India’s over 63 million micro, small, and medium enterprises (MSMEs) form the backbone of the nation’s economy, contributing nearly 30% to GDP and 45% to exports. They embody India's entrepreneurial spirit and offer a clear pathway to inclusive prosperity and in the past decade, the landscape for these businesses has quietly but radically been transformed by the rise of digital payments and custom solutions.
As India’s MSMEs chart their next phase of growth, digital payments are playing a pivotal role
India’s over 63 million micro, small, and medium enterprises (MSMEs) form the backbone of the nation’s economy, contributing nearly 30% to GDP and 45% to exports. They embody India's entrepreneurial spirit and offer a clear pathway to inclusive prosperity and in the past decade, the landscape for these businesses has quietly but radically been transformed by the rise of digital payments and custom solutions.
As India’s MSMEs chart their next phase of growth, digital payments are playing a pivotal role — not just in streamlining transactions, but facilitating access to responsible credit, enhancing operational efficiency, and integrating small businesses into the fabric of a digitally empowered economy.
MSMEs exhibit agility, local market understanding, and niche expertise making them indispensable in complex value chains. They are now at an inflection point, leveraging digital tools and advantages once reserved for large corporations—like global market access, digital commerce platforms, and innovative financial services.
To truly strengthen India’s MSME ecosystem, organisations that have evolved in tandem with the nation and can seamlessly blend their global expertise with rich, local understanding—must rise to the occasion and help chart the path forward.
According to a Visa study, 39% of small businesses globally view new payment methods as key to expanding their customer base, with over 58% seeing increased turnover and 88% identifying cross-border expansion as a major opportunity.
However, challenges persist. Cash flow management, working capital constraints, access to credit, continue to hinder their full potential—including for women-led MSMEs in India, who make up over 26% of the sector and often lack tailored support.
A core challenge lies in fundamental financial management practices among many small business owners. Commingling personal and business expenses, a lack of systematic record-keeping, and inadequate risk protection restrict growth and limit access to formal credit and government schemes. These can be remedied.
Modern digital payment ecosystems offer elegant solutions through the three Cs framework--control emerges through clear expense categorisation and automated financial oversight. Convenience manifests in streamlined operations, reduced cash handling risks, and seamless cross-border transactions. Cost-effectiveness derives from flexible credit access, operational savings, and negotiated business service discounts.
Recognising the nuances within the diverse nature of small businesses is vital. Home-based entrepreneurs require simple expense separation and credit-building tools, while established businesses eyeing international expansion need sophisticated cash flow management, exclusive platform access, and comprehensive travel benefits. Growth-stage enterprises require integrated business productivity tools, cloud services, and statutory compliance automation.
The Asia Pacific region is home to over 200 million MSMEs, many of whom face challenges in adopting digital payments—chief among them, high transaction fees, and limited digital education. In fact, 26% SMBs in Asia Pacific that don’t accept cards cite costs as a concern—along with expenses for setup, maintenance, and training. While the adoption of digital payments is rapidly addressing these barriers, the rise of innovative fintech solutions is taking digital transformation even further.
Digital CFO platform solutions, also available in India, are redefining financial management for MSMEs—automating bookkeeping, optimising cash flow, and easing access to credit through organised digital records. Meanwhile, SaaS platforms are enabling even the smallest businesses to integrate financial and operational tools, enhanced further by Gen-AI and Web 3.0 for smarter decision-making and customer experiences.
Security concerns are a significant issue for MSMEs, especially with the rise of sophisticated cyber threats. In 2023, 33% of Asia Pacific SMBs that accepted cards saw preventing fraudulent activity as a challenge when setting up card payments. Tokenisation mandated in India by the Reserve Bank of India is a critical step in securing payments. Additionally, Visa solutions like real-time risk assessment and innovations such as Compelling Evidence 3.0 can also help to alleviate these concerns.
Visa global innovation of Flex credentials empowers users to add business credit to personal cards. It enables them to easily switch between business and personal spends using banking app rules—streamlining expense management and improving efficiency.
In India, government adoption of digital payments with e-Marketplace (GeM), has grown supplier participation from 3,000 to nearly 4 million by FY21-22. It helped draw more MSMEs into the formal economy by facilitating their integration into the government digital procurement system. Further, initiatives like the Udyami Mitra portal are positive steps towards reducing friction and improving accessibility.
Sustainable change demands a robust collaboration among public institutions, private enterprises, fintech innovators, and community organisations. Programmes like Visa’s Empowering Women Entrepreneurs programme demonstrate the transformative power of such partnerships. Since 2022, Visa, in collaboration with the NGO--United Way Mumbai, has supported over 11,000 women across 360+ districts in India empowering them with access to financial and business skills, mentorship opportunities and financial tools, helping them thrive in their entrepreneurial journeys and ensure prosperity for whole communities.
India is on the threshold of becoming a global economic powerhouse and MSMEs are the key drivers of this growth. A multi-stakeholder collaboration would be instrumental to propel their transition from merely being beneficiaries of transactional support to active participants in the ecosystem. By building tailored solutions and stronger infrastructure, together we can unlock the MSME potential—fueling inclusive and sustainable progress.
This article is authored by Shruti Gupta, head, Commercial and Money Movement Solutions, Visa India and South Asia.
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