Fintech firms like BharatPe and Paytm, which are building their core operations around merchant payments and lending, are set to face increasing competition from large banks that are developing their own game plans for this sector.

HDFC Bank has built Smarthub Vyapar, which is targeted at small businesses. ICICI Bank has InstaBiz, and Axis Bank launched ‘Neo for Merchants’ last year.

State Bank of India, India’s biggest lender, is also revamping its Yono for merchant applications, according to reports.

Axis Bank is rapidly scaling up its digital banking platform 'Neo for Merchants', targeting businesses that need a full stack banking experience beyond just payments.

Vivek Gupta, president, of wholesale banking products at Axis Bank says, “We have adopted a mobile app-first strategy when it comes to serving merchants and SMEs. The effort is to make banking invisible, we have streamlined customer onboarding, and we are working to issue payment terminals, QR codes within a day or two of onboarding a customer via a current account and also connect with their software backend very easily.”

“Unlike fintechs, given the regulatory scrutiny on banks is higher, we have to do all this in a strictly compliant fashion and with high resiliency system-wise,” adds Vivek.

Fascinatingly, banks are developing and enabling these apps with the help of other fintechs, such as Mintoak. One of the main participants in this market, HDFC Bank, has rapidly expanded through its Smarthub Vyapar application. Along with soundboxes and UPI QR codes, it buys merchants and provides a broader range of banking services beyond payments.