Indian fintechs eye overseas licences as they push into global markets

Cross-border payment firms are seeking licences in markets such as Canada, the US and Singapore as they look to build a multi-country presence beyond India

Indian financial technology (fintech) companies are looking at licences across some of the world’s fastest-growing markets as they look to expand digital payments infrastructure beyond their existing cross-border businesses.

 

By establishing a presence across markets spanning North America, West Asia, and Southeast Asia, companies are increasingly seeking to operate directly in these markets, expand beyond their existing cross-border businesses, and build a multi-country footprint — a strategy long employed by global payments giants such as Stripe and PayPal, among others.

 

On Tuesday, Indian cross-border fintech Skydo Technologies said it had secured a payments licence in Canada, making the North American country its first licensed market outside India. “Our ambition is to be a global company. We started with India because we are familiar with this market, but we now want to expand to countries in North America such as Canada. We will be able to serve customers in Canada for their business-to-business payments requirements,” Movin Jain, cofounder, Skydo, told Business Standard earlier.

 

In a statement, the company said Canada was a strategic market, with the licence enabling two-way payment flows between the country and India, including local collections and payouts, while expanding beyond international collections into a broader suite of cross-border payment services.

 

Cross-border fintechs such as Razorpay, Cashfree Payments, Skydo, Xflow Payments India, BriskPe, among others, are companies that have the Reserve Bank of India’s payment aggregator-cross-border (PA-CB) licences. “We think about licences in two dimensions. One is, how can we go deeper into India, which will always be our home market? Second, how do we go more global? Today, we have the PA licence, a licence in Canada, and a money service business registration in the US,” Ashwin Bhatnagar, cofounder and chief executive officer, Xflow, said. Bhatnagar explained that companies could further explore authorisations in countries such as Singapore, Dubai, Ireland, or Hong Kong.

 

“Large Tams (total addressable markets) in some of these geographies might manifest as trade flows between that country and India... For us, regulators in Singapore, Hong Kong, and Ireland could unlock large Tams,” he added.

 

The focus on globalisation also comes at a time when companies have spent time building cross-border businesses from India after securing operating licences from the country’s central bank. Executives said that the initial years of the cross-border business were spent building products until they had enough resources to look for external markets with better monetisation levers. However, securing licences is one thing; winning market share is another.

 

Indian fintechs will have to contend with entrenched local competitors in international markets that continue to defend their turf aggressively. “It’s a competitive market there. The market has existed for the past 10-20 years. We want to build a very large business and if we expand to other countries, particularly North America, which is the largest market in the world, then that expands our overall opportunity size by 10x,” Jain said.

 

Other fintech executives explained that companies were evaluating their global expansion plans one market at a time, since internationalisation requires an entity to deal with multiple regulations and compliance guidelines.

 

Executives said that licensing in some developed markets, such as Singapore and the US, required time, and the process could be expensive for early-stage companies focused on India as a market. “A licence has a certain amount of cost associated with it; it’s one thing to acquire a licence, it’s another thing to operationalise and maintain it. It becomes an investment in itself,” Bhatnagar said.