More small- and medium- sized businesses in the region can now address their cross-border payment challenges through financial fintechs

After a prolonged period of slower growth, small- and medium- sized enterprises (SMEs) are finally expanding, according to industry watchers.

However, as these businesses look to take on new markets and opportunities, they may run into a familiar roadblock: payments.  

While cross-border payment options have improved for consumers, bank standards for SMEs in different countries have not improved at the same pace, with some SMEs encountering slow payments, opaque processes and high fees.

In small countries, this can be a steep cost amid a domestic market that is relatively small and likely dependent on cross-border expansion as a key to growth.

SME payment challenges

When SMEs expand into international markets, they face a host of challenges, including fluctuating currency exchange rates and hefty processing fees. These fees add up quickly, draining resources that could otherwise be spent on growing the business.

For example, when a HR software solutions company expanded into India, Thailand and Vietnam, its leaders faced challenges dealing with a monthly double billing cycle and processing around 40 invoices each time. Their existing payment solution was not only slow and unresponsive but also costly. 

To cut their exposure to exchange rates and service fees, they had to resort to agile fintech solutions that offered real-time payments and higher efficiency.

Fintechs paving the way
The rise of cost-effective fintech solutions presents a new way forward for SMEs. Their solutions can sometimes a fifth that of traditional bank services yet up to 12 times faster — based on traditional bank averages.

This speed is crucial in today’s fast-paced global commerce landscape, where real-time payments have become a game-changer. For SMEs, where cash flow is the lifeblood of operations, timely payments reduce business uncertainty, boost working capital and potentially create a range of economic and social impact. Whether it is ensuring employees are paid on time, keeping suppliers satisfied, or managing intra-company transfers, real-time payments provide a level of speed and agility that traditional banking simply can’t match.

Beyond speed, SMEs seeking to expand struggle with widely varying licensing requirements and anti-money laundering regulations – and it often puts their plans on hold. Ironically enough, a study by UOB had found that 35% of Asia Pacific SMEs surveyed had cited a lack of legal, regulatory, compliance and tax support as major issues in overseas expansion. 

This is where modern fintech solutions offer more than just financial efficiency. Regulated and licensed in multiple markets, they can help businesses navigate stringent local regulations with ease. 

Payments as a strategic driver
SMEs facing payment efficiency and high fees as a burden of legacy systems and opaque processes can now look to established fintechs offering bank-grade security with the flexibility and innovation tech-centric businesses. 

However, to make the most of it, SMEs must begin to think of payments as a strategic driver of business, rather than an afterthought.

Embracing this perspective will not only help them overcome payment barriers but also fuel their growth.