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Visa: Real-Time Settlement, Online Marketplaces Help Put SMBs Back On The Road To Recovery

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The eCommerce Digital Shift Is Spurring A Great Logistics Shift, Too

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India's Zomato Raises $102M, Ups Its Value To $3.4B

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Amazon-Reliance Tie-Up May Transform India’s eCommerce Landscape

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Bitcoin Daily: India Eyes Crypto Trading Ban; Japanese Crytpo Exchange Sues Binance Claiming It Accepted Hacked Funds

India intends to propose legislation prohibiting digital currency trading, while other economies in Asia have opted to regulate the market, Bloomberg Qint reported.

It is anticipated that the India federal cabinet will talk about the legislation prior to the time it moves to parliament, the outlet reported, citing unnamed sources. Blockchain will be encouraged by the federal government, which is not enthusiastic about digital currency trading, according to two unnamed sources in the report.

Moreover, the federal administration's think tank is looking into potential cases where blockchain technology could be harnessed, the report stated. South Korea and Singapore regulate digital currency trades, while China recently let bitcoin be exchanged as virtual property instead of fiat currency.

In other news, the U.S. Securities and Exchange Commission (SEC) unveiled charges against Washington state-based digital eSports gaming and gambling company Unikrn for holding an “unregistered initial coin offering (ICO),” according to a press release.

The SEC claimed that the company landed roughly $31 million via an offering of the UnikoinGold (UKG) coin. The firm consented to settle the charges through a $6.1 million penalty to be provided via a Fair Fund to investors.

The press release noted that the company agreed to the payment “without admitting or denying the SEC's findings.”

And Binance Holdings is facing a suit from Japan-based Fisco Cryptocurrency Exchange in a complaint that arose from the purported laundering of stolen digital currency, according to the complaint from Fisco.

According to the complaint, Fisco alleged that “cyber-thieves” took digital currency valued at roughly $63 million in a 2018 hack of the Zaif digital currency exchange. Hackers took a combination of digital currency, including bitcoin. (Fisco had bought the Zaif exchange shortly following the incident.)

After the hack, the complaint said that pilfered bitcoin was tracked to one bitcoin address through publicly available analytics, and that analytics indicated that the Zaif hackers ultimately laundered approximately 1,452 bitcoin via Binance.

“Despite being one of the world’s largest cryptocurrency exchanges, Binance’s ‘know your customer’ and anti-money laundering protocols are shockingly lax and do not measure up to industry standards,” Fisco alleged in its complaint.

Visa: Real-Time Settlement, Online Marketplaces Help Put SMBs Back On The Road To Recovery

Online marketplaces are the digital storefronts helping small to mid-sized businesses survive — but adding real-time settlement into the mix can help them thrive.

To that end, joint research between PYMNTS and Visa, in a study titled Marketplaces as Retail’s New Front Door, found that 60 percent of surveyed businesses that are not currently using online marketplaces would like to do so. And 60 percent of surveyed firms selling across online marketplaces would take their business to one that offers real-time settlement. Another 62 percent of businesses and 78 percent of individual sellers in the study (which included more than 1,000 businesses and individuals generating up to $10 million in sales) reported that they use marketplaces to reach more customers.

In an interview with Karen Webster, Mike West, head of global commercialization for Visa Direct, noted that enterprises — particularly smaller ones — have been evolving their strategies to keep pace with the rapid shifts in how consumers work, shop and pay. But getting funds settled more quickly into their accounts can make all the difference in giving them the cash cushions they need to expand, weather economic shocks and even get their suppliers paid in a timely manner.

Along the way, these companies that are embracing eCommerce have seen an increasing percentage of sales derived from digital payments.

Digital payments — and specifically, card-not-present transactions — may be convenient for consumers, but can impact the very operations of the retailers serving them. Card payments go through a number of steps, as transactions are authorized through acquiring banks, authorization requests are sent to issuing banks and, eventually, funds are deposited in merchants’ bank accounts.

“That means [there is] a gap between when you get your sales and when you get paid out — and we know cash flow is the lifeblood of a small business,” said West. The settlement wait can be several days in length, with even longer lag times over a holiday weekend.

As a result, Visa and PYMNTS found that 76 percent of the surveyed Main Street businesses reported having cash flow shortages. Roughly 27 percent of surveyed firms report waits of between three to five days.

Real-time settlements — where funds are transferred quickly between banks, such as those facilitated by Visa Direct — can help close those cash-flow gaps as these smaller firms navigate the day-to-day challenges of buying inventory, paying bills and covering shipping costs.

“We’re seeing really strong adoption from a lot of marketplaces now” that are realizing the value of real-time settlement, said West, as companies seek to have working capital available to meet new challenges and opportunities as they arise.

