Optimising cross-border payments for SMEs

The recent explosion in e-commerce has created huge opportunities for Small and Medium Enterprises (SMEs) globally  – yet capitalising on these opportunities is challenging, especially in cross-border payments.

In a new webinar, Freemarket and Atlantic Partners Asia (APA) explain how SMEs should change their payments approach for optimal cross-border e-commerce.

Cross-border e-commerce has erupted in recent years. According to Juniper Research[1], cross-border e-commerce is expected to more than double over the next five years, and will account for one in three digital transactions by 2028 to reach a value of more than $3.3 trillion.

At the same time, new payment methods such as real time and instant payments are transforming the way people pay online.

In their webinar Freemarket and APA note that just under half of all e-commerce now takes place using digital wallets, while real time payments are growing at 30% per year.

Meanwhile, new payment methods such as stablecoins – cryptocurrencies linked to fiat – are emerging fast.

Such changes have added complexity to an already challenging landscape for SMEs.

Despite making up 90% of the world’s companies and contributing 70% of the world’s GDP, according to APA, they have been historically under-served by banks as they are seen as too risky and expensive to service given their diversity and lower capital reserves compared to major corporations, as well as their traditionally lower length of tenure as banking clients.

In the webinar Freemarket and APA describe the new wave of fintech providers that’s emerging to help SMEs cut the cost, time and friction experienced in cross-border payments, citing research from McKinsey and Co that shows fintech banking services will grow three times faster than banks themselves over the next five years.

However, Freemarket and APA say that SMEs need to choose their fintech partners with care, arguing for the importance of finding a fintech that understands the specifics of your sector of activity and can deliver services relevant to that sector.

Their webinar also covers the importance of extensive and robust compliance and risk controls to a successful partnership, as well as important factors to consider when choosing a fintech for your cross-border payment needs.

Such as a fintech’s flexibility and agility when it comes to service delivery, the user experience they offer SMEs, how rapidly new SME clients can be onboarded, the range of payment rails available and how quickly they are able to process and settle transactions.

Above all, the webinar stresses the importance to SME success of building resilient partnerships with fintechs that have links to a wide range of service providers to ensure 24/7/365 uptime, rapid settlement and a smooth user experience.

By taking all these factors into account, SMEs can capitalize on the cross-border e-commerce opportunity while minimizing the risk, cost and complexity of accepting payments across borders.

Watch the new webinar from Freemarket and APA for more on how SMEs can optimise their cross-border payment strategies to profit from cross-border e-commerce.

[1] Juniper Research, 17 July 2023: “33% of e-commerce spend to be cross-border by 2028”