News Post

Here is how Skydo addressing challenges in B2B cross-border payments

Entrackr

· 2m

Bengaluru-based fintech firm Skydo aspires to make cross-border B2B payments much more hassle-free and address common challenges such as steep forex charges. Founded in 2022 by former Ola executives Movin Jain and Srivatsan Sridhar, the company aims to tap into the massive market of cross-border payments, which is dominated by global players like PayPal and Stripe. We spoke to cofounder and CEO Sridhar to learn more about Skydo, how it works, and what is the roadmap ahead. Here are the edited excerpts: How did you come up with the idea of Skydo? My co-founder Movin Jain and I used to work together at Ola. This was about six years back and we’ve been good friends since then. I’ve been mostly doing business roles throughout my career. First year at McKinsey, then for several years in startups and in between for about six years I ran my family-owned business. Movin has been an engineering and product guy and most recently before we started up he was actually at Phonepe, leading the payments platform. So given I have been a manufacturing exporter myself, somehow you know making life simple for exports, figuring out the problems that exporters have in terms of the complicated foreign exchange and other things that they have to deal with has been on my mind. But I never kind of thought about it consciously until we started brainstorming about which space we have to build in. Given Movin’s recent stint in payments, he was very excited about payments and the value of technology in improving payments. So since we were brainstorming about payments, some of my experiences studying the payments and wanting to solve for them came to our thinking and then we kind of started deeply digging into whether these problems are real, how can we solve them as a small company, what kind of actual issues do exporters face on a ground level, let’s talk to a few people and understand. And as we did the initial research, we realized that this is actually a real problem and it’s worth solving and this is a large enough market for us to solve it in. So this was largely the genesis of Skydo. What are the key challenges in payments and exports, cross-border payments that have not been addressed yet and how do you plan to address this? Up until 20-30 years ago, inter-entity payments were slow and cumbersome, often involving manual processes like cheque writing. International wire transfers were particularly sluggish and document-heavy. However, the likes of PayPal, business and international payments have transitioned to facilitate online transactions globally. Conventional banking systems have also significantly improved their infrastructure, with the inclusion of faster payment systems within domestic countries. This robust infrastructure, coupled with various payment options, enables companies like us with the right tools to address unsolved customer challenges. Moreover, consumers now expect instant payments, regardless of geography. Though things like compliance pose another hurdle, with varying regulations across countries causing confusion and complexity. Simplifying and standardizing compliance procedures can enable seamless international payments and business transactions. While companies like Skydo are lowering costs, there still remains room to tackle margins through technological solutions. While issues like Forex hedging and treasury management exist, addressing these concerns should be the next frontier in the payment landscape. Can you take us through how Skydo has performed since inception. So we started the company exactly two years back in March of 2022. It took us about seven months to launch the product after our first set of partnerships and approvals came. We launched in November 2022 with a small pilot batch and since January of 2023, we have been gradually and systematically scaling the business. Today, we have onboarded close to 2,500 businesses and currently our rate of acquiring new businesses is almost 500 to 600 businesses every month. So, this number is doubled, the customer base is doubled at the end of March from what it was at the end of December 2023. And I think at this pace of growth, it looks like it is going to sustain for quite a bit of time now. From onboarding, then if I look at the total payments processed, we are currently processing about $50 million of payments. This again is growing quite strongly and I think by the end of next year, that is the March of 2025, we hope to be processing over $750 million of payments annually. That is the kind of scale that we are looking at. What are your goals in terms of product and business expansion? So in the short term, obviously we want to really scale and hold a very large market share for Indian small businesses. I think that will keep us busy for the next couple of years at least. Although we will also follow this with multiple product features that will be required to make this happen from creating more countries where we can have local collections, enabling credit card payments, enabling two-way payments both from India to outward and along with the export payments that today exist and so on. So there’s an entire product roadmap that will support this growth in India. We also have to be looking for multiple licenses throughout the world. We have already applied and are waiting for approval for the payment aggregator license that RBI gives for cross-border companies. But in addition, we will be looking for multiple licensing in other geographies that will allow us to slowly and steadily expand to more corridors beyond India, which is slightly on the longer term plan. Apart from payments, the diversification is primarily into software to start with. Over time, when we have a very large scale, we might diversify into commerce as well as working capital. But that is very long term.