Unlocking the APAC Cross-Border Trade Opportunity with Integrated Payments


In Asia-Pacific (APAC), the rapid development of cross-border e-commerce has fueled demand for cross-border payment capabilities and integrated financial solutions as small online businesses embrace digital technologies to expand their reach and go global, according to a Currencycloud’s recent report shows.

Integrated Finance allows any business to integrate pre-built financial solutions via API integration into their offerings. These solutions can range from payments and loans to other specialized services such as insurance coverage and investments.

There are many reasons for the rise of embedded finance, including favorable regulations, the acceleration towards a cashless society, and the growth of e-commerce.

Above all, however, it was the ease of use and convenience of these solutions that had consumers hooked.

Customers can now make cashless payments directly from a ridesharing app, or they can apply for point-of-sale personal loans at the touch of a button.

For businesses, integrating financial services means an improved customer experience as well as increased buy-in. Asian fintech leaders and super apps, including Grab, GoJek, WeChat and Kakao, are proof of this.

By partnering with third-party vendors and banks, these platform players have built vast ecosystems of virtual products and services and are now entrenched in users’ daily lives, providing not only online messaging, social media and marketplaces, but also digital payments, online investment products and consumer loans.

The trend of integrated finance has accelerated at such a rapid pace that US private equity firm Lightyear Capital predicts that overall global revenue from integrated finance solutions will grow by 922% between 2021 and 2025 to reach $230 billion.

Over the next ten years, space is expected to become a US$7 trillion industry.

Integrated financial forecasts

Embedded Funding Forecast Source: Lightyear Capital

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In a December 2021 Hot Topic Briefing, experts from the Emerging Payments Association Asia (EPAA) and cross-border payments company Currencycloud discussed the rise of integrated finance in APAC.

A subsequent white paper detailed the various topics covered during the discussion, outlining the key technologies and drivers pushing companies towards integrated finance.

According to the document, technologies such as near field communication (NFC), tokenization and QR codes offer a wealth of opportunities for the seamless delivery of financial services through mobile apps and websites as well as wearable devices.

COVID-19 has changed consumer behavior significantly, forcing people to embrace contactless payments, the newspaper said.

As the adoption of payment methods, including digital wallets and smart cards, continues to increase, it looks like the next evolutionary step will be mobile payments.

This trend will be driven by customer demand for greater convenience, growing adoption of the Internet of Things (IoT) and development of virtual reality/augmented reality (VR/AR) technologies, a research firm predicts. .

Not only that, but a changing regulatory landscape characterized by open financial regulations and spurts of market liberalization will help facilitate the exchange of data between market participants and provide opportunities for a larger group of businesses to participate in the provision of financial services.

In this context, integrated finance is now entering its third level of maturity where the concept is applied to other areas of finance and banking, including credit, insurance, investment and cross-border transactions, indicates the document.

Five Levels of Embedded Finance Maturity, Source: Powering Cross-Border Payments with a Modular Approach

In Asia-Pacific, one trend that makes integrated cross-border payments so relevant today is the booming cross-border e-commerce market.

For example, China, one of the most mature markets for cross-border e-commerce in the region, has seen its sector grow to US$1.5 trillion, according to Deloitte.

Of this amount, 72.8% went to cross-border business-to-business (B2B) e-commerce, a segment that is expected to grow to US$2.2 trillion by 2026.

Degree of digitization on all links of cross-border e-commerce

Degree of digitization in all cross-border e-commerce links, Source: Deloitte

Singapore is another developed market for cross-border e-commerce, with consumers increasingly seizing the opportunity to spend with overseas companies.

In 2020, 73% of online consumers in the city-state said they purchased from foreign merchants, according to research by JP Morgan.

At the time, the cross-border e-commerce market in Singapore was worth S$2.91 billion (US$2.15 billion) and accounted for 35% of the entire Singaporean e-commerce market, indicating the dynamism .

In Asia-Pacific, SMEs have been key drivers of the digital transformation of cross-border trade and now account for 85% of the region’s cross-border e-commerce sector, according to Deloitte.

They are increasingly engaging in global commerce, aided by cross-border e-commerce platforms such as Shopee and Lazada, but also integrated fintech providers like Currencycloud, to help them sell their products in larger markets. wide.

SMEs are driving these changes as well as the existing opportunities for massive growth in the years to come.

Founded in 2012 in the UK, Currencycloud provides a suite of out-of-the-box solutions that businesses can easily integrate via APIs, enabling businesses of all sizes and across industries to offer their customers virtual accounts, multi-currency wallets, exchange services, etc.

Learn more about integrated finance in APAC and how Currencycloud supports banks, fintechs and other businesses with their cross-border payments needs here.

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