The world is shifting towards digital economy and it is changing countries and people across the globe. Digital transformation is altering the way organisations work and is contributing in reshaping the global economy altogether.
Digital transformation has also changed the modes of payment globally making it easy, cashless and hassle-free. India is seen as one of the top markets for digital economy as it is ranked fourth in in terms of active Internet users across the world. The Indian government is also gearing towards digitisation of the country and has launched initiatives to pave way for a cashless society through its varied schemes like Aadhar Pay.
The Indian government recently announced that it will be banning cash transactions of greater than Rs 3,00,000 (UK£3600 or US$4500), in the 2017-18 Budget which focuses on boosting the digital economy and rural growth. The move is designed to shift paymnent methods in India to a virtual and digitised system and making the country a global market for firms across nations.
Payoneer's CEO Scott Galit speaks with International Business Times- India edition about India's potential of being a fast-growing digital market and the company's future plans with the nation. Payoneer is a leading financial services business which provides online money transfer and e-commerce payment services:
- What kind of potential do you see in India for your business and its role in global digital economy today and why?
India has shown strong growth in both the export of goods and services in the recent past. The country has a large population and a budding market of entrepreneurs. Today, we have over a million merchants selling goods like handicraft, leather products, jewellery, apparel and home products. India is also one of the biggest ICT service exporters. In fact, 30 per cent of India's export is software and services. With more than 1.5 crore freelancers; it is estimated that we bring in about 40 per cent of global freelancing business. Our products and offerings are customised to help each of these segments get paid from their global clients in a fast, easy and low-cost way.
- When did you launch your operations in India and how has been the response so far?
We have had our licenses in India since mid-2015. Businesses in India are very enterprising and they found us online even before we had a local presence. Our office in India opened in August of 2016 to support and grow the services for our Indian customers.
- What are the trends you have analyzed when it comes to transactions by Indians and how different are they from the rest of the world?
India is unique in that the export of both goods and services are growing at a fast pace. Typically, other emerging geographies focus on just one of these segments. Because of this span, we get various customer requests for their cross-border transactions. For example, our platform plays a role in building parity between small developers and enterprise companies as far as speed and costs of processing payments are concerned. This allows the developer to have similar cost structures and compete with the large organisations. Similarly, we enable small goods exporters to get their tax refunds by helping them identify and complete the needed documentation.
- Do you foresee entry of more global players eyeing India in the context of gradual shift to digital economy?
In our opinion, the shift to digital is not gradual and businesses are adopting it at very fast pace. Our focus is to help these businesses embrace this shift, and to grow and compete on a global scale. We channel our efforts in driving this transformation rather than worrying about our competition.
- What do you think is crucial to a successful switch from cash economy to digital?
Some key factors for a successful switch from cash to digital are: a) transparency - for example we disclose our pricing upfront. In contrast, with many other players and banks, the foreign exchange conversion rates are mostly unknown to the person receiving the funds, and b) trust and expertise – as a company, we have focused exclusively on cross-border B2B transactions. This has helped us develop strong machine learning profiles that help us do faster approvals and disbursal, to make sure the digital economy can move as fluidly as the cash economy. And finally, c) awareness – as we speak, we are preparing to outreach into tier 2 and tier 3 towns in India as that's where the transformations have been slowest.
- In a country like India where only 26 per cent of Indian population has access to internet, how do you think digital economy will progress here?
Though only 26 per cent of the India population has access to the Internet, it's important to keep in mind two things. First, in terms of the number of Internet users, India still ranks fourth in the world, so the number of participants in the digital economy is massive. The relatively low penetration percentage promises a huge potential for growth to come. Second, I think this statistic would grow quite a bit if we were just looking at businesses. Anecdotally, I haven't come across a single business or entrepreneur in the cities or in the rural areas of India who does not have a smart phone. Our focus will be to tailor our services to every kind of user. For example, we may have to create vernacular language versions of our content. But Internet access is not something we lose sleep over. We believe the transformation there is well underway.
- Won't vulnerability to data theft discourage consumers from using digital modes of payment, especially in countries like India?
Unfortunately, cyber theft is as inevitable of a risk for digital economies as regular theft is for cash. Just as we must all take some steps to protect ourselves from pickpockets and scammers, we must take digital precautions as well. The key is to do business with payment providers you trust, that have a reputation for security and honesty. Payoneer is a risk company at heart, and one of the most regulated and trusted fintech companies globally. Our backbone is a strong and secure platform for transactions, customer data and any information that changes hands.
- What is your revenue model? Apart from charging customers for transactions done, Is there any other source of income for you?
Our belief is that we should focus on creating more value for our customers and act as their partner for growth, and that this in turn will expand Payoneer's network of users and ultimately lead to our success as well. One such example are the free forums we host all over the world that bring in experts from various industries who help entrepreneurs learn more about how to grow and optimise their business. Payoneer is about empowering an SMB to grow their business, and payments is just one piece of the puzzle.
- With only 29 per cent women among the Internet users in India, how can more women be included in the digital workforce?
I think an important first step is recognising just how wide the opportunities in the digital economy are. Many traditional jobs can bring success online, and the digital economy offers the added benefit of a flexible schedule. For many, a 9-5 workday can interfere with family life. Freelancers and entrepreneurs can work from the comfort of their own home, and during the hours that suit them. In addition, marketplaces are looking for a wide variety of entrepreneurs – translators, designers, photographers, craftmakers, and more. In short, almost anyone with a strong skill and a willingness to work hard can find success in the online economy.
- What are your plans for the current year? Anything specific for India?
India is a priority for Payoneer and one of the key focus areas. We already have a local office and we want to be as close to our customers as possible. We are investing in driving awareness across India so that businesses can understand the benefits of digital and cross border. We are localising our products and offerings to suit the local demand.