According to a recent study by ­­PayNearby, the micro, small and medium enterprises (MSME) sector in India is on an ambitious growth curve and in recent years, there has been a progressive change in the mindsets of small business owners towards technology adoption. The analysis finds that more than 71 per cent MSMEs in retail, use some form of digital technology for their day-to-day business operations. The report further highlighted that more than 80 per cent of MSMEs admitted that the adoption of digital technology has had a positive impact on their businesses and personal lives.

The insight was shared as part of a detailed survey titled – MSME Digital Index 2023 – a pan-India report showcasing technology consumption by MSMEs at the last mile, released by PayNearby. In its first edition, the report was prepared basis a nationwide survey conducted by the company among over 5,000 MSMEs in the retail space (kirana stores, mobile recharge stores, medical stores, customer service points (CSPs), travel agents, among others), recording their tech awareness and tech consumption patterns in their professional and personal lives.

According to the survey, small business owners within the age group of 18-30 years were the most digitally adept, with over 75 per cent of this age bracket owning a smartphone to run their day-to-day business operations and accessing digital content through it. It was immediately followed by the age group 31-40 years. Notably, 32 per cent of them citied that their monthly income is more than Rs 15,000. The uptake of smartphones underlines the critical role played by the internet in helping bridge the infrastructure gap and drive tech inclusion at the last mile by onboarding MSMEs on the digital bandwagon.

Among all digital devices, smartphones were cited as the most popular category, with 68 per cent of the users claiming them as their most preferred choice. 66 per cent MSMEs claimed to use smartphones for business activities consuming 2GB -5GB of the internet in a day. More than 52 per cent of these small businesses spend less than Rs 500 per month on internet consumption. Thanks to the Digital India mission and the BharatNet initiative of the government, internet penetration in Bharat has accelerated. It is now accessible to citizens at affordable prices, thus helping bridge the digital divide. In terms of connecting to the internet, approximately 55 per cent cited that they used mobile hotspots to connect to the internet at work. This was followed by Wi-Fi routers at 30 per cent. The use cases of ethernet cable and dongle were a mere 10 per cent and five per cent, respectively. 73 per cent used mobile internet to connect to the internet at their homes.

The use of digital devices was primarily for work purposes, with 32 per cent spending four-six hours on their phones. However, when it came to leisure activities like social media or online entertainment, the report noted that 60 per cent were spending less than three hours. Among the social media apps, Facebook took the top slot with 27 per cent, and YouTube was the most preferred entertainment app with 47 per cent usage. Interestingly, 57 per cent of the respondents said that they did not have gaming apps of any kind installed on their phones.

The report further stated that of all the tech-savvy MSMEs, a majority of 25 per cent used accounting software, followed by POS software and customer relationship management (CRM) software at 20 per cent and 17 per cent, respectively, to manage their business operations. When asked about the purpose of the usage of digital devices, 25 per cent used them for account keeping and payment acceptance, while 20 per cent stated that technology was used to process transactions. It validates the need to create a thriving tech ecosystem to empower MSMEs so that they can be brought up the growth curve for a stronger India.

In the financial services category, Aadhaar banking and unified payments interface (UPI) were the two most popular banking services availed by MSMEs at the last mile. Additionally, WhatsApp and WhatsApp Business, cumulatively, were the most widely used messaging apps with 97 per cent usage.

On being asked about the positive impact of technology on their businesses, 32 per cent said that it has helped grow their business by improving efficiency in business operations and 28 per cent said that with technology they have seen an increase in their sales and income. When it comes to the main challenges faced in using technology for business operations, 30 per cent said that they could not afford the high cost of technology, and 29 per cent grappled with poor internet connectivity. Remarkably, 65 per cent chose English as their preferred language to understand technology and conduct business transactions, followed by Hindi at 24 per cent.

Commenting on the report findings, Anand Kumar Bajaj, founder, managing director and chief executive officer, PayNearby, said, “The findings in the report are inspiring and emphasise the fact that Bharat is gearing to walk hand-in-hand with India. The digital gap in the country is gradually getting bridged. Riding on the back of the smartphones, internet and fintechs, MSMEs at the last mile are increasingly embracing tech. However, this is just the start. We need to create a strong eco-system where not only access to technology is made cheaper and easier, but also provide an infrastructure where people can be skilled and their tech inhibitions and apprehensions suitably addressed. For this, technology has to be form factor agnostic, easy-to-use, easy-to-manage and easy-to-scale. At PayNearby, we focus on providing new-age technology solutions—such as providing data insights, artificial intelligence (AI), augmented reality (AR) and machine learning (ML) – to help MSMEs in Bharat harness the full potential of tech deployment in their operations. Our innovative, tech-led distribution-as-a-service (DaaS) platform has encouraged small businesses to explore novel revenue streams, which has, in turn, fueled significant growth in the MSME sector. This digital transition will usher in a new era of commerce and create millions of livelihood opportunities in the hinterlands and small towns, thereby driving economic growth and social upliftment in the real Bharat.”

Meanwhile, Jayatri Dasgupta, chief marketing officer, PayNearby, said, “India is at the cusp of a tech revolution. However, for this to happen, MSMEs need the necessary tools to get inducted into this fast-moving economy. The MSME Digital Index is our effort to understand the uptake of technology in the MSME segment and highlight areas that need to evolve to bridge the digital divide in our industry. While it is heartening to see that there is an uptake of technology, in some form, among MSMEs, much needs to be done on upskilling, connectivity and cost of infrastructure to make it more affordable and accessible at the last mile. The MSME report is an eye-opener as it will help us create the right solutions for this sector, in a form that is of most value to them. At PayNearby, our commitment to connect Bharat with India and bridge the digital divide remains stronger than ever.”