How Skydo Is Using Its Tech Stack To Disrupt Indian Cross-Border Payments Landscape

With the evolution of UPI and other digital modes of transactions, making online payments has become incredibly straightforward and seamless. However, making cross-border digital payments is still one of the biggest peeves for many.

This is especially true for exporters (small, medium and large-scale), who are particularly tormented by high transaction fees, archaic systems and time-consuming and inefficient payment processes.

Having witnessed this first-hand while overseeing exports and imports at his family-run automobile business, Srivatsan Sridhar, along with his former Ola colleague Movin Jain, cofounded Skydo in March 2022 to streamline cross-border online transactions for small businesses.

Skydo approaches cross-border payments in a novel way with a vision to cull the dominance of a few players in the Indian cross-border payments industry. It allows Indian businesses to open international accounts (collection accounts) with the help of its global banking partners.

What sets Skydo apart is its ability to allow Indian businesses to open international accounts directly with proper know-your-customer (KYC) and know-your-business (KYB) documentation. In essence, local businesses can simply make payments to their vendors spread across geographies at the touch of a button through online banking. 

Skydo’s operations are powered by the startup’s partnerships with six global banks, which enable its customers to receive money in 32 currencies. These banks span countries such as the US, the UK, Canada, Western Europe, Singapore, and the UAE, among others, which account for 80-90% of remittance inflows into the country.

Backed by marquee names such as Elevation Capital, Better Capital and Eximius Ventures, the two-year-old startup has raised more than $5.2 Mn to date.

Currently, it claims to work with 1,500 businesses and processes payments to the tune of $50 Mn a year. The startup has set its eyes on clocking a volume of $750 Mn on its platform by March 2025. 

With a 32-member team, Skydo competes with the likes of XFlow, PayGlocal, Winvesta, and Salt, among others, in the larger cross-border payments space.

How Seeds Of Skydo Germinated

It was Sridhar’s stressful tryst with cross-border payments that resulted in the genesis of Skydo. Before joining McKinsey and Company in 2017, he was overseeing exports and imports at his family-run business of manufacturing automotive components, which introduced him to the complicated world of cross-border payments.

Right after McKinsey, Sridhar joined ride-hailing giant Ola where he met Jain, who would eventually team up with him as a cofounder. Afterwards, the two parted ways – Sridhar went to fintech startup Rupeek and Jain joined digital payments juggernaut PhonePe.

After learning the ropes of the trade at their respective companies, the two banded together to disrupt the Indian cross-border payments landscape. The duo quit their respective jobs at the end of December to take the entrepreneurial plunge in March 2022. 

Along with pursuing a rigorous six-month-long regulatory process, the cofounders built their tech stack and figured out the right product-market fit. Eventually, Skydo went live, as a product, in November 2022. 

“Back then, there were hardly any good options for small businesses in terms of cost convenience for cross-border payments, especially those compliant with RBI norms. So, that’s the gap we spotted as barely anyone was solving for such aspects,” Sridhar told Inc42.

Two years on, small businesses continue to remain their key focus. As per the company, a major chunk of its revenues comes from segments such as IT servicing (accounting for half of the startup’s revenues), process outsourcing, design and engineering servicing, content writing, legal, and account outsourcing.

CEO Sridhar told Inc42 that the cross-border payments platform clocked a revenue of $500K in 2023 and is looking to shore up the number to $3.5 Mn by 2024-end. 

Eye On A Bigger Pie

The crown jewel of the platform is its end-to-end tech stack that enables exporters to convert the received foreign currency (in partnership with DBS Bank) to Indian Rupees. 

Unlike SWIFT transfers, Sridhar says that its customers can track their cross-border payments. Another USP of Skydo is that it has built an entire accounts receivable tool, which allows businesses to raise an invoice and then reconcile their invoice to payments. 

In addition, the startup’s products can be integrated with Zoho and other accounting and enterprisetech platforms. 

As of now, the startup, which competes with the likes of XFlow, PayGlocal, Winvesta, Salt, among others, is vying for a bigger pie of Indian small businesses looking at exports as an attractive opportunity. 

As per government estimates, the country’s overall exports (both merchandise and services) stood at $73.55 Bn in February 2024, up 14% from $64.41 Bn during the same period last year.

However, the cross-border payments market is fraught with its own set of challenges. On the regulatory front, the RBI has recently ramped up the screening of the fintech ecosystem, including cross-border payment startups. It has also tightened norms for issuing various licences and rejected the applications of some of the major players in the industry. 

In addition, competition appears to be on the prowl. While Skydo does have first-mover advantage in the space, the startup’s playbook is not unique and can be replicated easily.

Nevertheless, as Skydo continues to deepen its penetration in the cross-border payments segment, it would be interesting to see how it leverages its tech stack to remain a dominant player in the long run.