Startup Mantra: Cross-border payments made easy
Indian fintech startup Skydo is providing a cross-border B2B payments platform for small businesses, offering a convenient and cost-effective solution for Indian exporters to receive payments from customers abroad. The platform operates under the RBI's Online Payment Gateway Service Provider framework and aims to save transaction costs and reduce the frustration of waiting for banks to confirm payments. Skydo's payment tracking service allows businesses to monitor the journey of their funds, reducing the risk of fraud and simplifying document management. The startup has served over 300,000 MSME exporters and plans to expand its services to various customer segments and offer financing options and treasury services.
PUNE Chinmay Chandgude, designated partner at Pune-based Latent and Abhishek Agarwalla, founder of Bengaluru-based Aidetic, both faced problems while receiving payments from their customers abroad. Like them, lakhs of Micro, Small and Medium Enterprises (MSMEs) exporters share similar experiences. All these entrepreneurs want is to save transaction costs and not wait in frustration for banks to confirm their payments being ‘sighted.’
These entrepreneurs recently discovered Skydo, a cross-border B2B payments platform for small businesses, founded by Srivatsan Sridhar and Movin Jain, which is providing Indian exporters with a convenient and cost-effective solution to receive global payments from customers abroad.
Skydo operates under RBI’s OPGSP (Online Payment Gateway Service Provider) framework. Currently, this facility serves as the primary payment method for over 300,000 MSME exporters across India.
Exporter challenges
In the dynamic landscape of international trade, India is seeing dramatic growth in exports. Over the last two years, the nation’s exports soared from ₹41.50 lakh crore to an impressive ₹ 64.40 lakh crore, marking a staggering 36 per cent increase. This rapid ascent catapulted India to the 14th position globally in terms of exports, a testament to the nation’s growing prowess in international trade.
Exporters and freelancers currently face multiple challenges while receiving overseas payments and the biggest of them is high costs. While banks charge around 2 to 3 per cent of the invoice amount, the figure can go up to 10 per cent depending on the intermediary payment providers. Apart from the inability to track the payment, exporters and freelancers often must wait for two to three days for funds to be transferred to their accounts and must negotiate foreign exchange or Forex.
In essence, the combination of high processing fees, delayed settlements, and complex regulatory requirements results in considerable transaction expenses, amounting to ₹9.96 lakh crore globally each year due to currency conversion, bank fees, and other transaction charges. This is where Srivatsan and Movin’s startup Skydo made receiving international business payments simple, cost-effective, and seamless.
Initial steps
Srivatsan, a mechanical engineer from the Coimbatore Institute of Technology and an MBA from the Indian School of Business, began his career in Chennai, leading an automotive parts business founded by his father.
Though he went on to work as a consultant with McKinsey & Company and with Ola and Rupeek in senior leadership roles after leaving his family business, the issue of solving payment problems for exporters was always in his mind. “At Ola, I met Movin and we realised our common interest in starting up, solving large impactful problems and creating a tech-enabled platform for making people’s lives easier. This led us to set up Skydo in 2022,” says Srivatsan.
Movin, a computer science engineer from IIT Delhi and an MBA from the Indian Institute of Management, Ahmedabad, started his career in the investment banking space.
“After working in the UK for a couple of years, I moved to Bengaluru to join the startup ecosystem and have worked for more than a decade, across start-ups, OLA cabs, Meesho and InMobi,” says Movin.
Before starting Skydo, he was leading product management at Phonepe where he worked closely with NPCI, RBI, Banks & Payment Gateways to ensure seamless user experience.
Automating FIRA generation
Skydo’s payment tracking service functions much like parcel tracking on e-commerce platforms. Skydo enables you to monitor the journey of your funds, from the moment they are sent by your client or partner overseas to the point where they are credited to your account. Skydo’s payment tracking service is a reassuring solution. It lowers the risk of fraud and reduces transaction costs as it bypasses intermediaries. Additionally, the documentation process involved in international payments is often a cumbersome, paper-based ordeal that can take up to 7-15 days or even longer in the case of errors or inaccuracies. It is a major pain point, particularly for exporters dealing with multiple foreign clients.