The potential for turbo-charged commerce, done with speed, is vast. Visa and PYMNTS found that marketplaces can capture a collective $82 billion to $141 billion per year by adopting real-time settlement options. Call it a greenfield opportunity, as only 3.5 percent of all Main Street businesses report using online marketplaces.

West said marketplaces could find value in offering fast settlements to small and medium-sized businesses (SMBs) — both as buyers and sellers — as speedier settlement improves cash coffers and transactions’ visibility.

Moving beyond the mere ability to list goods and services for sale, and settling those sales quickly, said West, “can be a real motivator to bring those businesses along” with positive ripple effects across supply chains. The merchant who gets cash faster can, in turn, spend money on new inventory (or pay workers) even more quickly.

The Increasingly Digital SMB 

Businesses and sellers that opt to ply their trade across multiple marketplaces are increasingly comfortable doing so, said West, as they run their operations digitally end to end. PYMNTS/Visa found that 72 percent of surveyed SMBs have improved upon or added digital capabilities since the pandemic began, and have increasingly transitioned online to conduct their everyday financial activities.

“That includes whether they access capital through online banking, or manage payroll, send invoices, accept payments and receive settlements digitally,” said West. In the meantime, Visa Direct’s network effect has the capability to touch billions of bank accounts as well as debit cards globally. Digital sellers leverage the online marketplace in what is anything but a passing phenomenon, with 65 percent of surveyed companies using it as a digital storefront to complement their online sales.

“It’s going to be a new normal,” said West of the digital shift, “whether launching an eCommerce site or changing POS technology to set up an omnichannel presence.”

Looking at the technology roadmaps that lie ahead, West said that while COVID-19 has forced marketplace platforms to pivot to prioritizing investments (and settling sales quickly), “the good news is that marketplaces are waking up to the demand and opportunity, and are starting to offer real-time solutions.”

The eCommerce Digital Shift Is Spurring A Great Logistics Shift, Too

In the great digital shift, logistics firms are shifting, too.

The ripple effects, of course, extend up and down the logistics and transportation chains, getting products where they need to go.

As The Wall Street Journal reported, the rise of eCommerce giants is changing the way even the largest container firms are doing business.

In one example, Rodolphe Saadé, chairman and CEO of the globe’s fourth-largest container firm, CMA CGM, said in an interview that “clients like Amazon and Walmart are looking for one entity for all their shipment needs.” Those eCommerce companies are, he said, boosting volumes from Asia into the United States.

Industry observers say that as much as a quarter of container volume that enters this country through routes that wend their way across the Pacific is headed to eCommerce distribution centers. And that means shipping and freight companies are boosting investments in warehousing and trucking operations to increase presence in “inland” logistics, helping these firms effectively become end-to-end delivery systems.

As the Journal noted, firms such as A.P. Moller-Maersk A/S are investing in warehousing, customs clearance and truck capacity to cater to the growing demands of commerce. The company’s Maersk Line has announced it will consolidate some of its logistics, air and ocean freight forwarding.

More immediately, some of the pressures on freight and logistics operations are evident in pricing surges. As noted this past week by PYMNTS, freight pricing has moved higher. That’s because consumer demand is picking up, but retail inventories are relatively low. Call it an illustration of supply and demand.

To help smooth the last few legs of delivery, in news this week, reports surfaced that Amazon plans to open 1,000 “mini” delivery hubs in suburbs and cities across the nation. To get a sense of how steep the curve is for eCommerce adoption, consider the fact that Amazon’s sales were up 40 percent year over year, while Walmart’s eCommerce operations saw 97 percent sales growth over the same timeframe. The U.S. Commerce Department reported that eCommerce sales were up more than 44 percent year over year in the second quarter.

Amazon is also moving ahead with plans to launch an armada of delivery drones. The company also got approval from the Federal Aviation Administration (FAA) to start delivering packages and other items to customers.

And though the headlines may be focused on the eCommerce giants, the great digital shift is also spurring smaller firms to address the demand of an always-on, omnichannel environment.

In an interview with Karen Webster, Steve Denton, CEO of Ware2Go, a UPS company, warned that jumping onto eCommerce platforms is but one part of the equation. "If you solve the sales channel problem without solving the supply chain problem, you are going to create one-time customers who never come back," he told Karen Webster. Fulfillment, he noted, can be a growth driver for SMBs.

For now, the all-important holiday shopping season looms — and the web of logistics, local and even global in scope, is likely to feel the pressure.

India's Zomato Raises $102M, Ups Its Value To $3.4B

Zomato, India’s food ordering and delivery startup, has raised $102.5 million to power its growth.

