How digitisation is easing the process of corporate payments for India Inc

Hate sifting through paper bills or taxi receipts to file for reimbursements at the end of a hectic office tour? Or tired of maintaining medical and food bills to claim monthly reimbursements? 

A clutch of tech-enabled digital payments startups is trying to make life simpler for corporate India. 

While consumer payments are going digital on mission mode, most payments in the corporate world are still trapped in paper bills, cash transactions and hardbound files saved for audit trails. Sensing opportunity in digitising these, a clutch of new-age companies such as Zeta, Happay and NiYO are trying to bring innovative solutions. 

But challenges are aplenty, including the apathy of corporates to invest in digitisation, complicated tax norms, and increasing competition from banks as well as established payments companies such as Paytm and MobiKwik. 

“In India, 95% of the companies I speak to have not got a corporate card for anything more than their top 10 executives. Most of the employees have to incur travel expenses from their own pockets and then get reimbursed,” said Neeraj Dotel, managing director for India and South Asia at US-headquartered SAP Concur, a global giant in the reimbursements business. The business opportunity in corporate reimbursements became brighter with the Reserve Bank of India mandating digitisation of paper vouchers by the end of February, receiving a push similar to how the consumer payments industry benefitted from the demonetisation of about 86% of the currencies in circulation in November 2016. 

“It would be great if the government could make a stronger push towards digitisation and make it mandatory within 12 months as the cost of fake bills and verification of the same is extremely high,” said Sanjay Swamy, managing partner at Prime Venture Partners, which has invested in both NiYO and Happay. 
 

SME OPPORTUNITY 
Companies incur two major kinds of operational expenses: employee salaries and reimbursements, and vendor payments. About 90% of the operational expenses in terms of value are vendor payments, which for large listed companies are digitised by banks through bulk payments and other corporate solutions. 

Startups are particularly looking for opportunities in the small and medium enterprise space, where companies typically have relied on traditional banking services or cash for payments. 

Bengaluru-based Happay offers SMEs its prepaid payments solution to handle their multiple payment requirements, particularly targeting companies with large feet-on-street models or retail chains. NiYO and Zeta are bringing in technologyenabled payment solutions that will allow for all reimbursement calculations and payments to be digitised. 

Woohoo offers complete digitisation of employee gifting as well. 

“An estimated seven million small enterprises use Tally as their accounting software. These are our prospective clients who would find our payments solution ideal,” said Anshul Rai, chief executive officer of Happay. “Since banks do not build products for these entities we have a huge opportunity here.” 

Merchants like Health and Glow or Dr Batra’s that have distributed retail chains across the country have always faced issues in managing the payment needs of their outlets. Such companies would typically open accounts separately for each outlet, making managing finances for the entity a huge challenge, said Rai. 

“What we bring in is an expense card that can be used for all the expenses of these outlets. Since everything is digital the chief financial officer of the company will have a complete overview of where payments are happening,” he said. 

Happay has around 4,000 corporate clients using its expense management solution, which is integrated with their backend systems to enable them to track and manage transactions seamlessly. 

SAP Concur, which has a dominant market share in India and works with 70% of the Fortune 500 companies globally, offers technology-based solutions for employees to digitise payments incurred while on tours. 

“I call it ‘mazdoori’ (hard labour). Employees have to tabulate the expenses, get the receipts, staple them together, and send to the central office or department for processing. It is waste of work hours for highly paid white-collar executives,” said Dotel of SAP Concur. 

SAP Concur has partnered with more than 40,000 merchants across major service providers such as airlines, taxi aggregators, and restaurant chains. Its platform automatically captures any expense at such locations, eliminating the need for manual tabulation by employees of its clients. Zeta, a part of Directi Group and founded by serial entrepreneur Bhavin Turakhia, is digitising the entire reimbursement payments of firms with digital wallets and prepaid cards to capture employee spending directly and process them for any tax benefits. 

Social Capital-backed NiYO is reaching out to corporate entities to install its entire reimbursement stack. What startups offer here is not only beneficial for the company’s Human Resource department avoiding paper work but also makes life easier for employees who do not have to retain medical bills and other documents for reimbursement claims. These platforms tabulate expenses, digitise spends and prevent leakages as well. 

GROWING MARKET 
The scope for digitisation of corporate reimbursements is huge. The challenge for startups is to be able to win the trust of companies, which tend to be able to win the trust of companies, which tend to be wary of integrating directly with emerging businesses. 

As per industry estimates, out of 15 million SMEs in the country about 5 million could be potential users of digitised corporate payments solutions for both vendor management as well as employee benefit payments. MobiKwik estimates the size of the market at about Rs 51,600 crore. Also, unlike individual customers, corporate clients offer greater stickiness and stability. 

“Individual customers jump between payment providers in search of discounts and cashbacks. In our business, clients do not prefer to switch service providers easily and tend to stay with us for a minimum of five years, which is enough for us to make up the acquisition cost and more,” said Rai of Happay. 
Banks too have woken up to the opportunity, posing tough competition to younger startups. All banks have to do to win clients is top up their corporate salary account offers with reimbursements, foreign exchange, travel cards and other features. 

“Our focus is to offer the entire banking, investment and assets suite along with value-added products and services,” said Deepak Sharma, chief digital officer, Kotak Mahindra Bank. Paytm and MobiKwik, too, are vying for a share of the corporate payments market. 

MobiKwik recently launched Mobkwik Magic to capture a share of the employee benefits and reimbursements space. “We aim to eliminate the estimated processing cost of `6 crore for organisations, and benefit over 5 million users by 2020,” said CEO Bipin Preet Singh during the launch of the product. 

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