Visa will explore long-term partnerships with fintechs to provide solutions to the entire value-chain of corporates and B2B suppliers, and may even look at investing in some fintechs, said Sandeep Ghosh, who was recently appointed as group country manager for Visa India and South Asia.
The fintech partnerships it is scouting are in the areas of dynamic underwriting solutions, as it looks to enable more small and medium businesses (SMBs) to receive the financing and benefits they need.
“In the recent last few years, there has been an adoption of corporate and commercial cards for statutory payments like GST, procurement where businesses are understanding the benefits of adopting card-based payments and it is a big opportunity,” Ghosh told ET in an interaction. “When corporates leverage card-based payments to pay long-tail suppliers, they can introduce (repayment) flexibility, embed financing in payments, and bring the element of analytics, bookkeeping and reconciliation for small businesses.”
As per Visa estimates, almost 25% of overall card payment transactions for the industry in India are B2B in nature.
This was largely driven by corporate use-cases such as employee travel and entertainment before the outbreak of Covid-19.
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However, with the pandemic disrupting travel and entertainment, almost 80% of card-based B2B payments in the country have shifted to supplier-related settlements and payments to small businesses and vendors, Visa said.
Corporate card use-case for employee travel and entertainment have reduced to 20%, at present, causing the card behemoth to actively increase its play in the segment.
“The B2B (payment) flows is still an underpenetrated market in India as compared to Europe and other markets,” Ghosh said. “India is poised for further adoption of digital payments in the future.”
Visa expects that B2B payments will roughly contribute to 50% of transaction volumes on its network in the country with business-to-consumer (B2C) contributing the rest.
Through a partnership view, Visa is working with several banks to offer value-adds to its customers including helping them provide financing and insurance to long-tail suppliers.
The company invested in business-payments platform PayMate back in July 2019 to offer enterprise payment solutions to SMBs, which also helps the card major complete the entire value chain of commercial payments for its corporate clients.
At present, several fintechs such as Clear, formerly Cleartax, that provides GST-filing solutions to corporates and SMBs, have shifted focus towards providing other value-services such as invoice-based discounting and lending, among other financial services.
“India is a huge focus market (for Visa) where we see a hyper growth potential for the next many years,” Ghosh said. “The reason why we are bullish is because of the rapid digitisation and ever increasing ecommerce payment volume… India continues to be the top five international markets for Visa in terms of future growth.”
During the investor call for its second quarter results for FY22, Vasant Prabhu, vice chairman and chief financial officer of Visa Inc, had said India showed strong recovery from the pandemic-restrictions “up almost 20 points from December”, and has been Visa’s fastest growing market in Asia, up almost 80% since 2019, fuelled by a tripling of ecommerce volumes.
Its other B2B solutions in the country include CyberSource payment gateway solution to provide industrial-grade payment acceptance capability for larger merchants such as Flipkart, helping them handle huge transaction spikes during events such as Big Billion Days sale.
On the B2C side, Visa is continuing with its ‘network-of-networks’ strategy, where a payment transaction can start on a certain payment infrastructure and end on a different one. Visa is partnering with unified payments interface (UPI)-payment solution providers and digital wallets to ensure customers also get the option of paying through their debit or credit cards even as they scan a merchant quick-response (QR) code.
For Visa Inc, consolidated net income in the fiscal second quarter ended March 31, 2022, was $3.6 billion. Operating expenses were $2.4 billion, an 11% increase over the prior year’s results, the company said.