India has thousands of ethnic craftsmen, handicraft workers, and other such local entrepreneurs who can no longer run their offline presence as a business. But they cannot sell their wares online because they don’t possess the know-how for setting up a payment gateway. Most of these small businesses are not even digitally savvy enough to know that they can sell on popular marketplaces like Amazon. This is the gap that Visa’s Bring India Home initiative seeks to fill. 

What’s the Bring India Home platform by Visa?

‘Bring India Home’ is a digital platform being launched by Visa which will take offline artisans and small businesses to the digital space. It will facilitate online shopping for these small businesses. BIH is a support initiative by the financial services company which will also serve as an educational platform to handhold the stakeholders in their digital transformation journey.

How BIH will help artisans and small businesses go digital

BIH will help artisans and small businesses go digital by helping them attract new consumers through incentives. Visa will also conduct instructional sessions for small businesses to educate them about digital payments, transactions, and about digital marketing techniques. 

Motive behind the initiative

The ‘Bring India Home’ initiative is in line with Visa’s global commitment to support over 50 Mn small businesses on digital. It’s also aimed at supporting the small business fraternity in India to create jobs for the Indian economy. Since consumers are now spending online, Visa wants to bridge the gap between local artisans and small businesses with digital purchases. 

Benefits for small businesses

Small businesses will be able to expand their product reach to digital shoppers. Local artisans will also be able to give millions of online Indian consumers access to their unique, Made-in-India products. Small businesses and artisans will be successfully able to survive and revive during the pandemic and beyond by taking the digital route. 

Scope of the initiative

The Bring India Home Initiative will cover 17 Indian states in India and will empower local artisans and small businesses in these states to list their products online. It will bring exposure to their products to online shoppers in India and thus facilitate digital sales for these small businesses which were previously offline. 

The low-income workforce in India is a very self-reliant, hard-working lot who face rejection when availing credit and applying for loans. Banks have categorised them with low creditworthiness when the fact is that most of them are highly credit worthy with real financial needs. GalaxyCard is a fintech start-up that’s catering to this segment. 

What is GalaxyCard?

GalaxyCard is one of the top Fintech companies in India that is offering instantly approved credit cards in India. Their eponymous product, the GalaxyCard is a digital credit card with easy accessibility for consumers. Based in Gurugram, the start-up was founded in 2018 and stands out in the fintech space owing to their full-digitised mobile-based credit card. 

Everything you need to know about the GalaxyCard

Features

The Galaxy Card can be instantly made available to consumers in a record time of under 3 minutes. This app-based card can be used to make online purchases, payments for utility bills, phone recharges, and can even be swiped at roadside stalls. 

How to avail the card

To avail the card, consumers need to only download the GalaxyCard app, and make a free online registration for processing. The application process is purely digital requiring three basic documentation, the PAN Card, Aadhar Card, and Bank Statements. 

Benefits for consumers

Consumers can enjoy zero annual, joining, and interest charges. The GalaxyCard targets consumers with income below INR 30,000 per month and is aimed at enabling access for credit to them. Unlike the traditional lending process, customers will find that there is no elaborative paperwork or long processing durations involved while availing the GalaxyCard. 

The Fintech’s expansion plans – 600 towns and counting

The fintech start-up has acquired a massive consumer base comprising 600 towns in India. They are harbouring ambitious expansion plans to cater to a wider audience, and they will be adding more types of cards to suit different customer categories and financial needs to achieve this. The company will soon be scaling up their business and expanding their team. GalaxyCard aims to become the largest provider of digital cards in India. 

Customer acquisition strategy – How they covered more than 600 towns

Since its inception, GalaxyCard has managed to cover close to 700 towns in India and their acquisition strategy is growing their customer base by 50% every month. They also have plans to increase this number by 5X within the next 4 months. GalaxyCard has adopted an aggressive customer acquisition strategy right from the start to establish itself as a key player in the market. 

A few years ago, banks guarded their data with utmost security and privacy. In fact, they were more reluctant to share customer and financial data than they were about parting with their money. But with the growth of fintech start-ups, banks are now realising that to stick to rigorous banking methods is to become irrelevant. They are now much more flexible and ready to share data through APIs for fintech start-ups and are thus siding with the competition. As a result, both the banking as well as the fintech sector are growing together and have become mutually beneficial to each other.

What is open banking?

Open Banking is an initiative which is fostering innovation in the fintech sector. It transforms the banking sector into a more inclusive and convenient medium for users. Besides financial inclusion, it is pivotal in driving innovation in the banking industry. Open banking cuts the dependency on legacy infrastructure among banks. It’s the bridge that’s culminating in more partnerships and collaborations between traditional banks and the fintech sector, thus encouraging innovation in fintech and leading to higher fintech adoptions among consumers.

