In May, Currencycloud’s Singapore office organized a panel session, bringing together partners and clients to explore the topic that was on everyone’s minds: payments. We invited Aspire’s Regional Head of Sales, Thomas Jeng, Visa’s SVP and Head of New Payment Flows, T.R. Ramachandran, TransferClear’s CEO and Co-founder Sam Yap, and Currencycloud’s Chief Product Officer, Stu Bailey, to share their thoughts on the future trends of payments. Here are the key takeaways from the evening.
1. The pandemic continues to impact payments
Covid-19 accelerated the digitization of commerce in APAC. It changed the way consumers shopped and the way businesses accessed cash and managed their funds. India has embraced the digitization of commerce. This accelerated during the pandemic, and now at the tail-end of the pandemic there are 2.4 billion Real-Time Payments (RTP) made every month in the country, which has seen a 52% increase in ecommerce. This is backed up by a recent report stating that cashless transaction volume will increase fastest in the Asia-Pacific region, increasing by 109% from 2020 to 2025 and then by 76% from 2025 to 2030.
The pandemic not only changed the way businesses made payments. It also changed their ability to access funds, with SMEs unable to reach traditional financial tools or open bank accounts during that time. As a result, digital-first companies like Aspire, who provide all-in-one financial operating systems to start-ups and SMEs, have been a game changer.
2. B2B and B2C: the gap is still wide
Compared to B2C, B2B is a relatively opaque payments ecosystem. How a corporate pays another corporate, how a corporate pays its suppliers, how vendors pay their sub-vendors, in this we are still where B2C payments were in the early 2000s because it’s a complex, costly system to digitize.
In Europe, B2B payments is also a highly fragmented market, and as a result there are a lot of entrepreneurs and neobanks working with SMEs to help make B2B payments as seamless as possible. It is a similar story in APAC where there are around 32 different regulators in the region.
3. An evolving payment system
The way the payments infrastructure will evolve is different depending on whether it’s B2B or B2C. For B2C, the main question is that of message standardization of RTP protocols which are, for example, very different in Thailand than Dubai. Once payment messaging is harmonized, B2C payments will be smoother and more accurate.
For the B2B side of the equation, if you’re an importer wanting to pay for something and your money is stuck in a black hole, not knowing where your money is or when it will arrive, this is a real pain point. The holy grail for B2B payments will be in getting the movement of money and the movement of messages to happen at the same time.
One solution to the complexities of digitizing B2B SME payments across APAC has been addressed by regulators who understand the importance of instant cross-border payments. The Monetary Authority of Singapore (MAS) has announced three bilateral Fintech cooperation initiatives between 2021 and 2022 alone.
- In April 2021 MAS announced the linkage of Singapore’s PayNow and Thailand’s PromptPay RTP systems so customers in participating banks could transfer money seamlessly via a mobile number.
- September 2021 saw MAS announce the phased linkage between PayNow and Malaysia’s DuitNow to enable customers from participating banks to make RTP on their mobile and also make in-store payments by scanning DuitNow QR codes.
- In April 2022 MAS signed the Fintech Bridge Agreement with Australia. This framework for cooperation supports Fintechs wanting to expand into Australia or Singapore while strengthening regulations and policy links between the two countries.
4. To partner or build from scratch?
The Asia-Pacific region has gone beyond the time when Fintechs were Davids overthrowing Goliath legacy banks. It’s now all about how David and Goliath can dance together, creating commitments and synergy.
Singapore-based Aspire is happy to dance with Goliaths. They use best-in-class third party services such as Visa’s virtual cards system to help their SME clients encrypt their B2B transactions and grow their business. It is more efficient and much less costly than building a new tech stack.
It comes down to a choice: a company can build it themselves or partner. It is simpler to partner. Once you identify a partner that ensures you remain compliant and delivers a solution for you, the time, cost and labour saved will make life much easier.
Payments - what’s the outlook?
A big trend, one often overlooked in payments, is the number of ancillary services built around security. Many economies around Asia-Pacific have populations that are first generation in the field of finance, lacking inbuilt expertise around how best to protect the customer. An interesting trend to watch beyond 2025 will be in individual and enterprise security around payments, and how this can be embedded into every payment experience.
The last five or ten years has seen the unbundling of banks. This has allowed specialist providers like Currencycloud to facilitate cross-border payments, using APIs to create a best-in-class service for businesses. There’s now a rebundling happening, due to so many providers coming in and wrapping services up in software.
These are just a few opinions and conclusions we discussed on the night. If you’d like to discover more about how we can help you streamline cross-border payments for your business, talk to one of our team of experts to see how partnering with Currencycloud can help you.