Digital adoption by MSMEs see twofold rise

CHENNAI: Digital adoption by MSMEs has seen a twofold rise, driven by first-time digital adoption from small businesses in tier-2 and 3 towns.

Fintech companies say there has been a significant demand for various digital business management services like e-invoices, cloud-based bookkeeping, integrated interface to file GST returns, creating payment vouchers for vendors and salary slips for employees since March 2021. It is primarily driven by traders, retailers, wholesalers and other small businesses.

Digital payments and financial services company

PhonePe

saw the number of offline merchants onboarding its platform double since last year. Its

VP

of offline business development Vivek Lohcheb says, “We have over 20 million offline merchants who accept PhonePe across 11,000 towns and 4,000 talukas across the country, from 10 million merchants accepting PhonePe across 300 cities in March 2020. A majority of these merchants are MSMEs such as kiranas and neighbourhood shops like pharmacies and street food stalls among others. And there has been a 300% growth in merchant onboarding from tier-2,3,4 towns and villages in the last year.

For online payment gateway platform Razorpay, about 51% of online transactions happened through MSMEs from tier-2 and 3 towns. It's business head of

SME

Vedanarayan Vedantham says they saw over 1.5 million MSMEs adopt digital payment solutions for the first time during this period. And its digital transaction volume has grown by 200% from smaller towns.

Chattisgarh-based fintech startup GimBooks, which offers cloud-based business management and accounting platform for SMEs, saw the number of

MSME

enrolment on its platform grow by 2x-3x between March 2020 and June 2021.

The mobile-first business management firm’s CEO and founder Yash Raj Agarwal says, “We have been steadily adding 20% higher number of MSME units on a monthly basis. We have seen a 33% price increase in the services offered; i.e., our yearly plan or subscription has increased from Rs 1,800 to Rs 2,400 currently.”

Even companies that trade in industrial goods like wholesalers, manufacturers and distributors have adopted the digital mode of bookkeeping.

It offers a cloud-based mobile-first business management platform with the solutions like invoicing, bookkeeping, creating payment vouchers for vendors and salary slips for employees, domain-based bookkeeping ensuring businesses stay compliant, and an integrated interface to file GST returns.

For fintech firm

Payoneer India

, which offers online money transfer, digital payment services, it saw a 22% growth in Indian MSME volume post lockdown in 2020 till now. With over two lakh micro, small and medium sized businesses on its platform currently, its vice-president Rohit Kulkarni says, “Users under the ecommerce business segment; i.e., MSMEs like goods sellers who sell on ecommerce portals has grown by 20-22% YoY. Businesses like textiles, herbal products, teas to newer sectors like toys, home and kitchen were the key categories of ecommerce exports from India.”

There is a huge demand for micro SMEs like freelancers who offer services like coding, software development, photography and others. “Post lockdown, a lot of businesses adopted cross border ecommerce channels. We saw good traction from tier 2 and tier 3 towns in ecommerce growth. For example, Udaipur and Jodhpur in Rajasthan, Erode and Tirupur in Tamil Nadu were amongst the largest growth markets in ecommerce growth,” he added.