Payment apps are cornering the SME sector. What can India's old-fashioned lenders do?
Visit a mid-sized store in an Indian city, and you’d wonder if it exists to make any money. It might just as well be there to process transactions for half-a-dozen payment apps: PhonePe, Paytm, Google Pay, BharatPe, Amazon Pay and MobiKwik. Add up the merchants who have downloaded the digital services and the figure quickly reaches 80 million. A third of India’s 60 million-plus small businesses are using an average of four different platforms, according to Raman Khanduja, the chief executive officer of Mintoak, a Mumbai-based fintech.
“The neighborhood shopkeepers’ bandwidth is getting sucked into accepting money,” he says. “When do they run their business?”
There are several juggling acts going on here, apart from the millions of small businesspeople reconciling their accounts across the many services that have sprung up as an alternative to cash and plastic. The payment apps don’t make any money out of this activity because they all run on a shared public utility .What they get is data they can analyze to predict the creditworthiness of the small shops. It’s the banks that ultimately issue loans to these “thin-file” customers but fintech controls the flow of information — and gets remunerated by the lenders for finding creditworthy merchants. But why have the banks let fintech get between them and all these potential clients?
Read more at: https://economictimes.indiatimes.com/industry/banking/finance/banking/payment-apps-are-cornering-the-sme-sector-what-can-indias-old-fashioned-lenders-do/articleshow/90554331.cms