PayPal, which has facilitated cross border remittances for over a decade to support small and medium enterprises (SME) particularly, launched its domestic operations in 2018 to help small businesses and freelancers with their domestic and cross-border payment needs by a single account. Growth of MSME sector, which contributes around 29 per cent to the Indian GDP, has been repeatedly stressed by the government to boost their global reach and understanding of the global trade without fretting on payments part. Ensuring SMEs of their growth and competitiveness was one of the key reasons for India to not join the RCEP agreement. Nonetheless, as digital payments adoption increases gradually among SMEs, Nath Parmeshwaran, India Director, PayPal and Navin Mistry, Director of Mid Market, PayPal India tell Financial Express Online how the payments major is vouching for two aspects — security and awareness among small businesses.
PayPal has been in India for a long time. How significant SME segment has become for you?
Nath Parmeshwaran: Essentially, PayPal firmly believes that we are SME champions. We are into decades now in India doing the remittance for the small, medium exporters in India. Receiving money is very easy but there is a cost of money and at the same point of time there is a risk element to it. For that, we have a programme called Buyer Seller Protection programme that SMEs really appreciate. We provide the ease of receiving money from more than 200 markets and accept money in 100 currencies. If you have a website, you put a PayPal product on your website, it's an open-ended code so there are no fees to it, anybody can do it. And most importantly, this money is secure because we cover the merchant the moment they sign up. If a business is not e-commerce integrated, it can use PayPal to send invoices. Then we have PayPal.me — a customized URL to send and receive money in your account. So, the entire hassle of cost management is eliminated.
Do you see them willing to get on board the digital payment route?
Nath Parmeshwaran: Let's take a view from a consumer/merchant side. The first question in your mind is whether my money is protected and will I get it safely? We eliminate this doubt. For example, you ship an item to New York and due to snow, the item doesn't reach a buyer. Here, you are not at fault. In this case, we refund the money to both buyer and to you because it is a natural calamity.
The clear priority for SMEs is the safety and security of their payments, frictionless receipt of remittance of their money. When we tell them PayPal ensures that, they are very open to moving to a digital remittances platform.
But they still remain unaware of the global trends in the market.
Navin Mistry: Apart from securing payments, the second most important point is the global knowledge and trends we bring to their doorstep to enhance their skills. We provide them with global merchant dashboards and knowledge to help SMEs upgrade their understanding. Through merchant dashboard, you can find which countries you have received money in, the trends in other European markets etc. Right from onboarding the merchant, integrating to the platform, helping them remit the money in their account, providing them with the foreign inward remittance certificate, PayPal does all that.
Would you also be looking to lend to SMEs?
Navin Mistry: Not right now but very soon you will see a lot of our features like lending coming up in India. Globally we offer merchant credit and it is really important for us as it helps us concentrate on this sector specifically. Liquidity is a constraint for SMEs but the lending feature is still in the pipeline. The biggest thing we want to focus on is risk and security. As a sector, it is our focus for the next six months in terms of getting the global capabilities here.
Any particular sectors from where you see SME traction?
Nath Parmeshwaran: We don't break up numbers by markets. But, I think the segment is related to textiles, handloom, fashion, jewellery, handicrafts, etc. Also, the services part is pretty big for us like consultancy, coaching, services, coding, doctor consultancy etc. It is about people with creativity as India is a big market from a freelancer’s perspective. There is no payment player in India who can not only provide them with this platform but covers them with buyer-seller protection.