Why faster, friction-free cross-border payment systems help SMEs expand their horizons
Executives Rhidoi Krishnakumar, of Visa Direct, and XTransfer’s Violas Xiao reveal how firms can overcome challenges of entering new markets
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Simpler payment process can help SMEs achieve global dreams
Small and medium-sized enterprises (SMEs) are the world’s quiet but dependable engines that are driving growth – making up about 90 per cent of the business landscape in most economies, according to the World Bank.
“Across Asia-Pacific, small and medium-sized enterprises are the backbone of local economies,” Rhidoi Krishnakumar, head of Visa Direct in Asia-Pacific, says.
As these SMEs start to expand and look beyond their established domestic markets, they often seek payment providers that can adapt to their needs.
As one of the world’s largest digital payment networks, Visa Direct offers international money transfer services across Visa’s global network, and works with partners such as XTransfer, a Shanghai-headquartered global cross-border remittance platform.
Krishnakumar joined Violas Xiao, XTransfer’s Singapore CEO, to talk about the cross-border trade expectations of SMEs in the latest of the South China Morning Post’s InsiderTalk video series featuring the insights of leading international business executives.
As SMEs expand their cross-border business activities, they will want their payment providers to offer quick, seamless and secure transactions – and the ability to handle multiple currencies, Krishnakumar says.
“Whether an SME pays a supplier or pays an invoice, their expectation is for beneficiaries to receive proceeds as if they are sending a digital remittance, with all the complexities of that business payment to be managed by their partner,” he says.
“Partnerships like Visa Direct and XTransfer are already making this need a reality, enabling faster and frictionless payments.”
Xiao says SMEs diversifying into new markets often face challenges when seeking financial services from traditional banks.
“SMEs generally find it difficult to obtain better financial services from traditional banks,” she says. “This not only hinders their transactions with buyers in different countries, but also forces some enterprises to use non-compliant channels, such as underground banks, for cross-border remittances, resulting in significant capital and regulatory risks.”
She says those SMEs that are able to work with a large bank often have to contend with high fees, unattractive foreign exchange rates and slow settlement times – all reasons the partnership between Visa Direct and XTransfer offers real value.
Krishnakumar says: “By integrating Visa Direct’s modular APIs [application programming interface] into XTransfer’s SME payments platform, we enabled XTransfer’s customers to launch faster, more streamlined collections. This is particularly appealing for SMEs who are exporters selling into markets like the UK, Canada, Europe and the US.
“At the same time, XTransfer can lean on Visa’s deep local market knowledge and regulatory and compliance capabilities to help navigate the complexities of the Asia-Pacific region.”
Xiao says that XTransfer’s use of Visa Direct’s collections and payout capabilities has enabled her SME customers to reduce costs by nearly 80 per cent.
“Real-time payment rails empower fintechs to deliver with speed, transparency and efficiency, directly addressing SMEs’ biggest financial and customer journey pain points, and accelerating their growth,” she says.
The unpredictability now being caused by global trade disputes means that SMEs need to be constantly agile, Xiao adds. “In a fast-changing world, your ability to adapt and move quickly is your greatest asset. Make agility a core part of your culture and strategy, and it will empower you to turn challenges into new opportunities.”
Watch the video to see Rhidoi Krishnakumar and Violas Xiao discuss how Visa Direct can help SMEs grow their business