Understanding Cross Border Payments Trends

If we look at the cross border payment sector, we can clearly observe a strong leadership of PayPal, at the same time, there is a huge potential from the customer's needs perspective that lies beyond PayPal. Cross-border payment is a very sensitive subject when it comes to banking transactions. The cross-border payments thing as an industry trend is becoming strong because small vendors and small manufacturers and MSMEs are becoming globally active and at the same time they definitely require a strong, robust and very secure and also easy method of payment transfer.

In an exclusive conversation with the co-founders of SALT- Mr. Ankit Parasher and Ms. Udita Pal, it is explained that how the globalisation of trade and business is influencing digital finance/Digital Payments. IN the conversation with Faiz Askari of SMEStreet key digital payment trends and customer satisfaction are highlighted.

Launched in 2020 by Mr. Ankit Parasher ( IIT Khadakpur) Salt, provides a one-stop-shop to manage cross-border payments of Indian MSMEs which currently do international transactions worth $300 Bn every year. Salt helps SMBs/ MSMEs with inward remittance products, helping these businesses receive money from over 50 countries and six currencies. Salt is building it to reduce complexities in the operational and banking experience of exporters and importers.

Faiz Askari: Right now the preferred processes are either time taking or often considered by many as costly talk about industry leaders like PayPal. How do you look at this scenario?

Ankit Parasher - So when we talk about cross border payments people typically talk about PayPal, TransferWise and similar players. However, what they see is a very small portion of what cross border payment looks like. Papal and all such companies are focused on smaller transactions and mostly PayPal’s focus is on P2P type of transactions. 

What we are focusing on is a larger market out there that is uncatered and crying for help. It is a  B2B payment space where people are doing much larger transactions that is including any of the services that people are doing, also the importers and exporters who are currently doing the transactions.

Most of this volume is being catered to by the bank directly where once a cross border transaction is initiated; customers have to do a lot of paperwork. The whole process is very opaque, full of hassles. As customers have to follow a lot of compliances, they have to hire a broker or agent in the process. So the whole process becomes non-transparent and a very uphill task for anyone who's looking to do it. Even someone who's doing it for years will face problems doing these transactions with lot of pre and post transactions paperwork and formalities involved in the process lead to a process that is not at all streamlined or drive any good experience 

That's where we are focusing on! If there is a way where we can merge an ultimate B2B international transactions, along with export transactions and drive a seamless, hassle-free experience.

Faiz Askari: In terms of salt as a company? is it Indian or an MNC operating in India? What is the Business model that Salt have?

Ankit – We have a US entity, and our parent company is registered in the US, operating in India. 

Faiz Askari:  In terms of the Indian market, which are the target segments or which MSME based sectors you are focusing on?

Ankit – we are targeting the mid to lower side of MSMEs. Starting from companies in the services segment and then we would be looking at customers in the import and export side. Currently, we are working with customers who are into Textile, food and then some who are into import and export as well as stones etc. Once the product is more mature and the whole experience is figured out, we shall be tapping the mass market on the import/ export side. On the services side, we are already live.

Faiz Askari: In terms of the current no of customers or Footprint so far or targets in next one year ?

Udita Pal, Co-founder SALT

Udita Pal-  When We started off salt 2 years ago, We started off to drive awareness and educate various  MSMEs on ease of doing businesses during covid times. We started off with the community of 2000 MSMEs/ SMEs whom we were trying to help to set up their Shopify sites or set up their FB pages/ Instagram pages. It also gave us time and insights to understand our customers and the market we were planning to cater. 

So far, we have done transactions worth of 4-5Mn post official launch of our product, a month back. We see this growing tremendously. On average, we are doing 25 KYC a day. It’s a bit of a tedious job at our end since we also do the KYC of our clients.  The first call we do with our customers is to explain the concept and to get all the important information from them to be able to facilitate the KYC. On the 2nd call, we help them get onboarded and to complete the KYC process. Once all the information is verified, they are eligible to undertake all international transactions without any further paperwork required. 

They can smoothly do their international transactions. We have enabled and automated the process for them in such a way that it literally brings the transaction time to minimal. For example, for one of our customers, we onboarded at 5pm. He initiated the international transaction at 8 pm and by 11 am, the next day, they had the money in their bank account. 

Faiz Askari: What’s the KYC process you follow?

Udita – Process is most typically putting together their basic information like Aadhar, KYC documents, business details, GST etc to do background information checks on them. It takes us 24 to 48 hours to verify information, clients have given and post that they don’t have to do any transaction or any paperwork.

Faiz: You have 20-30 KYC . Are u looking at a regional push? Any number in mind to achieve in next 1 year?

Udita– Surprisingly, we are not the only one thinking in the direction in terms of how PayPal transactions are costly. I have been myself a consultant for 4/5 years and for every $100 international transaction, PayPal charges me $11. On top of that, you don’t get your international money into your account anyway. It takes 2/3 days for your money to hit your bank account from your PayPal account. There is no good customer care service made available by PayPal. Lot of PayPal customers who have come to us to ask that this is the kind of amount PayPal is charging, can we compete on this and in most cases we could. This is how lot of PayPal customers have moved to us because of complexities involved in PayPal transactions. On the other hand, some customers are complaining that there swift transactions happening but these swift transactions, they are ether getting double charged or their money is getting stuck and then they don’t know where to go. In such circumstances, respective banks involved takes 2/3 days to resolve the issue. While I am not blaming the bank, but sometimes we are unable to understand the gravity of the situation under which the customer needs his/ her money which gets stuck in the complexities of such transactions. 

Hence to resolve all such issues, in next 6 months, our target is to onboard at least 7-8 thousand SMEs/ MSMEs. Their cheque size would vary from $5k to $25k. We are also looking at tapping some mid-size companies whose cheque size would be $2-3Mn on monthly basis. 

Faiz- In terms of being a new entrant, what is the distinguish element of Salt or USP to attract the MSMs/ SMEs who are dealing into international transactions? Is it speed or cost of transaction or both?

Ankit- if u map our users’ journey, there are various check points customers have to go through before they actually get the money into their account or even are able to use the money. Our vision is to reach at a place where cross border payment world is completely automated and our customers don’t have to bother for any international transactions 

We are committed to work on the process that would lower the transaction cost and also speed up the transaction time. It will reduce multiple human transactions and automate the process of international remittances as it happens in local transfers.