How open banking is driving SME success in Fintech

The fintech sector is riddled with disruptive players especially among start-ups and SMEs. These fintech players are collaborating with banks and leveraging APIs to create digital solutions that are democratising financial services. This has been possible only because of the prevalence of the open banking system.

How MSMEs in Fintech are benefitting

Open Credit

India has high demand for credit and in this regard the Open Credit and Open Credit Enablement Network (OCEN) have emerged to democratise credit for the vulnerable segments like MSMEs and small businesses. By providing credit access to the severely underpenetrated MSME sector, OCEN is a valuable technology framework that’s giving rise to the open data economy. On the other hand, it nurtures multiple service providers including technology companies in fintech to extend credit services through innovative solutions.

Funded by data

Through open banking, banks are making valuable data available via APIs. This is funding small and mid-size enterprises (SMEs) with a more valuable asset than hard capital ‘data’, which is driving fintech success. The data they harvest is endowing SMEs with real value. Data sharing implementations like the AA (Account Aggregators) architecture and the DEPA (Data Empowerment and Protection Architecture) are helping lenders in fintech to lend money to individuals and small businesses both in the fintech and non-fintech space within minutes. With data flowing freely, subsectors in fintech are thriving with new players venturing into sub-sectors like lending, wealth management, personal finance management, accounting, etc.

India’s Open Banking Ecosystem and UPI

India’s Open Banking system is based on a hybrid model comprising IndiaStack, a Government API initiative and software platform for businesses, start-ups and developers. UPI (Unified Payments Interface) is a subset of IndiaStack that’s a classic example of the introduction of open banking in the country.

Instamojo, a Bengaluru-based digital payment solutions provider for small businesses along with custom-tailored business tools helps a business grow on the internet. The platform offers end-to-end solutions to medium, small and micro enterprises with credit facilities, marketing tools, inventory tracking applications and logistics as part of its full-stack digital service.

Mastercard-Instamojo Partnership

In June, Mastercard made a strategic equity investment in payments and online selling platform Instamojo. The partnership aims to empower millions of MSMEs and gig workers in setting up online stores. The initiative also equips these small businesses with digital payment methods to reach out to their customers in a hassle-free manner.

The investment and partnership strengthen the company’s initiative to support gig workers like tutors, electricians, personal trainers and small F&B operators among the lot, to launch, scale and grow their businesses.

Why Did Mastercard Invest In Instamojo?

MSMEs and gig workers are an integral part of Indian economy. With this collaboration and investment, the company aims to digitise the MSME sector.

With the help of Instamojo’s full-stack e-commerce platform for D2C brands and MSMEs, Mastercard aims to extend the company’s evergreen commitment of bringing one billion people and 50 million micro and small businesses into the digital economy sphere by 2025.

The buy now pay later (BNPL) financing model that remained in its absolute infancy is gradually gaining ground in India. Amid job losses, business closures and pay cuts induced by the pandemic, credit card limits have been lowered, resulting in discretionary spending taking a backseat. For small businesses, traditional lenders are denying loans looking at the negative business environment.   

Such pandemic-induced economic change is driving consumers and small business owners to find alternate ways of financing at low or zero interest to fund their purchases and sustain business in such grim times. This is where BNPL has emerged to be the most convenient payment option that provides customers make payments for essential and aspirational purchases with 15-30 buffer days for repayment at 0% free interest rates without worrying about the irregularities in salary. 

To boost festive sales in its platform e-commerce majors Flipkart and Amazon introduced pay later options. To which Flipkart witnessed a 7 times increase in consumer spends on introducing the BNPL option and 1.7 times higher adoption of the EMI schemes. 

It is anticipated that e-commerce and BNPL will have a promising future. A report by Goldman Sachs reveals India’s e-commerce market to become a $99 billion market by 2024 and BNPL will become the fastest growing online payment method that is poised to grow from 3 percent in 2020 to 9 percent in 2024. 

The Buy Now Pay Later for MSMEs 

In such a weak economic slowdown, the traditional lenders are apprehensive about offering loans to small business owners. With BNPL making inroads in the consumer retail sector, new-age digital lenders, fintech and NBFCs are introducing this model to offer convenience and financial flexibility to the MSME sector, which are already staring at closures. 

