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EXCLUSIVE


WHAT ARE EXPENSE CARDS AND HOW ARE THEY HELPING SMES?

Most SMEs focus on large expenses such as rent, payroll, cost of goods, etc, and
overlook smaller items such as utilities, insurance, internet, etc. Expense
cards are prepaid, debit, or occasionally credit cards for business expenses
that give companies new levels of control over spending. In this week's
Explainer, ETBFSI spoke to two FinTech companies who shared insights on expense
cards, their functionality, challenges they address, and how they are helping
SMEs.

 * ETBFSI
 * August 16, 2022, 08:00 IST

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~ Anushka Sengupta

SMEs are primarily known as the ‘missing middle’ due to the lack of their credit
history and limited financial services available to them. For such businesses, a
primary obstacle is their credit score, which makes it a challenge to get a
corporate credit card with a decent limit. On the other hand, an expense card
eliminates all these issues and offers spending limits based on the money
uploaded to the card, said Kumar Shekhar, VP-Member Operations, Tide India.



Corporate expense cards are prepaid, debit, or occasionally credit cards for
business expenses that give companies new levels of control over spending.

Every business wants to create a business process that’s streamlined and made
easier for a smoother workflow. This not just benefits the business in the long
run but also creates better work processes for the employees.

The larger problem companies face is managing business finances especially when
it comes to business spending. Manually tracking the outgoing transactions is
something that’s not just time-consuming but involves a longer finance process.
Corporate expense cards can reduce the time spent in manually tracking expenses
since these are linked to an online account that automatically tracks expenses
and categorizes them accordingly, said Anish Achuthan, Co-Founder and CEO of
Open Financial Technologies Pvt. Ltd.

Anish believes that expense cards are a must-have for the smooth running of
teams, helping the organization scale up, letting go of its legacy processes,
and increasing productivity internally.



Expense cards help SMEs boost productivity

SMEs face critical challenges like managing and reconciling expenses,
non-compliant expense reports, privacy and security issues, etc. To address
this, an expense card is a one-stop solution for all small and medium business
owners, which will help them manage and monitor their expenses efficiently.



Keeping track of the company’s spending also makes tax time much easier as many
costs may be written off. Regular expense tracking and monitoring decrease the
likelihood of overlooking possible tax deductions. As a result, MSMEs have to
pay less in taxes, which saves them significant unnecessary expenses, said
Kumar.

Most SMEs focus on large expenses such as rent, payroll, cost of goods, etc, and
overlook smaller items such as utilities, insurance, internet, etc.

A non-streamlined expense management solution pushes an employee into a cobweb
of organisational procedures thereby giving them lesser time to focus on the
larger tasks at hand. Businesses are always looking for ways to create efficient
processes that lead to optimising every function. Hence, they are always on the
lookout for solutions that contribute to this mission, said Anish.

If businesses are supported with the necessary tools, monitoring their spending
is far less painful. These resources also help in building everyday cost
tracking habits for businesses, which in turn enables them to keep a closer
watch on the smaller corporate expenses. Further, with time and effort saved on
spend management and manual reconciliation, there will also be a visible impact
on the top line and profitability.

Since we are on a mission to solve the business banking problems that small
business owners face we often interact with them to understand the problems they
face to optimize and create solutions that can help them. Through these
conversations we’ve learned that entrepreneurs often complain about not being
able to spend more time on the more operational aspects of their business and
managing cash flows, he added.

SMEs in India heavily rely on cash when it comes to expense management and then
reconciliation. This remains the key challenge to adoption, additionally,
financial instrument awareness and education continue to be other challenges.
They are also concerned about security especially when it comes to their funds.


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EXCLUSIVE


INDIAN FINTECH MARKET TO RECORD ‘10 TIMES’ GROWTH; ACHIEVE $1TN IN AUM, $200BN
IN REVENUE BY 2030

India is now being recognized as one of the largest FinTech unicorn ecosystems,
home to 21 FinTech Unicorns as of March 2022.

 * ETBFSI

Click Here to Read This Story
 * 
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Indian Fintech market is expected to record a 10 times growth to achieve $1Tn in
Assets Under Management (AUM) and $200Bn in revenue, said the report titled ‘$1
Tn India FinTech Opportunity'.

The report released by Chiratae Ventures in collaboration with Ernest and Young
(EY), highlighted that much of the growth will be driven by the digital lending
market, which is expected to grow to $515 Bn in book size by 2030.

The market is expected to reach $1Tn in AUM with contribution from lending to be
highest at 50%+, while from a revenue standpoint payments and lending make 75%+
of the pool, the report highlighted.



India is now being recognized as one of the largest FinTech unicorn ecosystems,
home to 21 FinTech Unicorns as of March 2022. An organic and collaborative
ecosystem is driving this growth, which is being supported by key government
initiatives, such as Digital India, Smart City, the development of UPI, and
other initiatives.

Payments, Digital Lending, WealthTech, InsurTech, and Neo-banking will all be
contributing to growth in the FinTech space with Agri+FinTech and Prop+FinTech
considered to be big bets.

Tailwinds due to favorable demographics, growing technology adoption, higher
disposable incomes, and aware customer are further fuelling this growth.
Fintechs have been innovating in product and delivery to cater to the evolving
needs of the customers.

The report also highlights that Buy Now Pay Later has become mainstream and is
on an accelerated growth trajectory, emerging strong not only in B2C but also in
the B2B payments space.

On the launch of the report Sudhir Sethi, Founder, and Chairperson, Chiratae
Ventures said, “The Indian Fintech market has been a formidable global force,
contributing to the largest share of unicorns in India. We have been a
technology-first investor believing in the power of both data and technology and
hence have backed companies such as EarlySalary, Kristal.ai, PB Fintech, ShopSe,
and Vayana amongst others”



Co-lending to emerge as a preferred model that supports lending partners in
mitigating their risk exposure. New asset classes, Crypto & NFT will also
continue to attract investor interest as fintech continues to solve for
traditionally underserved customers.

Technology-based Innovation on the underwriting side of the insurance value
chain will help deliver solutions for the highly unpenetrated market at
affordable rates.

“FinTechs have innovated for the underserved financial markets through a strong
and supportive ecosystem, which will continue to keep accelerating growth and
penetration of Fintech in India. These include fast-growing digital adoption and
mobile penetration on the back of the cheapest data rates in the world offered
by private telecom players, to enabling regulatory environment coupled with
world-leading digital infrastructure (Aadhar, UPI, BBPS etc.), and structural
reforms and initiatives (GST, TReDSetc.),” said TC Meenakshi Sundaram,
Co-Founder and Vice Chairperson, Chiratae Ventures.

“We also expect FinTechs to continue solving for the substantial and growing
sub-markets with novel solutions,” he added.

With 5X growth in the digital tech talent, India has the opportunity to address
the global digital skill gap and establish itself as the destination of digital
and tech talent.

“India is recognized as a strong FinTech hub globally and is increasingly
becoming a talent destination for fintech businesses. We are glad to partner
with Chiratae Ventures and delve into the emerging trends in regulatory
innovation, technology advancements, new business models, industry convergence,
and inclusive digital financial services in the Indian fintech space,” said
Rajiv Memani, Chairman and Managing Partner, EY India.

The report also highlighted that the regulatory support will enable the industry
further as already established models go international through collaborations.

The actively encouraging innovation through regulatory sandboxes, new
distribution models, and the launch of innovative products has provided a good
regulatory environment.



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