IndiaMART launches buyer & seller protection program (escrow service)
IndiaMART, India’s largest online marketplace has announced its entry in the payments space to enable over 3 million sellers on its platform. Addressing the bottleneck of trust deficit for the SMEs, the company has launched its buyer and seller protection program which will enable the sellers to remain free from the concern of payment risk, and assure the buyers that they will receive exactly the product or service they expect before the payment is made.
For any marketplace, effective payment facilitation is the most aligned service as it facilitates the purchase cycle. And with more than 14 million monthly business enquiries being generated from around 35 million registered buyers, it made sense for the company to offer a service that can help buyers and sellers to safeguard their business deals.
Dinesh Agarwal, Founder & CEO of IndiaMART said, “Bottlenecks like trust deficit & lack of credit continue to hold back the growth potential of our SMEs. Being at the convergence of e-commerce, payments and finance we have a larger plan to address these areas and this is the first step under the umbrella of initiatives like escrow services, payment gateway, invoicing and receivables management and SME financing. There are more than 50 million SMEs in India and our vision is to enable ease of doing business for them. With this buyer & seller protection program, we are taking our first step in that direction.”
The company launched the pilot project in January 2017 and has seen a week-on-week growth of 100%. More than 10,000 buyers and suppliers have already registered for it. The company has partnered with ICICI Bank for providing RBI approved escrow account management service.
This is not the first time that the company has ventured into payment solutions. The marketplace had launched ABCpayments.com in 2005 when it was an export oriented platform. “In 2009, we pivoted towards the domestic marketplace model and after achieving scale for 5 years we again decided to work towards payment facilitation. After bringing Lizzie Chapman, Co-Founder & CEO of Zest Money, who was then the Executive Director of DBS Digital Bank, on our board, we were looking for like-minded partners. That’s when we managed to get support from Quona Capital that invests in financial technology space. With such experience, we are thus very well placed in venturing into payment facilitation. We facilitate business worth INR 500 Billion. Payment solutions have the potential to double our GMV as it will enhance customer satisfaction and thus increase stickiness on our platform” Dinesh added.
“The Buyer and Seller Protection Program is a great example of collaborative fin-tech. By working closely with the largest banks, IndiaMART is able to solve real world, sizeable problems that exist, enabling access to innovative financial services for millions of Indian SMEs,” said Lizzie.
“IndiaMART is the pillar of the SME lifeline in India and the new program is an evolutionary step forward in easing the pain points of buyers and sellers. It enables IndiaMART to serve the SMEs better through the intersection of commerce, payments and trust building. It enables IndiaMART to understand the buyer and seller behaviour holistically to serve them better over time,” added Ganesh Rengaswamy, Partner at Quona Capital, an investor at IndiaMART.
In 2014 realizing the efficiency in the online payments system, IndiaMART developed its own robust payment platform (pay.indiamart.com) to collect the subscription amount from its paid customers. “More than 90% of our revenue and 60% of the transactions are through online payment modes which were earlier through cheques.” shared Dinesh. These numbers depict the changing SME mindset and the growing acceptance for the digital payments among Indian SMEs which prompted IndiaMART to foray in payment facilitation.