- B2B payments are the exchange of currency-denominated value from buyer to supplier in exchange for goods or services. Depending on the contractual arrangement between the customer and supplier, It might be one-time or recurring.
- B2B payments are more complicated than B2C payments since they require more time to authorize and finalize the transaction, which might take days or weeks. In contrast, in B2C payment processing, the transaction is often finalized immediately. In India, at least 90 to 100 transactions are required per day to allow the business to be commercially viable.
- However, the B2B payment technology offers several benefits such as reduced payment transaction charges and improvement of sales of the organization to domestic business owners, which drives the growth of the market. In addition, the rise in the adoption of cash in advance payment technology such as credit cards for purchasing products from domestic businesses propels the growth of the market in this segment.
- The India B2B payments market was valued at $31.34 billion in 2020 and is projected to reach $98.04 billion by 2028, registering a CAGR of 15.4%.
- On the basis of payment mode, the B2B payment market is divided into traditional and digital. The India B2B payments market was valued at $31.34 billion in 2020 and is projected to reach $98.04 billion by 2028, registering a CAGR of 15.4%.
- On the basis of transaction type, the B2B payment market is segmented into domestic payments and cross-border payments. The India B2B payments market was valued at $31.34 billion in 2020 and is projected to reach $98.04 billion by 2028, registering a CAGR of 15.4%.
- On the basis of enterprise size, the B2B payment market is segmented into large enterprises, medium-sized enterprises, and small-sized enterprises. The India B2B payments market was valued at $31.34 billion in 2020 and is projected to reach $98.04 billion by 2028, registering a CAGR of 15.4%.
- As per RBI Data, cash withdrawals through micro ATMs had almost doubled. While the initial spurt was huge, the growth was only 22% in the last financial year.
- The cash withdrawals worth ₹1,17,086 crore were done through micro ATMs in FY20, and this grew by 92% to ₹2,25,041 crore in FY21. Between April 2021 and February 2022, the value of withdrawals was ₹2,71,297 crore.
- As of August 2021, 0.49mn micro-ATMs were deployed in the country.
- Retail digital merchant payments in India have grown at a 67% CAGR over the previous five years, reaching Rs 58 trillion in FY21, While through AePS a total of 43 cr transactions worth Rs.16,101 cr were made during the lockdown period. In the financial year 2020, AePs had over one trillion Indian rupees worth of transactions across India.
- Since its launch in 2016, AePS has grown at a CAGR of 137%. It recorded over 400 million transactions in April and May 2020, owing to direct disbursement under the stimulus packages announced by the Government during the COVID-19 crisis.
- The global remittance market size was valued at $701.93 billion in 2020, and is projected to reach $1,227.22 billion by 2030, registering a CAGR of 5.7% from 2021 to 2030. As of FY21, yearly remittances within India amounts to roughly Rs 2 lakh crore.
Industry Growth Drivers
- In rural India, people prefer to make a transaction in person, instead of digital transactions which limit the penetration of digital solutions, till now, 72% of transactions in India happen via cash which makes cash the dominant mode of transaction, especially in the rural area, one of the main reason for this is a huge lag in digital literacy. Only 38% of households in India are digitally literate which makes them unaware of these payment methods, but this creates a huge opportunity for the industry to spread awareness and capture the remaining market share.
- The cost of acquisition for PoS terminals is considerably high for rural merchants which leads to low penetration of these payment services in tier-2 and tier-3 cities, which opens up many growth opportunities for the company. Even, as of FY21, rural India has 6.2 ATMs per 100,000 people, which is much lower than the pan-India average of ~21 ATMs. It is estimated that only one in ten villages has reasonable access to an ATM.
- One of the major factors driving the need for B2B payments among businesses is the rising export and import of products and services throughout the world. Furthermore, firms anticipate dealing with other nations in order to expand, which increases cross-border commercial transactions. Furthermore, the increased use of technology in B2B payments, as well as the fast expansion of local SMEs and medium-sized businesses engaged in large trades, function as important driving forces in the worldwide B2B payments market.
The company has various competitors in the unlisted market including RapiPay, SpiceMoney, Fino Paytech, but Ikeda holds a significant advantage over them in terms of fast and secure services.