More innovations needed to change merchant behaviour

The covid-induced lockdown and its impact on the supply chain helped digital transactions surge in India. However, as the country unlocks, small businesses need major handholding by the fintech ecosystem and regulators to help them revive their businesses, said panellists at the Mint Pivot Or Perish webinar on fintech.

As the economy started unlocking, payments firms, such as PhonePe and Razorpay, witnessed 30-35% higher volume and new user growth compared to pre-covid levels, which will likely be sustained even after life returns to normalcy.

However, while consumer behaviour has evolved rapidly, merchant behaviour will require more innovation and support, the panellists said.

“We saw a strong V-shaped spike in organic users and consumption across categories like peer-to-peer transfer and recharges. But we have seen challenges in servicing merchants getting back to business after being shut for months,” said Sameer Nigam, founder and chief executive, PhonePe.

“In the MSME sector, technology adoption levels aren’t very good. If we have to help merchants offer more new-age digital channels to tap into the demand, they will need more software-based solutions like a QR code or link-based payments,” said Harshil Mathur, chief executive, Razorpay.

Srinivas Nidugondi, senior vice president and chief operating officer, mobile financial solutions, Comviva, said that the shift to digital payment systems within a short span was a challenge. “Onboarding merchants and nano-merchants within a short time to adopt fintech solutions has been a learning in itself. There is more opportunity in enabling their access to finance through solutions like micro-atms, pushing for apps where possible and enabling feature phone solutions for the rural ecosystem,” he said.

The merchant ecosystem can also be further enabled by strengthening the data protection framework, said Shilpa Mankar Ahluwalia, partner, fintech, Shardul Amarchand Mangaldas. “As consumer appetite grows, there will be a stronger need for data regulatory framework. Beyond consumer protection, it will be important to allow fintech to access data to customize financial solutions for merchants as well.”

“SMEs are losing a lot of business due to the pandemic in terms of accessing capital and digitizing themselves. From methods to sanitize their stores to start digitizing their business, there are multiple ways we are enabling them,” said Tobias Puehse, vice president and head of innovation and customer solutions, Asia Pacific, Mastercard.

“There is enough technology and innovation available in the country already to address the fintech requirements of consumers and merchants. What we need is to bridge the gap between the people and technology use case that apply to their specific requirements,” said Naveen Surya, chairman, Fintech Convergence Council, and chairman emeritus, PCI.

romita.m@livemint.com