Simplifying Cross-Border Payments: A Deep Dive into Skydo's Innovative Approach

Skydo, a Fintech Startup founded in Feb 2022 by Movin Jain and Srivatsan Sridhar, aims to streamline cross-border B2B payments, cutting forex charges for businesses by over 50%. Headquartered in Bangalore, the company enables Indian service providers to create a global virtual account within 5 minutes. Partnering with leading banks worldwide, Skydo provides businesses with foreign virtual accounts for receiving payments and converting currencies at live FX rates with zero markups and a flat transaction fee.

The company raised USD 5.2 million in a seed round led by Elevation Capital. Headquartered in the US (Delaware), Skydo has subsidiaries in Singapore and India, offering(providing) a convenient, fast, and cost-efficient solution for getting paid locally from overseas clients.

Srivatsan Sridhar, CEO of Skydo, is dedicated to tackling significant business challenges through technology. With leadership roles in Bangalore startups, he served as SVP at Rupeek and senior director at Ola. Previously, he worked with McKinsey and managed an automotive parts business in Chennai. Inspired by unresolved payment issues in his export business, Srivatsan founded Skydo. A mechanical engineer, he earned his degree from Coimbatore Institute of Technology and MBA from the Indian School of Business.

In an exclusive interview with Ciol, Srivatsan Sridhar, CEO of Skydo, shared insights about how Skydo’s cross-border payments platform aims to make global trade efficient for SMBs by providing solutions related to Compliance, Cost, and Convenience.

Can you provide a brief overview of Skydo?

We established Skydo in March 2022, making us just about a year and a half old. Our product was launched in November of the same year, and since then, we have experienced promising early growth. Currently, we have onboarded over a thousand companies onto our platform, processing nearly $4 million in payments each month. This figure continues to grow consistently month by month, marking a robust start for us.

Presently, our focus is on assisting small exporters receiving payments in India. The sending party, typically the importer of our Indian customers, can be located anywhere globally. We currently support 32 currencies, mostly the common ones constituting over 90% of India’s exports. Our services are tailored to business sectors, primarily in services, and to a lesser extent, manufacturing.

Our approach is to take one segment at a time, and currently, we are focusing on service businesses. We offer a B2B payments platform that is characterized by its simplicity, transparent pricing, and user convenience. Our value proposition is straightforward – a flat fee, no negotiations on foreign exchange, and the convenience of raising an invoice to the client while we handle the payment collection process seamlessly.

Before founding Skydo, I led operations at Rupeek, a gold-based lending platform. Prior to that, I held a position in growth and revenue management at Ola. Additionally, I spent a considerable amount of time managing my family’s automotive manufacturing business. Earlier in my career, I worked as a management consultant at McKinsey, primarily serving financial services clients. I hold an engineering degree and an MBA, as does my co-founder, who also has a background in engineering and an MBA. After completing his MBA, he worked in investment banking at Barclays in the UK before returning to India to pursue his passion for technology, joining various successful startups, including Inmobi, Ola, Meesho, and Phonepe, where he held product roles. This is his second startup venture.

Both my co-founder and I bring entrepreneurial experience to Skydo, with me having a family business background and him having founded a company previously. Our shared ambition is to create something enduring, large, and global. Our initial focus is on simplifying cross-border payments for businesses in India, gradually expanding to serve different segments within the country and eventually reaching a global scale.

Could you kindly provide information on the challenges that Skydo is designed to tackle?

Skydo’s customers today are small businesses, most of them in various knowledge services such as IT development, business process offshoring, engineering design, accounting, legal, and various other service businesses. As you all know, India is already one of the largest services exporters globally. India is also a significant manufacturing exporter, but our services exports have been growing at a much faster rate than manufacturing exports over the last decade. So much so that services are almost as large as manufacturing in the recent past.

Why did we choose services to start with? Because we felt it’s large, it’s fast-growing, and the customers are these small businesses who do not have large, well-developed finance teams or deep banking relationships, unlike their manufacturing counterparts. So, we felt like these were the people who were acutely facing the problem of payment complications, and we could help them from day one. Eventually, we hope to cover manufacturing exporters as well, and we are already serving some manufacturing exporters. But yeah, these are our customers.

Now, what problem do they face when they receive a payment? They have a few options to get payments, right? One is they raise an invoice and then ask their customers to pay through PayPal, Stripe, or any other credit card payment platform. This works well for small customers where ticket sizes are very small, in the few hundred dollars. Because with larger ticket sizes, PayPal Stripes costs are very prohibitive, almost 7-8% of your invoice value, which you don’t want to spend just for a payment solution at a larger scale.

The other option to receive payments is some of these B2B payment platforms specialize in helping businesses. Give me a moment, sorry, some of these are B2B payment platforms like Payoneer or Wise for Business, and so on. Now, these payment platforms are a little cheaper than the likes of PayPal but still work on a combination of account payments and credit cards, making them a bit more expensive than what an exporter would ideally want to spend.