Skydo has addressed this issue by automating the generation of FIRA for all international payments once they reach the exporter’s bank account.
Srivatsan says, “Skydo’s user-friendly dashboard allows businesses to download FIRA receipts for individual transactions with a single click. This significantly simplifies document management and reporting, ensuring compliance with Indian tax laws and other regulatory requirements.”
Fintech challenges
Though both Movin and Srivatsan had prior experience in helping build businesses in the payments and fintech startup eco-system, they still faced multiple challenges because of the lack of awareness among exporters about the deductions made from their payments.
“One of the challenges in building a cross-border payments platform is that a lot of companies do not know what they are paying for while receiving international Forex payments. Traditional banks and platforms charge under several oblivious headings, and make it difficult to understand the exact nature of the charges,” says Srivatsan.
Moreover, it is not easy to reach out to small exporters as they are scattered across various belts. “We address this by participating in industry and export forums to raise awareness,” Movin says.
International remittances
At Skydo, Srivatsan and Movin have built a tool that helps exporters and freelancers understand how much they were charged on a Forex transaction. “So, if you are an Indian company that frequently receives payments from overseas, this tool could help you understand exactly how much you are paying to banks or other intermediary platforms out of your hard-earned revenues,” Movin points out.
“To use the services of Skydo, an exporter must link their India bank account with Skydo through its web-based application,” explained Movin.
“Once linked, the exporter can raise an invoice. Here, the Skydo invoicing tool helps to automatically fill in the bank account details, unlike other platforms where the international bank account details must be refilled every time before being shared with the customer. Once the invoice is raised, Skydo tracks and communicates payment status, credits the India bank account with the payment, and sends the payment advice and compliance details to the exporter. It takes less than two days for the payment to be received in the exporter’s bank account. What sets Skydo apart is its straightforward pricing structure for all transactions, eliminating unexpected charges and allowing for easy cost calculations and budgeting,” said Movin.
Impact
Agarwalla is a case in point. In November 2021, when he was expecting his first payment from a new client in Canada, he could not track its whereabouts. His client had made the payment of $7,000 via SWIFT nine days ago, and Abhishek was being chased for a confirmation of receipt of funds. “The relationship manager at the bank informed me that the payment had not been ‘sighted’ yet, leaving me to wait in frustration,” he recalls.
“I discovered that Skydo’s product was specifically designed to solve the exact problem I was facing. I signed up as one of their first customers. Later, I obtained virtual accounts in the US, UK, Canada, and Europe. I have now instructed my clients to transfer money into these accounts for all future payments,” he says.
According to Chandgude, Skydo has similarly helped them reduce transaction costs and the need to constantly follow up with banks due to the provision of instant FIRA making managing payments much simpler and saving on transaction costs but also on FX rate losses.
Future plans
Skydo has recently completed one year of operations and is currently serving 750+ Indian businesses and exporters, seeing a rapid month-on-month growth rate of 20 per cent. It has processed over USD 10 million in Forex payments since launch and expects this to grow to USD 500 million in the next 12 months.
Currently, Skydo is sharply focused on reaching out to 200,000 small businesses which can be onboarded. “In our initial growth phase, our primary focus is on deepening our product offerings, with a particular emphasis on serving the SMB market,” says Srivatsan.
“Now, we have extended our payments platform to include a dedicated analytics section. Users can segment and categorise payments, distinguishing between those that have been settled and those that are outstanding. This provides valuable data to identify reliable customers and make informed decisions,” says Movin.
“Our next steps involve expanding into various customer segments, including remote workers. Additionally, we are exploring opportunities in the financial services sector, such as providing financing options, offering payout cards, and introducing treasury services to facilitate multi-currency payments. In terms of competition, we aim to carve our niche by supporting ₹8300 crore export payment flows across businesses and freelancers by 2024,” adds Srivatsan.
Skydo has helped businesses save close to ₹2 crores in fees and Forex charges last year and its ambitious growth plans mean this saving is likely to be ₹100 crores in the next year.