In the past few years, the Micro, Small, and Medium Enterprises MSMEs sector has seen digital acceleration like never before. According to a report by global management consulting firm Kearney, the pace at which MSMEs should accelerate is slower than that of corporates, given the amount of digital innovation happening in the country today.
Business spends, which currently stands at $6 - $7 trillion, have the potential to reach $15 trillion by the year 2030, according to the report.
The report pointed out that demonetisation and the pandemic have played a key role in digitising small and medium businesses. Adoption of and upscaling the digital payments ecosystem within the B 2 B segment can pave the way for digital-first thinking within this sector.
The report said that the rate of digitisation is pretty dismal. Of the 64 million businesses in India, only about 3 -- 4 million businesses have shown rapid progress in digitising.
There are various reasons for this. There is a lack of awareness that leads to the low adoption of commercial cards among micro-enterprises. The same is the case with other enterprises as well. The adoption of commercial cards is a big deal for large businesses in the current scenario. Micro enterprises, which form the largest pool of businesses compared to small and medium businesses, have seen medium adoption of NEFTs. The problem with taking this number further up is a lack of scale.
NEFTs are seeing a high adoption among small and medium enterprises due to the integration of ERP solutions.
The report says that the way to drive digital payments within the sector depends on four aspects - adoption, standardisation, regulatory policy-making, and relying on solutions from the fintech start-up ecosystem.
India is the third-largest start-up ecosystem in the world after the US and China. The report said that the fintech-enabled solutions are increasingly being adopted by countries across the globe to drive efficiency, from syncing payroll expenses to cross-border accounting, invoice financing, auto reconciliation, and integration with CRM sales software.
The sector has been further boosted by the government initiatives such as the Open Credit Enablement Network, India Stack, and Aadhar.