Then there’s the option to get money through your bank. So, you give your customer overseas your Indian bank account your Swift code, and other identifiers. The problem here is that the banking channel is a little slow, and it’s also broken because banks in different countries work differently, and the handshake is not often smooth. When you give your account details to your customer, for example, your a customer might not not know which field to enter because what we call an account number in another country could be called IBAN, and what we call a Swift code could, in another country, be called a short code, and so on. This causes a lot of problems, especially in a small company to a small company type of transaction.

That’s where we realize we could provide the convenience and compliance bundled into one. So, if we can offer both convenience and compliance at a very low price, it’s an unbeatable proposition. Because then, for a small business, the complication of thinking about payments and solving all these issues completely goes away. All they have to do is sign up with a single platform called Skydo. Skydo provides them with accounts in multiple countries, and when they raise an invoice to their customer, they just have to use that particular country’s account that we have given them, and then it all becomes straightforward. So, your importer pays you into the local account in their country, and for them, it’s a simple internet online banking transaction, similar to how we would do any NEFT transaction. Similarly, Skydo then takes care of all the payments from the time the money is in the local account to bring it to your Indian account, and you don’t have to do anything. It’s what we call a touch-free experience. And, you also don’t lose money in this process. So, this is what we have built.

How would you describe the unique selling proposition and USP of Skydo in the market?

So I would describe our unique selling proposition in one line as transparency. Many businesses complicate their pricing structures, leaving customers uncertain about what they’re being charged for and when payments will be received. In contrast, Skydo prioritizes transparency in every aspect.

To elaborate, our product is tailored for a specific use case. We’re not a bank catering to various customer types, nor are we like PayPal, which serves multiple purposes from buying movie tickets to business transactions. Skydo, being a young and focused entity, exclusively targets a specific market. Our product is designed to assist small businesses in generating invoices, sending payment reminders, tracking payments, storing compliance documents, and reconciling with their books. The great value proposition lies in our laser focus and customization for this particular use case.

Our second strength is the transparency we provide in payments, covering both timelines and costs. Additionally, our pricing structure sets us apart as an industry first. Unlike others, we offer a flat pricing model. Instead of a platform fee plus a margin on currency conversion, we decided to eliminate the margin on FX. We charge a flat fee and pass on the live currency exchange rates to the customer. This represents another unique value proposition, simplifying the process with clear rates and transparency.

No complications, just straightforward business. Forget about it, go on vacation, start a new job – money flows into your account, and you’re fully aware of the amounts, reasons, and timelines. That’s the ease we provide.

What is some key strategic initiative that Sky is currently focusing on?

The first strategic initiative that we are eyeing is, how can we now solve equally deeply for a few more segments in the market. It involves penetrating various market segments more deeply. This includes addressing the needs of both small and large service exporters, and extending their reach into the manufacturing sector, targeting exporters of different sizes.

Moreover, Skydo is placing a significant emphasis on integrating with various online platforms. This includes commerce platforms like Etsy and Amazon, labor platforms such as remote.com and deal.com (which enable Indians to work as remote employees for global companies), and business process, discovery, and trade platforms like Upwork and Fiverr.

We also want to solve for these platforms in a big way where we may not necessarily be selling to each customer but we sell to the platform itself so that the platform uses Skydo as a payment partner to be able to transport money to multiple customers. So these are growth initiatives on a customer side. On the product side, we are trying to, expand our product offering from just receiving money from bank accounts to supporting other payment methods like credit card instant settlements.

So, some of these product features are getting built out things like recurring invoices things like automated billing, SAS companies and software companies might find very useful. So, there are certain product initiatives and product extensions that we are working on similar to use cases. We are currently supporting one use case of money coming into India. We also want to support other use cases like can we help companies make small payouts from India outside, who might be buying software for their company or paying sales and marketing agents that they may have in another country, and so on. So, how to support those small value payments and make them seamless for our customers? That’s another use case we are working on. Then in terms of risk management and compliance, we are working on getting licenses in every market that we are working in. So, to start with, we’ll be in India. Then eventually, we will expand and start getting licenses in other big markets, like Singapore, the US, and so on. And eventually, on the back of those licenses, then we can expand our operations globally. So this is like a roadmap of things that we want to do over the next few years. The customer segment expansion and product expansion will be more short-term and the licensing roadmap is slightly more medium-term.

What roles does technology play in cross-border payments and how is Skydo embracing technological advancements?

When we onboard a new customer, currently our customer onboarding processes are entirely digitally integrated with the India stack. So, when any business comes in, we have built the onboarding journey in such a way that we will immediately be able to pull the customers' data whether it is company identification number, their PAN numbers, and so on, and digitally verify them. So, this enables us to be able to provide an all-digital and very seamless experience during onboarding. We are also able to verify this customer's name against various sanctions lists or high-risk lists for terrorist and unlawful activities prevention and so on, which are very important in cross-border payments. So, this kind of risk management and convenience on onboarding is possible by the use of technology. Then when it comes to processing transactions, there are also a lot more risks involved in transaction processing because international payments are a high-risk environment where prevention of money laundering, prevention of terror financing, prevention of unlawful activities, etc. are quite important. And government regulators in all countries are very serious about this. So here, from the screening of sender and receiver names, the institution names, then passing the invoice and making sure that the invoice value and the sender name and other things from the invoice match the actual sender to validate these names against various lists on a real-time basis when the transactions occur.