Digital lending platforms like SOLV, a B2B e-commerce marketplace for small businesses along with its network of financial service providers are offering BNPL finance solutions to suffice the financial needs of MSMEs to run their daily operational requirements of the business with adequate time for payback. 

In the past 6 years, fintech start-ups have revolutionised the manner of payments in India, such that currently, people are not considering carrying a wallet in the markets. Moreover, the necessity to go contactless has further proliferated the usage of fintech payments. According to a joint study by Boston Consulting Group (BCG) and the Federation of Indian Chambers of Commerce and Industry (FICCI), fintech is expected to reach USD 150-160 Bn by 2025, resulting in a USD 100 Bn value creation opportunity.

The fintech landscape in India at its peak of value creation that is exploring and expanding its offerings to new geographies, new consumer cohorts like- teenagers, millennials, and Gen Z, cryptocurrencies, money transfers, loans for small businesses, investments thus not limiting itself to online payments only. 

We Indians are spoiled with the ‘The more the Better’ ideology. With the penetration of smartphones and falling data plans in rural India, it presents a host of opportunities in the fintech space to mushroom fintech companies to create disruptions in money matters. 

This story presents a checklist for the aspiring entrepreneur who wants to launch their fintech company.

Digital or cashless payments that began nascent since the announcement of demonetisation have now become mainstream with affordable smartphones and falling data prices. The fintech market is expected to be worth $150-160 Billion by 2025 as per a joint report from Boston Consulting Group and FICCI (Federation of Indian Chambers of Commerce and Industry).

With digital payments gaining a strong foothold in India, several startups are now targeting a new consumer cohort of millennials and Gen Z with new fintech products and services suiting their needs.  

The millennials and Gen Z comprises 33 percent and 27 percent respectively of India’s population and will be the main drivers of fintech in the coming years. The reasons for them becoming drivers can be largely attributed to being digital natives. They have witnessed processes getting easier with technology intervention right from shopping without carrying a wallet to paying electricity bills. This has made them firm believers of apps and technology. 

Trends like- being instant, fast and ‘no- time’ in the digital ecosystem have lowered the patience of millennials making them lose trust in bank’s slower operations. Millennials who are at an early stage of their career with fewer household responsibilities are saving less than their predecessors. 

Sensing this to be an opportunity, Jitendra Gupta, a fintech mogul and founder of Citrus Pay, has founded a neobank – Jupiter dedicated to millennials to offer a delightful banking experience.  

What is Jupiter Offering?

Jupiter is a fintech app that will act like a millennial’s go-to-banking app by providing them with a savings account and helping them to decode, analyse savings, insights about how money is growing and spending patterns. 

Jupiter has innovative products such as: 

Intelligent Piggy Bank

It helps users to understand the risky areas to spend money and move money anytime. It helps millennials to get into the savings habit by creating multiple saving goals whose progress can be tracked. 

Jupiter’s Debit Card

Offers 1 percent cashback with every single spend. One can spend freely without any annual charges. 

Spending wisely

The app can give insights into money inflows and outflows by displaying a list of your expenditure. It helps an individual to take control of spends with smart categorisation.

In September 2019, Punjab and Maharashtra Co-operative Bank (PMC Bank) met with its sad fate by becoming the single largest lender to HDIL (Housing Development and Infrastructure Ltd) that accounted for 75 percent of its loans. HDIL’s failure to pay the loans resulted in the collapse of PMC Bank that led RBI to intervene by approving Centrum Financial Services Limited and BharatPe to take over the cash-strapped bank to form a small finance bank. 

The joint venture between Centrum and BharatPe will infuse a total of Rs 1800 crores which will be equally divided between the two entities out of which Rs 900 crores will be invested in the first half of the year and the bank will commence its operation with a value of Rs 500 crore from day one. 

There is nothing unusual about the collapse and taking over of a bank, but what is rare about the deal is a three-year-old fintech company taking the reins of a beleaguered bank to become its half owner.

BharatPe-A Three-Year-Old fintech company winning a rare banking license 

BharatPe a fintech platform enabling Indian merchants and small business owners to accept digital payments, was eyeing to receive an NBFC license for a long time. The collapse of the PMC Bank was a shot in the arm for BharatPe as it first submitted its nomination along with Centrum to RBI for becoming potential bidders to take over the bank and earn a banking license. BharatPe aspires to join the Unicorn club with its ongoing talks with Tiger-Global for an E-Series funding of $250 million required for opening a new-age bank. This takeover is beneficial for BharatPe as it presents the opportunity of raising deposits and public deposits that is supposedly the cheapest source of capital for lending. It also lowers the cost of capital from a lending perspective.