E-commerce is allowing MSMEs to expand globally.
Fintech companies must constantly re-strategize in order to meet customers’ ever-changing needs. At the same time, these enterprises must guarantee that consumers’ payment experiences remain safe, simple, and frictionless, according to Chandni Nihalani, Director, PayPal India.
According to her, technological innovations such as the Open Network for Digital Commerce (ONDC) not only offer firms with a platform for safe commerce but also assist in effectively serving the financing demands of MSMEs.
Nihalani speaks with ET Digital on India’s financial sector, regulatory framework, innovation, and cross-border e-commerce. Excerpts have been edited:
Economic Times (ET): How are shifting consumer tastes affecting the payments ecosystem in the face of global economic turmoil and rapidly growing technology?
Consumers are becoming more wary of their transactional habits in the wake of global economic volatility and desire for trustworthy, safe, and transparent payment solutions, leading in the increasing usage of digital payment systems, according to Chandni Nihalani (CN). These consumer expectations forced the creation of omnichannel payment systems, which allow customers to begin and finish transactions smoothly across many touchpoints.
Payment providers have the ability to provide customers additional payment flexibility as technology usage continues to rise. Furthermore, by giving explicit information on any foreign currency costs that may apply, these payment players can assure transparency. Given the dynamic and ever-changing nature of the digital ecosystem, firms in the sector must constantly re-strategize to meet new customer needs while maintaining safe, convenient, and seamless payment experiences.
ET: What is the state of India’s fintech ecosystem? How may it be enhanced further?
CN: Factors like increased smartphone use, government efforts like the Digital India movement to promote digital transactions, and a favourable regulatory environment have catapulted India to the forefront of the global fintech business. Digital payment platforms and digital banking services have played an important role in increasing financial inclusion, especially among those who are unbanked or underserved by conventional financial institutions.
Furthermore, substantial developments spearheaded by the Open Network for Digital Commerce (ONDC) and neobanks are fueling a surge of innovation. The government-backed ONDC is not only a platform for safe and interoperable commercial commerce, but it also satisfies the credit requirements of MSMEs by facilitating data flow that would ease supply chain processing and financing loan invoicing. Challenger banks and neobanks are breaking down established banking structures to provide simple financial solutions. These new solutions not only allow fintech organisations to reach a larger audience, but they also expand cooperation and integration opportunities for the future of fintech.
As the Indian startup ecosystem contributes to the ‘Make in India for the World’ movement, boosting cross-border commerce via digital payments will be critical. Improving the regulatory environment that supports the fintech sector, such as simplifying and expediting licencing procedures and operating standards for fintech businesses, may significantly accelerate the industry’s growth. Investing in India’s population’s financial literacy and digital infrastructure would provide smooth countrywide fintech services throughout the country, including rural regions. Establishing collaborative efforts between conventional financial institutions and fintech startups and organisations would also be a significant step towards enhancing India’s fintech ecosystem and promoting innovation.
ET: How might digital payments help to increase cross-border trade?
CN: Historically, only major corporations could explore cross-border trading as part of their growth plan. When contemplating going global, micro, small, and medium-sized firms (MSMEs) have to deal with a number of constraints such as a lack of finance, networking, and onerous regulatory procedures.
However, with the assistance of digitisation and government programmes such as the Market Access Initiative (MAI) Scheme, which promotes market access for Indian MSMEs in foreign countries, and India’s inclusive foreign trade policies, MSMEs and D2C (direct-to-customer) brands have begun to implement a ‘global first’ strategy. Because of the rising dependence on digital payments for cross-border transactions, they have been able to increase their customers and take their products across boundaries. According to PayPal’s MSME Digital Readiness Survey, 98% of Indian MSMEs are interested in investing in more digital payment solutions to improve the purchase experience.
When it comes to cross-border trading, it is critical to provide a seamless experience that caters to customers from many regions, each with their own set of demands. A digital payment platform’s role is to provide a flexible payment procedure that allows for a hassle-free checkout while accounting for multiple currencies and local payment preferences. Furthermore, businesses are looking at digital payment systems like PayPal because of our strong security features, real-time monitoring of individual transactions, and transparency. We link over 35 million merchants to over 400 million consumer accounts in more than 200 countries through our unique two-sided network, while also offering buyer and seller security.
ET: What are your thoughts on cross-border e-commerce?
CN: Cross-border e-commerce has levelled the playing field for micro, small, and medium-sized firms (MSMEs), allowing local company owners to extend their operations to international customers at a lower cost. This expansion not only allows MSMEs to exponentially scale up their enterprises, but it also helps to general economic development. MSMEs have aggressively used technology to boost their online presence, notably via social selling platforms such as Instagram and Facebook Marketplace, with a significant emphasis on digital strategy.
ET: Is cross-border e-commerce poised to become a major engine of global trade?
CN: Cross-border e-commerce has the ability to do so since it gives enterprises access to a worldwide customer base. Online shopping and digital experiences are becoming more popular among consumers. Cross-border e-commerce platforms are appealing to customers who want customised experiences, competitive discounts, and a pleasant shopping experience because of their convenience, vast and diversified choice of items, and low costs.
ET: How can SMEs use digital payments to remain relevant and resilient in the face of economic uncertainty?
Consumer needs in the post-pandemic consumer environment have evolved towards variety and customization. According to PayPal’s Borderless Commerce Report 2022, prospects for global businesses have increased as individuals have gotten more comfortable purchasing across borders. MSMEs must grab these chances and adapt to remain relevant in this shifting economic climate if they are to survive.
One critical strategy for MSMEs to thrive in cross-border commerce is to analyse and evaluate their tactics on a regular basis. This helps them to discover effective ways, fill gaps, and make required adjustments. MSMEs may also use social media platforms to broaden their reach and connect with a larger audience. It is also critical for them to continuously update and improve their brand’s website with correct information and enticing products in order to develop a better personal connection with prospective consumers. Furthermore, collaborating with a reputable payment service provider and building a thorough marketing strategy will substantially aid merchants in navigating market swings while preserving stability and relevance in their company operations.
ET: How can PayPal facilitate customer loyalty for merchant partners via transaction ease?
CN: When shopping online, customers want flexibility, reliability, and security, and our tools enable our partners satisfy these expectations and build confidence. PayPal’s infrastructure uses innovative technology to deliver a smooth consumer payment experience by lowering checkout time, accounting for preferred payment modes and currencies, real-time account updating, and access to additional pricing alternatives. Furthermore, our two-sided network, along with our trust and expertise in the payments industry, has helped our merchant partners achieve consumer loyalty.
We have made significant headway in cooperating with Indian fashion brands such as Aza Fashions, Pernia’s Pop-Up Shop, and Little Muffet, among others. We are also significant partners with top EdTechs like as Great Learning, White Hat Jr, Simplilearn, and CueMath, who have seen increased demand from foreign clients thanks to our collaboration with PayPal.
