payments can introduce simplicity, streamline business processes, reduce timelines, and improve overall efficiency for SMBs.

Further, consumers prefer transacting online. A recent Mastercard study found 49 percent of Indian consumers are planning to make more purchases online, while 68 percent of consumers think reduced in-store shopping is here to stay.

According to a report by RedSeer Consulting, digital payments in India are expected to grow over three-fold to Rs 7,092 trillion by 2025 from Rs 2,162 trillion in 2019-20. The report attributes government policies around financial inclusion and the increasing adoption of digitisation by merchants as primary factors for the growth.

The report also estimates that India’s current 160 million unique mobile payment users will multiply by five times to reach nearly 800 million by 2025.

Mastercard has identified this market reality and has made investments in technological innovations to develop low-cost acceptance solutions and provide a suite of value-added services, especially suited for small merchants.

Vikas Varma, COO, South Asia, Mastercard

The need to build consumer confidence

Vikas warns that such innovative tech products for SMBs will be adopted only if there is consumer confidence.

“On one hand, there is product innovation by bringing the latest payments technology to the market. On the other, there is a need to build consumer confidence in the product. Despite building an innovative product, the user segment may feel insecure or cagey about using it. So it is critical to get the merchant or target audience to feel at ease about going digital, and understand that the long-term benefits far outweigh the risks,” he says.

Mastercard has implemented multiple layers of protection to reduce the risk of fraud and build customer trust.

It has also launched a digital point-of-sale solution that allows merchants to accept payments through various digital form factors, including Bharat QR, simply using their smartphones.

According to Vikas, this is the first such payment acceptance solution globally, and it is ‘Made in India,’ for the world. The solution empowers SMBs anywhere in the country to start accepting digital payments, even if the current POS terminals aren’t available.

Mastercard has also partnered with Zoho Corp and Pine Labs to offer other ‘Made in India’ acceptance solutions and value-added services. Together with CAIT, it has integrated the Mastercard Payment Gateway System (MPGS) with ‘bharatnet.in.’

It has also partnered with Solv — a 360-degree digital marketplace platform that helps SMBs connect and trade with a large network of buyers and suppliers — build their credit scores and gain access to financing and business services, such as logistics.

Edited by Suman Singh