CATEGORY - SME

Empowering Bharat: How Fintech is Fueling Growth & Innovation in SME Segment

SME - 18 June, 2025

Table of Contents

Micro, Small, and Medium Enterprises (MSMEs) have long been considered the lifeblood of India’s economy. Spread across every district, industry, and demographic, they account for over 30% of India’s GDP, 48% of total exports, and employ more than 110 million individuals. However, beneath these impressive numbers lies a sector grappling with legacy hurdles—credit constraints, payment bottlenecks, compliance overload, and technological inertia.

As India aims to position itself among the top global economies, empowering this segment isn’t merely an economic necessity—it’s a strategic imperative. The remarkable rise in digital transactions—with UPI alone clocking 18,587 crore transactions worth ₹261 lakh crore in FY 2024–25—is a testament to the country’s innovation-led, user-centric fintech infrastructure. Fintech, as it evolves in scope and scale, is emerging as the most potent enabler to solve long-standing structural issues and reimagine the MSME landscape for the future.

MSMEs in India: Scale Without Support?

India is home to approximately 63 million MSMEs, with more than 99% of them falling into the micro category. Despite their substantial contribution, they continue to function in a fragmented, informal ecosystem. A 2023 IFC report estimates a credit gap of over ₹25 lakh crore in the Indian MSME sector, largely due to lack of formal documentation, insufficient collateral, and inconsistent cash flows.

Key structural challenges include:

Funding Deficit and Informal Lending
Only about 14% of MSMEs have access to formal credit. A vast majority continue to rely on NBFCs, informal moneylenders, or personal borrowing. The interest burden from these sources often ranges from 18–30% annually, squeezing already-thin margins.
Inefficiencies in Payment Ecosystems
MSMEs frequently face payment delays—especially from larger corporations—often waiting 45–90 days for invoice settlements. The ripple effect? Acute working capital shortages, stunted production cycles, and inability to scale.

Adding to this is the cost burden of digital payments. While digital adoption has surged post-2020, small businesses still bear Merchant Discount Rates (MDRs), payment gateway charges, T+2 or longer settlement periods, and hidden reconciliation costs. A small business processing ₹10 lakh per month digitally can lose ₹10,000–15,000 monthly to fees alone.
Tech Deficit and Digital Illiteracy
A report by the Boston Consulting Group found that nearly 40% of MSMEs still operate without any digital tools. Manual bookkeeping, unstructured inventory records, and limited use of mobile banking leave them exposed to inefficiency and errors. For businesses targeting e-commerce or direct-to-consumer models, this tech vacuum is a serious competitive handicap.
Overwhelming Compliance Mandates
India’s regulatory landscape is evolving at a brisk pace. GST filings, e-invoicing norms, TDS compliance, and mandatory KYC updates often overburden MSMEs with no formal accounting teams. Lack of awareness and support further increases the risk of penalties and business discontinuity.

Fintech: Not Just a Tool, But a Transformation

The confluence of technology and finance is redefining how MSMEs operate—both in urban and rural markets. Fintech solutions today are not just digitizing payments—they are re-engineering how small businesses think about credit, taxation, customer management, and vendor partnerships.

Solving the Credit Access Puzzle
Fintech platforms are leveraging alternate data sources—like bank statements, utility bills, GST filings, and transaction histories—to assess creditworthiness beyond traditional metrics. This data-led underwriting unlocks access to:
- Collateral-free working capital loans
- Invoice financing via TReDS or private NBFCs
- Buy Now, Pay Later (BNPL) schemes for B2B procurement
According to SIDBI, digital lending to MSMEs grew by 68% YoY in FY2023, with more than ₹2.5 lakh crore disbursed via fintech lenders.
Rationalizing Payment Costs
Fintech platforms like Easebuzz are enabling MSMEs to accept, track, and reconcile payments with greater transparency and lower friction. Features such as:
- Real-time UPI-based collections
- API-driven billing and disbursement
- Instant settlement cycles (T+0/T+1)
…allow MSMEs to save up to 1.5% in payment costs and drastically improve cash turnover.

Easebuzz also facilitates embedded finance, allowing merchants to integrate payment and lending solutions within their websites or apps, thereby removing dependency on multiple intermediaries.
Building a Single Source of Financial Truth
Integrated fintech solutions now offer unified dashboards covering:
- Revenue tracking
- GST-ready reports
- Cash flow forecasts
- Payroll and TDS automation
This level of visibility empowers MSME owners to make informed decisions, unlock new markets, and improve vendor-client relationships.