All of these are technologically done without any human involvement. And it's a green channel, then the process just moves to the next stage and the payments get settled. But if there is any problem with any name or any detail, then the system flags it for a compliance leader to check and then approve. So this is another place where technology is used. Then in terms of how our model works, it is stitching together multiple local accounts- in the US, UK, Europe, and so on with customer accounts in India and connecting networks in between. And Skydo is like a layer on top of this, which, technologically has integrated with all of them, which allows us to be able to provide these, continuous tracking and monitoring systems for customers to know where their money is. So again, this is all tech which is mainly about sending and receiving APIs and being connected in real time into these systems. And the final place where tech is used, obviously, in our customer acquisition journey. So where customers can digitally come to our website, give us a lead, and then we'll be able to immediately get that into our systems, be able to contact them, or be able to push them out automated onboarding link and so on. We are also beginning to automate a lot of our customer support processes but eventually, these get automated as well.

Certain gaps need to be addressed to further boost exports. What needs to be done there?

Yeah, I believe there are several inherent advantages that our country possesses. Firstly, our size, abundant natural resources, and a significant human capital base set us apart. Traditionally, India has excelled in certain manufacturing sectors, particularly when dealing with low volumes and high variety, such as home furnishings, carpets, gems and jewelry, and engineering goods.

Additionally, we see emerging strengths in areas like pharmaceutical manufacturing and chemicals. However, to further boost manufacturing exports, it’s crucial to address certain areas. Infrastructure improvement is paramount; we need faster and more cost-effective means of transporting goods within the country to ensure they reach ports efficiently.

Moreover, enhancing access to credit for Small and Medium-sized Enterprises (SMBs), along with implementing credit guarantee schemes and export credit risk management mechanisms, would encourage more domestic manufacturers to explore export opportunities. Skill development plays a pivotal role, not only in manufacturing but also in services. While we excel in certain service sectors, enhancing overall skill development can broaden our capabilities.

Lastly, revisiting some of the labor laws related to employment, freelancing, and simplifying taxation could motivate more individuals to freelance, work remotely, or pursue entrepreneurial endeavors on the side. These measures can contribute significantly in the short term.

How does Skydo ensure customer satisfaction, and what measures are in place for continuous improvement based on customer feedback?

Since we are still on a relatively small scale, what helps us is our ears to the ground all the time. So, we have, for example, WhatsApp groups with every customer that we onboard, and including me and my co-founder, we are present in every one of those groups. So, we have hundreds of groups that are active and so, therefore, any customer feedback that comes in, the pace at which it comes to the leadership team is very quick.

So, we instantly know what is wrong. Secondly, our product development is also very closely linked with customer feedback. So we don’t build a product feature unless, you know, either existing customers or prospective customers have asked for it. So it’s not like, you build something and you’re trying to push it down the throat of customers, but you’re building what the customer wants. And in terms of support unlike most payment platforms, which are mostly chat or email support only, we have phone support as well. And one of the reasons why we win certain accounts is because we have support.

We prioritize customer satisfaction by implementing a blend of quantitative and qualitative measures to ensure a comprehensive understanding of customer experiences. For quantitative assessment, Skydo focuses on straightforward metrics such as the transaction experience and the speed of payment delivery. These metrics offer a clear, measurable view of the customer's journey and satisfaction levels.

On the qualitative side, Skydo places significant emphasis on gathering and analyzing specific customer comments, especially in instances where issues arise. This approach allows for a deeper understanding of the customer's perspective, going beyond mere numbers to capture the essence of their experience.

As Skydo continues to scale, the challenge lies in maintaining this high level of customer engagement without losing the personal touch that characterizes its service. To address this, we leverage technology strategically. Advanced tech solutions are employed not just to manage and analyze customer feedback effectively but also to ensure that personalization and quality of service are not compromised in the process of scaling up.

What role do you see Skydo playing in the new financial year?

Since we are still at a relatively small scale, what helps us is keeping our ears to the ground all the time. For instance, we have WhatsApp groups for every customer we onboard, and both my co-founder and I are present in each of these groups. We currently manage hundreds of active groups. As a result, any customer feedback that comes in reaches the leadership team very quickly. This allows us to instantly identify and address any issues.

Additionally, our product development is closely tied to customer feedback. We don’t introduce a new product feature unless existing or potential customers have expressed a need for it. We’re not trying to force something onto our customers; instead, we focus on building what they genuinely want.

In terms of customer support, unlike most payment platforms that offer only chat or email support, we also provide phone support. This has proven to be a winning factor for us in securing certain accounts. Customers appreciate being able to reach out and talk to a support person directly over the phone.

These are some of the practices we follow. Our robust feedback mechanism and continuous awareness of customer needs are aspects we aim to maintain even as we scale. Now, we have introduced simple measurements for customer satisfaction, such as assessing the transaction experience and the speed of payment delivery. These metrics provide insights into what the customer is experiencing.

As we continue to scale, managing this process without losing the personal touch but still gaining valuable insights will be crucial. This is where technology can undoubtedly play a significant role.”