India Transact Services, digital lending provider to fulfil MSMEs short-term working capital needs

India Transact Services Ltd. (ITSL), an omni-channel merchant digital payment solutions company and a Group company of AGS Transact Technologies Ltd., is strengthening its merchant acquisition portfolio by enabling loans to micro, small and medium enterprises (MSMEs) across metros and tier II and tier III cities.

ITSL has partnered with leading digital lending firms including Flexiloans, Capital Float and Arthimpact (Happy Loans) to facilitate MSME's access to unsecured working capital loans. The company will leverage its unique pan India sales and distribution network across 700 towns and cities, and offer this facility to all the qualifying merchants with Ongo Point-of-Sale terminals.

Lack of experience, absence of collaterals and infrastructure, and small ticket size make lending to MSMEs challenging. As per the report released by International Financial Corporation (IFC), small businesses in emerging markets, such as India, are facing a funding gap of USD 2.1 to 2.6 trillion exists for all organized and unorganized MSMEs. Since the end-to-end process is mostly online, it is convenient for the partners to lend loans to MSMEs without any securities.

Most small merchants who are otherwise not eligible for bank loans due to prevailing strict evaluation criteria can avail Ongo LACR loans from ITSL partners based on their transactions on Ongo terminals.

"We are delighted to see that the Union Budget has given a big push to MSMEs by encouraging Fintech players in the digital lending space. MSMEs contribute around eight percent of GDP, 40 percent of the total exports and around 45 percent of the manufacturing output," said executive vice president, sales and marketing, India Transact Services Ltd., Sunil Khosla.

"We believe they will lead the digital payments growth in in the immediate future. Therefore, in addition to a unique digital payment portfolio we are offering an alternative lending model as a value added service to the qualifying Ongo POS merchants. Our lending solutions will help these merchants on a large scale by simplifying loans and addressing their challenges related to working capital requirements," added Khosla.

He added that the partnering with digital lending providers accelerates us towards becoming a 360 degree merchant services company in retail business solution. As Merchant acquiring forms almost 70 percent of ITSL's total business we are leveraging our strong foothold across 700 towns and cities to reach relevant enterprises and empower 10,000 merchants by FY18-19.

Here, the loan approval and disbursement cycle is faster because merchant's POS transaction data and KYC documents are already available with ITSL. Depending on the merchant profile and the volume of card transactions on Ongo POS terminal, lending partners will offer loans to merchants in the range of Rs. 5,000 to Rs. 50,00,000. The recovery of loans is through Ongo POS transactions. Therefore, the merchants do not have to run around anywhere for loan or repayment as the entire process is online.

Earlier this year, the company partnered with an Israel based company to enable Indian MSMEs create digital presence in less than a minute.