“We are seeing a digitisation wave for payments and receivable, which is why we are going towards creating a full stack solution with invoice discounting and credit,” business-to-business payments and lending fintech company PayMate India’s founder and CEO, Ajay Adiseshann told MediaNama. The company has around 150 large and medium enterprises, who in turn connect it with around 60,000 small and medium businesses, to whom it provides payments solutions at present. The plan is to go beyond payments and provide lending and enterprise solutions going forward, he said.
In fact, by October and November 2020, “we were transacting above pre-COVID levels, around 40-60% higher than pre-COVID levels”, Adiseshann said. He explained that the revival was taking place in consumer durables, financial services, fast-moving-consumer-goods and in some pockets of manufacturing, while travel and hospitality remains weak and is still under capacity.
The company hopes to be an end-to-end fintech player, providing payments solutions, lending products and enterprise based solutions for small and medium businesses in the country, according to Adiseshann. PayMate is currently in the midst of testing its new invoice discounting platform with a few clients and expects to roll-out the solution to all its enterprise clients and vendors in the next few months, he said.
‘Lots of learning required to build full stack solutions’
“It is still early days for us, we are turning the screws one bit at a time. The next two to three months will involve a lot of learning as we role out more pieces of the stack. For us, the question is how do we create value-added services for SMEs after they come onto our platform. So this could mean giving them visibility on payments and card-based credit products, and thereafter, invoice discounting. We are also looking to providing SME with the same enterprise tools that large companies use, like in accounting for example,” Adiseshann said. PayMate does not provide co-branded corporate credit card just yet, but enables SMEs on their platform to apply for the same through the company’s banking partners, he said.
“At this point, we have a lot on our plate. We will enter the co-branded card space if there is value to be added there. But much of the co-branded products out there are just a marketing aspect,” Adiseshann said.
‘Replicating UPI model in lending is harder than it looks’
While many new solutions in the credit space in India, like the Open Credit Enablement Network is essentially a lead generation tool, PayMate wants to have complete control and be the primary front-end solutions provider for SMEs across the country, Adiseshann said. “Every company needs to evolve its own strategy. Lending is very different from payments, so trying to replicate a UPI model on the lending side will take time because the data needs be made available for such a system to work efficiently,” he said.
“Many full-stack payments fintechs are looking an e-taliers or online merchants and offline retailers, whereas we are looking at the whole end-to-end digitisation of supply chains, from procurement to sales. There are so many interactions and integrations required, and there is a fair bit of complexity involved, which is what gives us a strong moat. We pitch to the treasuries of large and medium enterprises to get them to use our system and on-board thousands of suppliers. This requires lots of work because for every client, we have to do the Know-Your-Customer for all vendors. It is a very different market compared to what other fintechs may be pursuing,” Adiseshann said.
‘Credit is still a catch-22 situation for many lenders’
While providing fresh loans to SMEs is still a tough ‘Catch-22’ situation across the country for many lenders, our platform is being able to alleviate some of the risks, Adiseshann said. “Because of the closed-loop ecosystem, we can use existing data on fund flows, invoices and other aspects to apply that towards working capital and credit requirements for SMEs. We have been testing the invoice discounting platform with some of our clients, while the tools are available on the platform we have to test the solution and hand-hold our clients through the nitty gritty. We expect this solution to peculate down our entire customer base in the next two to three months,” he said.
“The Goods and Services Tax e-Invoicing system for companies with a turnover Rs 100 crore will be complementary for us to provide credit to such enterprises, as we can tap into that data of invoices to evaluate the credit quality. The system will be good to have as a validation tool for invoices as part of risk mitigation. But our aim is to provide credit to SMEs with far smaller turnovers, so it does not change much for us,” Adiseshann said.
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** Update (February 18, 2021 6:35pm). Earlier version had incorrectly spelt PayMate with a lower case ‘m’. The error is regretted. Originally published February 18, 2021 at 6:20 pm.