Innovating digital payments a key for business success
The rise of e-commerce, fintech, and digital wallets has navigated business to be fully done and operated with a tap of a few buttons. With less manpower required to move money across borders, the time it takes to complete each transaction becomes a win-win solution for both business operators and customers.
By 2025, researchers predict that the payments revenue of the business-to-business market in the Asia-Pacific will reach US$1.4 trillion. The figure comes from compounding an annual growth rate of 10.5%, with a specific growth in the cross-border segment.
This growth is highly attributed to migration and global trade happening within the region. Activities such as workers sending money to their families become regular remittance transactions, leading to stable flows of capital for many nations.
Take India for instance, which received US$89.4 billion worth of remittances in 2021. The World Bank reported that it was on track to receive US$100 billion in 2022.
On a larger scale, Asia covers only 40% of the world’s exports. This covers transactions from sales of goods coming from small businesses.
Other reasons for this growth are the online gaming sector in the Asia-Pacific, currently pegged as a US$197 billion industry, and the ‘creator economy’ coming from publishing content online by millions of social media influencers and personalities who can monetize their posts on various platforms.
What these new forms of businesses have in common is the need to have fast access to their earnings—much like how quickly social media posts can reach millions of viewers overnight.
Outbound, cross-border payment growth
Overseas education and property purchases, on the other hand, are also drivers of growth in outbound transactions. About 53% of foreign students enrolled in education institutions worldwide come from Asia. Transactions from families, scholarships, and other entities help move money faster in this cross-border setting.
This is similar to the increase in Asian homebuyers investing in international property markets. A recent research showed that buyers from China amounted to 6% of foreign buyers who bought properties in the U.S., having an average purchase price of about US$1 million per transaction.
When compared to traditional ways of sending money, digital alternatives have become more attractive both on cost and settlement period.
Before, bilateral banking arrangements would entail a high transaction fee and a longer lead time. Moving US$200 would entail paying a US$20 transaction fee, amounting to about 10% of the total amount. Today, a transaction can be done within a matter of seconds, even if the sender and the receiver are on opposite sides of the globe.
Next-generation digital solutions
Having digital alternatives has also made it possible for the unbanked to complete transactions. Within the region, more than 70% of the adult population is considered underbanked or unbanked. Tapping this market will entail major growth for businesses that will opt to go digital.
A survey conducted by Visa in Singapore showed that three-quarters of customers used apps for cross-border remittances in the previous years.
This proves how digital transformation has improved global payment networks. Now, customers see this as a rapid, seamless, and secure solution for moving their money compared to traditional and higher-cost alternatives.
It also opened the door for financial inclusion. Families of migrant workers can enjoy a higher percentage of their money. This can be seen in countries such as Bangladesh and the Philippines after lowering remittance costs.
The same can be said by merchants on marketplace platforms, who now likewise benefit from time cross-border settlement.
Leading payment providers such as Visa have been at the forefront of this payments revolution in the Asia Pacific. With a reach of more than 7.5 billion distinct endpoints on a single network, customers can now have seamless transactions by sending money to a bank account, digital wallet, or card on a single platform.
Having a unified platform also helps in providing ease in going through multiple transactions. Visa Direct as a solution has advanced alternatives catered to help banks, remitters, and merchants alike.
Find out more about how Visa Direct can help your business here.