Fintech faces unique challenges as real-time digital payments expand internationally and into the B2B space.
Varying global regulations throws up hurdles that many companies looking to grow beyond their national boundaries underestimate.
Michael Chang, Director of International Payments at EasyPay, former teacher and current industry pioneer in cross-border payment systems, helps businesses expand their cross-border payments and become compliant with global regulation requirements. In a recent episode, he shared how he’s addressing the many unique challenges in the industry.
- Cross-border payment solutions
- Challenges expanding Fintech in APAC countries
- The unique challenges in B2B payments
- The future for cross-border payments
China’s cross-border payments
EasyPay is a company that facilitates cross-border payments for companies located in China. Its origins can be traced back to the years immediately preceding the pandemic.
When the company began, Fintech solutions were all the rage in China, Michael says. But the country’s enthusiasm cooled significantly in the wake of the pandemic.
Still, Michael says that the pandemic, somewhat surprisingly, was a boon for the company overall. Their approach to helping B2B companies was needed more than ever before — even as many others in the Fintech space lost steam in the economic turmoil borne of the pandemic.
That’s not to say everything is a breeze for the upstart company. Cross-border finance is especially challenging in China, where monetary policies and regulatory burdens — like the nation’s strict currency controls — ensure already complicated international financial services even more difficult to successfully execute.
And once you look to the region as a whole, the aggregate challenges become a Gordian Knot to untangle.
APAC Fintech challenges
When compared to other regions, the APAC region is extremely complex.
For one, there are vastly more countries to deal with.
While doing business in North America really only involves 3 distinct countries and the EU introduces a certain degree of homogeneity across the many countries in the continent, cross-border payments in the APAC means contending with numerous countries — all with their own unique regulatory requirements
As such, Michael says many companies underestimate the challenges they will face when expanding in the region.
To illustrate, he cites upstart Fintechs in smaller markets like Singapore. These startups often demand growth that’s simply unattainable within the nation’s borders — but the challenges when expanding beyond them often catches these companies off-guard.
Usually, it’s the regulatory burdens and cost of entering a new market that chills these organizations’ ambitions. What they think should be as easy as flipping a switch ends up becoming a Sisyphean task.
That’s where the value cross-border solutions like EasyPay provide becomes so important for these organizations — especially in the B2B space.
Michael says that while there are plentiful options for payments in B2C — everything from credit cards to Zelle — B2B is traditionally more constrained.
In fact, credit cards make up less than 10% of B2B transactions, while the rest are dominated by bank transfers. And this poses multiple problems for B2B companies internationally.
Bank transfers like ACH often result in onerous delays where, say, a company may buy from a vendor, but those funds don’t hit the vendor’s accounts for days. Such delays put unnecessary restraints on the speed at which these businesses are able to operate.
Yet, similar to the regulatory challenges we discussed before, businesses often expect things to run much smoother than the on-the-ground reality. What most businesses want are instantaneous payment solutions.
EasyPay and others step up to provide these solutions, but the competition in the market is fierce. Where once cross-border payments could yield up to 2% in fees, these days solution providers are lucky to get 0.5%.
These lower margins make breaking into newer markets — a costly affair — even more challenging. Add to that newer payments solutions being implemented by governments and Michael — and many others — are seeking to innovate to stay competitive in the future.
The future of cross-border payments
Michael cites the payments wallet the Chinese government provides its citizens — along with counterparts in other countries — as something that may ultimately edge out companies like EasyPay. Of course, the company has plans to stay relevant.
For one, Michael anticipates that current trends — like the metaverse, NFTs and crypto — will afford plenty of opportunities for EasyPay in the future. He’s confident that the company will innovate alongside these exciting technologies, leading the industry and helping more companies solve their most pressing financial challenges.
Until next time!