MoneyControl.com reported that Tiger Global Corp, better known as “The Tiger Fund,” a New York-based equity investment firm, led the fundraising deal, bringing Zomato’s market valuation to $3.4 billion.

With this latest investment, the food aggregator has raised a total of $319.5 million since January.

Last week, the food ordering and delivery startup completed its planned fundraising deal with a division of the Singapore government’s Temasek Holdings. Zomato has now raised $62.4 million from Temasek, according to regulatory filings. 

Swiggy, India’s largest online food ordering and delivery platform, has received about $1.64 billion from investors. 

This latest infusion of cash comes as Zomato’s revenue has grown 105 percent to reach $394 million in fiscal year (FY) 2020, while its losses increased to $293 million, up from $277 million in FY19.

Results from its FY21 report will provide investors with a better picture of the impact of COVID-19, as India’s economy closed down for months and the company laid off 13 percent of its workforce. Revenue has yet to rebound to pre-pandemic levels.

But so far, the results have been promising, the company said. During the first quarter of FY21, Zomato had $40 million in revenue compared to $12 million in losses. 

“In the last few quarters, we have fast-tracked our efforts toward making our business profitable and driving efficiency into our spends,” CEO Deepinder Goyal wrote in a July blog post. “While COVID-19 has impacted the size of our business, it has accelerated our journey to profitability.”

 Despite strong demand for food delivery in India due to dining restrictions, Zomato researchers last month reported transactions are below pre-pandemic levels because of a supply problem as many restaurants remain closed. 

“The number of restaurants offering food delivery are at 70 percent of pre-COVID levels. Out of this, about 5 percent [of] restaurants did not offer food delivery services pre-COVID. Most of these are dining out-centric places, which have shown agility to pivot to food delivery,” Zomato’s researchers wrote.

Amazon-Reliance Tie-Up May Transform India’s eCommerce Landscape

The old saying goes: The enemy of my enemy is my friend.

So it is in India where — if it happens — Amazon’s taking of a stake in Reliance Industries Ltd. may herald a partnership designed to grab a significant chunk of the eCommerce market and ward off players like Walmart (which of course owns a majority stake in Flipkart).

Bloomberg reports that Reliance (and specifically billionaire owner Mukesh Ambani) is mulling selling a $20 billion slice of its retail arm, or as much as 40 percent, to Amazon. The news outlet cited an unnamed source “with knowledge of the matter.”

“The deal would be a highly complementary one that builds on the strengths of either side,” Utkarsh Sinha, managing director at Bexley Advisors in Mumbai, told Bloomberg. “Amazon comes with the might of its warehousing capabilities and the ability to streamline supply chains and sweat assets for maximum returns.”

Amazon and Reliance already have some relationship in place as both are part owners in Future Group.

A significant minority ownership stake in Reliance would be a tie-up that brings together online platforms but also a brick-and-mortar presence (through Reliance) and for Amazon may also blunt some competition. Though, as we’ve chronicled in these pages, demonetization has shifted cash to the sidelines and pushed the population at large to embrace digital payments at an increasing pace since 2016, many transactions are still done face to face. Reliance Retail’s brick-and-mortar presence is broad, spanning consumer electronics, online and offline groceries and wholesale operations.

As always, should a deal materialize (and it’s not a given), antitrust and regulatory scrutiny wait in the wings.

In the meantime, the value and lure of going big in India through partnerships, an online/offline and presumably omnichannel/mobile payments strategy is being crystallized.

As reported in May, Jio Platforms — India’s largest mobile commerce company and a subsidiary of Reliance Industries — gained investments from a slew of tech-focused investors including Silver Lake Partners. Jio has nearly 400 million subscribers in India and is crafting a digital ecosystem that includes streaming media, and is eyeing payments too. Reliance, over the spring, also announced plans to debut JioMart, a pilot program for a grocery delivery service that will feature an online-to-offline ordering system on WhatsApp.

And in terms of the competition, in July news came that Walmart India Private Limited, which operates the Best Price wholesale business in India, is being acquired by Flipkart Group. The stores would operate in a manner akin to warehouse clubs, selling items to independent retailers and smaller firms (as Walmart cannot sell directly to consumers through its eponymous stores or websites). An indirect presence (in terms of reaching end customers) is still a presence.

For Amazon, the partnership/minority stake strategy may be one that relies on shared heavy lifting to capture eCommerce in a $1 trillion market. And relying at least in part on Reliance  may (or may not) go some ways toward quelling criticism in India, via an antitrust suit filed last week by a group of more than 2,000 online sellers. As reported, that suit by the All India Online Vendors Association claims that Amazon gives favorable treatment to some retailers. The suit alleged online discounts may drive independent vendors out of business.

For the U.S. tech giants eyeing India, capturing greenfield opportunities will take quite a bit of … green.