Leading the March
Emerging markets are ripe for changing the way business-to-business payments are made. Apart from the need to maintain good supplier relationships, corporates are looking to adopt the advances in payment technology to maintain flexibility and a more harmonized
cash cycle. Although reports from a survey[1] indicate that checks accounted for 16% of all non-cash payments globally, with the number being as high as 24%
in USA, 20% in France, emerging markets are making electronic payment channels the de facto standard for doing business. Visa recently reported that 40% of its payment volumes now originate from the emerging markets. This is an indication of the increasing
use of a viable alternative payment and cash management technology.
Benefits of Adoption
Plagued by the risk of losing sight of their payment process through the diversity of the current channels and formats, corporates want to minimize the drag caused by complex, inefficient paper-based processes. Banking partners are well positioned to provide
corporates with the right-sized and adaptive technologies that meet their requirements to track and trace payments through their business ecosystem. For example, the adoption of SWIFT’s 3SKey which promises to reduce costs, decreases the transaction layers,
and provides increased security is already gaining acceptance in processing the corporates’ multi-bank, cross-border transactions.
Emerging markets such as Brazil upgraded the payment infrastructures with Reserve Transfer System (STR), Real Time Gross Settlement System (RTGS), Electronic Fund Transfer (EFT), etc., that promise to speed transactions and settlements. In Malaysia a contactless
mobile payment service using Near Field Communication (NFC) technology has been introduced, while in Thailand cheque imaging is being used to extend the scope of settlement services. China introduced the China National Advanced Payment System (CNAPS)
in 2009, making it easier for corporations to consider e-billing, real-time payments, corporate cards and mobile, and the country has also put in place the cross-border Renminbi receipt and payment information management system. M-PESA, a mobile, non-cash
payment system, in Kenya has grown exponentially with 19.5 million users (83% of adult population), transferring nearly US$8 billion annually[2].
Advantage Regional Banks
Regional banks in these markets are uniquely positioned to capture advances in payments to generate an incremental revenue stream. By offering corporates the right-sized tools that quickly adapt to evolving payment standards and the ongoing infrastructure
changes, regional bankers can tap $782 trillion in noncash transaction value and $492 billion in transaction revenues[3]. These payment services will help meet
the demand for a paperless business and to smoothly integrate the mix of varied payment channels and processes.
[1] http://gbm.rbs.com/docs/gbm/insight/gts/perspectives/WPR_2011.pdf
[2] http://ict4dblog.wordpress.com/2012/11/24/why-m-pesa-outperforms-other-developing-country-mobile-money-schemes/
[3] https://www.bcgperspectives.com/content/articles/financial_institutions_globalization_global_payments_2011/