MSMEs in the Global Tech Context

Globally, small and medium enterprises that embrace digitization are not just surviving—they are thriving. The OECD notes that SMEs using digital tools are:

2x more likely to increase their exports
3x more likely to adapt during economic downturns
26% more likely to report profit growth

India must mirror this global trend. With rising expectations from customers, compliance frameworks getting more stringent, and competition becoming digital-first, MSMEs that delay tech adoption risk becoming obsolete.

Where MSMEs Should Focus in 2025 and Beyond

Operational Efficiency
MSMEs must shift from fragmented systems to integrated tech stacks. Platforms like Easebuzz that offer plug-and-play solutions for payments, reconciliation, tax filing, and financial reporting allow MSMEs to reduce manual errors and save time.
Cash Flow Intelligence
Using predictive analytics to anticipate cash crunches and plan for seasonal variations is vital. Businesses can now get dashboard-level visibility to know when to raise credit, renegotiate terms, or delay non-essential expenses.
Reducing Payment Leakages
Every delayed settlement or unreconciled invoice erodes trust and profitability. MSMEs should benchmark payment partners on metrics like net effective cost, TAT for settlement, refund cycle transparency, and dispute resolution timelines.
Leveraging Government Infra
Initiatives like the Open Credit Enablement Network (OCEN) and Account Aggregator Framework are empowering MSMEs to share financial data securely for better credit access. Those who adopt early will gain first-mover advantage.

Easebuzz: Building Bharat’s Digital Payment Infrastructure

Easebuzz’s mission has always aligned with the vision of empowering India’s MSMEs. By focusing on modularity, affordability, and simplicity, it provides a stack of services that solve core MSME challenges, such as:

Faster settlements with real-time tracking
GST-compliant invoicing & reconciliation
Plug-in modules for payments, subscriptions, and lending
Localized support and onboarding for first-time users

Its partnerships with educational institutions, small retailers, and D2C brands underline its versatile platform that scales with business needs.

Conclusion: A Collective Push Toward Progress

India’s MSMEs are not looking for subsidies or charity—they seek ease, clarity, and access. The ecosystem must rally to ensure that fintech tools are not just available but also affordable, understandable, and accessible.

The road to “Digital Bharat” runs through its MSMEs. With the right blend of innovation, inclusion, and infrastructure, fintech platforms like Easebuzz can help these enterprises move from fragmented operations to future-ready institutions.

It’s no longer about enabling transactions—it’s about empowering transformation. For every MSME that digitizes, formalizes, and scales, Bharat takes a step closer to economic self-reliance.

FAQ's

What does SME stand for?

SME stands for Small and Medium Enterprises. These are businesses with limited workforce and revenue, but they play a crucial role in driving economic growth, innovation, and employment—especially in a country like India.

What is SME payment in India?

SME payments refer to the digital or offline transactions made by small and medium businesses—whether it’s for accepting customer payments, paying vendors, managing subscriptions, or disbursing salaries. Today, SMEs are rapidly adopting digital payment solutions to reduce cash dependency, improve efficiency, and reach a wider market.

Who offers the best payment solution to SMEs in India?

Several fintech companies offer tailored payment solutions for SMEs, but Easebuzz stands out with its easy-to-integrate, scalable, and secure payment suite. It’s built specifically to address the needs of SMEs—offering features like payment links, subscription billing, smart invoicing, and automated settlements—all in one place.

How is Fintech helping SMEs in India?

Fintech is empowering SMEs by making financial services more accessible, affordable, and efficient. From digital payments and loans to automated accounting and compliance, fintech tools help SMEs save time, reduce costs, improve customer experience, and grow faster—especially in tier 2 and 3 cities.

Examples of SMEs in India

A local manufacturing unit supplying automotive parts
A boutique clothing brand selling online
A regional logistics service provider
An edtech startup with under 100 employees
A small chain of cafes in a city

Examples of SME Brands in India

Bira 91 – A craft beer brand that started small and scaled up rapidly through smart branding and niche targeting.
Paper Boat – Beverage company offering traditional Indian drinks; began as an SME and gained national presence.
Chumbak – Lifestyle and fashion brand known for quirky designs; started as a small business and grew into a retail chain.
WOW Skin Science – Started as a small D2C skincare brand and scaled through e-commerce.
boAt – Although now a major brand, boAt began as a startup SME selling affordable audio accessories.
Suta – An SME in sustainable fashion, known for handmade sarees and a strong digital presence.
Sleepy Owl – Coffee brand that began as an SME and leveraged direct-to-consumer channels to grow.
Zoff Foods – A spice brand focusing on purity and technology, started as a small business in Raipur.
MyEasyStore – A SaaS platform empowering other SMEs to go digital, an example of an SME enabling others.
Easebuzz – A fintech platform helping over 12,000+ SMEs and educational institutions manage payments, collections, and digital financial operations with ease.