Salt revolutionises B2B cross-border payments for Indian merchants

Salt simplifies cross-border payments, automates compliance, and cuts processing time for Indian merchants, supporting SMEs, startups, and freelancers with cost-effective solutions

A few years back when marketing executive Udita Pal was freelancing for companies across European and African countries, it was an uphill task for her to receive payments back to her base in India.

Challenges with such payments, such as high fees, hidden charges, or roadblocks in terms of compliance, hindered Pal’s experience when it came to transacting with parties abroad.

Pal’s problems with cross-border payments aligned with IIT Kharagpur alum Ankit Parasher’s longing to build something within the larger fintech space. In 2020, just weeks before a global pandemic locked people inside their homes, the duo launched Salt; a fintech to solve cross-border payments for merchants in India.

“We are solving cross-border payments for merchants in India who are going global. We are trying to create a platform which eases cross-border payments business completely and makes it as easy as the trade between western countries such as the US-Canada, or US-Europe, among others,” said Parasher, who is the co-founder of the Bengaluru-based company, in an interaction with Business Standard.

He explains that the firm automates processes such as payments and compliance.

The key differentiating features for Salt in a growing market for cross-border payments processing are decreased processing time and assistance with compliance.

The startup has received backing from investors and angel investors such as Y Combinator, Prashant Pansare, and Amit Goel, among others. So far, the firm has raised a total of $625,000 in seed funding.

A study from Juniper Research adds that the global spend on B2B (business-to-business) cross-border payments will exceed $40 trillion by the end of the ongoing calendar year. This is an increase from $37 trillion in 2022.

Use cases

For instance, one of the use cases at the company includes foreign direct investments (FDIs) into startups based in India. Parasher explains that automated workflows ease processing times for such investments from a couple of weeks to less than 24 hours.

“The documentation required and the compliance associated with it is automated. If you are getting funded via a rights issue or a convertible note, among others, which will have a different compliance, we let them know about it in advance. They just do the transaction and are compliant,” he added.

Typically, the weekly average ticket size of such transactions ranges between $50,000 to $200,000, with some going as high as $500,000.

Apart from use cases involving SMEs and startups, the company is seeing demand from freelancers, which includes software engineers, consultants, and professionals from legal firms, among others.

About 80 per cent of the cross-border transaction volumes at the company come from such services, whereas the rest is cornered by goods export.

When asked if the cost of processing transactions or fees associated with cross-border payments is a hurdle to attract more business, Salt charges about 1.75 per cent of a transaction value for freelancers, which includes goods and services tax (GST).

Parasher does not agree. “It is easy to acquire customers and service them by burning whatever you have. There is a cost of the foreign exchange (FX) that we have. There is a cost of servicing. It becomes unsustainable if the margins go very, very low,” he elucidated.

He explains that financial services companies cannot be built just by offering cheap offerings to customers.

“We don't think price can be a differentiator for a long time. I can reduce the cost, but that doesn't mean everyone will use me. There are other things to it,” he said.

Way forward

At present, Salt offers cross-border payments across seven currencies, including US dollars (USD), British pounds (GBP), Hong Kong dollars (HKD), among others, as per the company’s website.

“I think it's the limitation that we would have to offer those currencies. I would like to offer other currencies, but since we are small, we have to prioritise which one to offer,” Parasher said.

He added that the existing currencies are the ‘easiest to be for’ and offer the ‘highest return on investment’.

Meanwhile, he admits that the company is piloting a few more currencies and has plans to offer more on the platform in another quarter.

“AED (United Arab Emirates dirham) is there that we have not listed. There are a couple of European ones that we have not listed as well. So those would be there that we have not listed, but we are piloting,” he said.

Parasher believes the Gulf region on Asia’s west would be the company’s next stop to solve cross-border payments.

“There is a lot of trade that happens through the Gulf region. That being an intermediary and consumer of it, it's immaterial. I think that would be something of interest to us,” he added.