Skydo was built with a deep understanding of the challenges exporters face in managing cross-border payments. Founded in 2022 by Srivatsan Sridhar and Movin Jainand operating under the RBI’s Online Payment Gateway Service Providers (OPGSP), the Bengaluru-based fintech has also applied for the Payment Aggregator-Cross Border (PA-CB) license. “Having recently raised $5 million in a pre-Series A round led by Elevation Capital, Skydo is on a mission to make cross-border payments as convenient, cost-effective and transparent as UPI,” says Movin Jain, co-founder of Skydo in an exclusive interaction with Bizz Buzz
What factors have contributed to cross-border payments remaining an untapped sector, and how will the RBI’s PA-CB regulations affect cross-border payments aggregators?
Cross-border payments have remained relatively untapped for several reasons. First, it took a coordinated effort by multiple companies to bring attention to the sector, helping to gain traction with regulators and financial authorities. The Covid-19 pandemic then accelerated globalization, leading to a sharp increase in demand for cross-border transactions. Indian exports have increased significantly due to global changes, including anti-China sentiment and increased demand for Indian products. Additionally, export-oriented government policies and regulatory focus have further boosted growth in this sector.
The RBI’s PA-CB regulations, introduced late last year, are a crucial step towards formalizing and improving the cross-border payments ecosystem. For platforms like Skydo, this regulation ensures transparency, security and trust, especially for MSME exporters. By setting strict compliance standards, only well-regulated and financially strong players will remain in the market, thereby reducing risks related to fraud and late payments. At Skydo we have applied for this license and are awaiting approval. For us, this is an opportunity to further strengthen our position as a trusted partner for small exporters, reducing system inefficiencies and offering more transparent and cost-effective payment solutions.
How do you see the internationalization of UPI and NPCI’s global partnerships impacting the cross-border payments space?
The internationalization of UPI and NPCI’s global partnerships is an exciting development for the cross-border payments space. For businesses like ours, this is a tremendous opportunity for two reasons. First, we could potentially use the UPI infrastructure to deliver our services more cost-effectively and with even greater efficiency, passing these benefits directly to our customers. Second, the move will shine a greater spotlight on the B2B payments industry in general, and companies like Skydo in particular, opening up more opportunities for global partnerships. The Indian fintech ecosystem, particularly UPI, is gaining recognition, and international players will increasingly want to partner with Indian fintechs to leverage this growth.
So far, the main focus has been on consumer payments, which include peer-to-peer transactions (such as sending money to friends, relatives or household staff) and payments peer-to-merchant, where consumers scan QR codes or use UPI IDs. to make purchases. However, B2B payments are fundamentally different from consumer transactions. They typically involve larger transaction amounts, more complex documentation, and specific tax and compliance requirements. Additionally, every business has different systems, whether it’s accounting software, ERP, or payment schedules. UPI would therefore always need platforms like ours to add to its infrastructure. We would certainly welcome an expansion of UPI’s focus towards B2B payments, as it would allow us to leverage this infrastructure to improve our platform. While we remain in active conversations with NPCI and the team working on International UPI, they are currently focused on consumer payments.
What are the key challenges faced by Indian MSME exporters in managing cross-border payments and how is Skydo addressing them?
Indian MSME exporters face several challenges related to cross-border payments. Most important is the lack of transparency regarding fees and exchange rates, which often exposes them to high costs that they do not fully understand. They also experience delays in processing payments because smaller exporters do not receive the same level of attention from their bank’s relationship managers as larger customers, slowing down the process even after arrival. funds.
When expanding into new countries, businesses often lack guidance from their banks, who may not have the expertise to navigate the complexities of international payments. India’s exports are worth around $750 billion, of which only $10-20 billion goes to B2C. The rest is B2B, which presents a huge opportunity. B2B companies, especially MSMEs, face significant challenges when it comes to cross-border payments: high costs, long delays and lack of transparency. We saw a gap in the market to better serve these businesses, providing them with the same convenience and efficiency that B2C businesses enjoy.
At Skydo, we have built a cross-border payments platform that directly addresses these challenges. We ensure full cost transparency with a flat fee structure, so exporters know exactly what they will pay up front. Our platform automates the entire payment process, allowing exporters to receive funds within one business day, significantly reducing delays. We also offer specialist support for cross-border payments, with a dedicated team trained to handle complex queries, which is often lacking in traditional banks. Currently, we serve approximately 10,000 freelancers and small and medium-sized businesses, processing several hundred million dollars of payments to India each year.
What steps are fintechs taking to build trust and address concerns exporters may have when adopting a new payment platform versus their old bank?
Trust is essential in fintech, especially when it comes to payments, and even more so when it comes to cross-border payments subject to strict compliance requirements. Many small and medium-sized businesses have a real concern about doing anything that could be perceived as non-compliant.
Having worked at PhonePe, I learned early on that fintechs need to embrace regulation rather than seeing it as a constraint. We have built a strong compliance team comprised of experts from institutions such as Citibank, American Express and Amazon, who have extensive experience dealing with global regulatory requirements. As an RBI approved platform, we have prioritized building a proactive compliance infrastructure to stay ahead of the curve in identifying and mitigating potential risks. This helps protect exporters and ensures payments are secure and risk-free. We have also established partnerships with trusted global banks such as DBS Bank in India and Singapore, and Barclays Bank in Europe and the UK and Visa, which further enhances our credibility. Additionally, we actively participate in local and industry events for exporters. By meeting customers in person, setting up booths and interacting directly with businesses, we establish a human connection that helps build trust.
How are fintechs leveraging technology for cross-border payments compared to traditional institutions like banks?
New-age fintech platforms solve many challenges of traditional banking services by leveraging modern technologies. From a fintech industry perspective, API integrations are at the heart of how modern platforms are transforming cross-border payments and financial services. APIs allow fintech companies to seamlessly connect to various banks and financial institutions, thereby streamlining transactions and improving overall efficiency. This interoperability not only speeds up payment processing, but also simplifies complex operations, such as currency conversion and compliance management, that traditionally burden businesses using legacy banking systems.
In addition to APIs, fintech companies rely heavily on cloud technology to ensure their platforms are scalable, secure, and able to easily handle large transaction volumes. Cloud infrastructure enables fintechs to offer real-time services, ensuring high availability and reliability to customers around the world. The security features of modern cloud platforms also help fintechs meet strict compliance requirements while providing peace of mind to their customers. This level of scalability and security provides a significant competitive advantage over traditional banking systems, which often struggle with inflexible and outdated infrastructure.
The use of APIs and cloud technology allows fintech platforms to offer faster and more efficient cross-border payments than banks, which typically rely on slower manual processes like SWIFT. By leveraging these technologies, fintechs reduce transaction times, lower costs and provide more transparency and control to businesses.
With the recent $5 million fundraising, how does Skydo plan to leverage these investments to improve its platform and expand its global reach?
With the recent fundraising, our main goal is to expand our technology infrastructure. We plan to invest further in our platform to ensure it remains secure, fraud-free and efficient as our customer base grows. Additionally, we are channeling funds towards our global growth strategy. Although we started with India, our long-term goal is to create a cross-border payments platform that operates across multiple global corridors, enabling seamless transactions from any country to any country.
A significant part of the investment will also be dedicated to strengthening our compliance team. As cross-border payments are a heavily regulated area, ensuring the highest quality compliance and security measures are a priority. We are also exploring new categories, such as the e-commerce export market, where we aim to help Indian exporters streamline revenue collection from global sales, for which we recently received approval from a global market of electronic commerce.