There are over 6 Crore MSMEs and only a few of them have access to formal credit. Their creditworthiness is evaluated based on multiple data points. Digital payments form a crucial part of this data that helps establish their business worth. In an exclusive conversation between Madhusudhan ML – MD & CEO NSDL Database Management Limited ( NDML) and Faiz Askari of SMEStreet trends in Credit profiling among MSMEs were discussed.
Here are the edited excerpts:
- How digital payments will help MSMEs economic recovery?
MSMEs are the backbone to the Indian economy contributing to 30% of country’s GDP & 48% of exports. The COVID-19 pandemic brought along financial challenges for many economies and institutions.
While Covid has accelerated digitisation across the value chain of MSMEs, the initiatives by the GOI on the lines of making India a cashless economy, along with robust advancements in payment systems and mobile internet have paved the path towards digital payments.
Covid would be the inflection point to this movement to digital payments across the economy. Some of the changes in customer behaviour like remote access to services/products, lesser physical interactions are likely to have an impact on how businesses are conducted. MSMEs will have to quickly adapt to this reality and digital payments is a huge relief for them to effectively conduct their business with minimal impact.
Hence digital payments apart from giving them ability to conduct their business smoothly also gives the MSMEs an ability to get credit which is an extremely important aspect for their business growth.
MSMEs who connect digital payments & integrate their business with the payment systems will be able to offer better solutions and get leverage to the business resulting in value creation. Such MSMEs will have more strength to fight uncertain economic consequences, contribute towards economic recovery, and accelerate towards growth.
- Which digital payments technologies can help solve the problem of delayed payment cycle for MSMEs & How?
While every business aspires to grow to its maximum potential, some factors hinder this progress. One such factor is the delayed payment cycle. Most of the MSMEs and other businesses spend a lot of time and resources on the collection of dues/accounts-receivables that are generally not paid on-time. Payment links sent to the customer’s via SMS & Email work as a differentiating factor where one can do a configuration of sending the payment links to customers at regular intervals and also send reminders to customers which will help customer pay instantly and seamlessly.
- How is NDML driving digitization and elaborate on different services it offers and its relevance to SME sector?
NDML is authorised by MeitY – Ministry of Electronics and Information Technology to run & operate the online payment collection system for government business. All major payment methods like credit & debit cards, Net Banking, Wallets, UPI, NEFT/RTGS, BharatQR & UPI QR are being offered to the customers. NDML is at always thriving towards bringing more and more automation in the services and payment collections being offered to Govt. sector by making customisations in the integration & reporting to make it more simple, seamless and easier.
All these services can be offered to private merchants as well. We take pride in our ability to customise the payments systems to the merchant requirements. This means we, apart from offering a plug n play payment system, would be able to address any specific requirements of the business and build required payment process.
- How is the company helping the government in its digital India campaign?
As mentioned earlier, NDML is authorised by MeitY – Ministry of Electronics and Information Technology to run & operate the online payment collection system for government business, in this regards an advisory has also been issued by MeitY to States, UT’s to integrate with NDML. NDML’s operated PayGov system already supports more than 250 Govt. Departments across various States with online delivery of thousands of services to the Citizens.
Various Govt. departments recognise the need to have digital payments and are working very closely with us and this would in turn make more services available to the citizens at a click of a button.
- What are the kind new-age technologies that you are enabling the government to transform the customer experience?
Various kinds of product innovation, system customisation are being offered to the government for seamless service roll-out and delivery. Integrated channels, customised, on-demand reports, mobile device support, new age payment modes, low cost, quick settlement, easy integration are some of the important verticals.
- What is NDML doing about ensuring security in digital payments?
Customer and Transaction data security becomes our first priority when it comes to digital payments. We have put across a robust infrastructure and secure system to ensure secured transaction processing. We have implemented ISO 27001 Certification for Information Security controls; all data is locally hosted and BCP is well provided for.
- What is the way forward for the companies in the post COVID world to ensure business continuity?
While the Covid would eventually be a past, the impact it will have on the practices and policies of Companies would last longer. Companies need to be proactive to ensure business sustainability and continuity.
There are 4 areas that companies to consider in this scenario:
- Automation – We have already experienced multiple services, institutions during COVID who have used bots to address customer queries. This is the simplest form of automation. More processes across businesses are likely to be automated.
- Do Digital – Digital is not any more one of the channels of service/product delivery. It should be at the heart of every process across all functions. This will help business optimise their processes, improve delivery and minimise disruption.
- Remote is reality – Businesses need to recognise this and plan for access to corporate network, applications etc. The infrastructure should be capable of supporting people working across the geography and time with high degree of efficiency and availability.
- Prioritise people – People policies need to be flexible and its important we realise that everyone will deal with the situation very differently. In this scenario more flexibility vs standardisation of people policies should be the norm. Businesses that understand this and take effective care of their people are likely to thrive and go stronger post the pandemic.
- How PayGov India initiative will help penetrate digital payment process in all parts of the nation & its advantages?
Based on the advisory issued by MeitY we have initiated discussion across all possible govt departments to ensure they start accepting payments digitally using PayGov platform. Our aim is to provide secure, seamless and robust transaction processing and reporting to all merchants.
- How NDML is helping PayGov initiative by providing Tech-infrastructure to make online payment accessible for everyone India?
NDML has developed the online payment collection system which is provided to govt. departments, all govt departments get technically integrated with NDML on its platform and send transaction request for which a response is sent securely. NDML team does technical discussion with all govt departments at the time of integration to ensure the requirements are understood and a right solution is provided to the department.