Business payments outlook in 2024: The four macro trends in APAC
The global payments landscape is facing a dynamic future, with the Asia-Pacific region presenting a $40 trillion+ opportunity, excluding China's domestic flows, in commercial money movement. This immense opportunity is intricately linked to the domain of cross-border payments, which poises it for significant changes in the coming year.
We see some macro trends in the Asia Pacific (APAC) below:
1. The evolution towards the "consumerisation of B2B"
Expectations will shift towards effortless digital transactions, catalysing a trend towards the "consumerisation" of B2B payments.
This shift is underpinned by two fundamental forces. Firstly, the concept of interoperability is key. Creating a seamless integration of diverse systems requires a collaborative effort from developers, businesses, and governments to develop and implement open application interfaces (APIs). Such APIs are vital in enabling platforms that can process various payment methods in a unified manner and resonate in regions like the Asia Pacific, where businesses are increasingly seeking simplified solutions for complex payment landscapes.
The second driving force is the increasing demand for integrated, multi-functional B2B payment solutions. These platforms are particularly favoured by small-medium businesses (SMBs) and encompass services like payment processing, lending, and invoice management, all accessible via a single interface. This consolidation allows businesses to efficiently execute essential tasks, streamlining their financial operations and enhancing overall productivity.
2. Digital payment options will come with more value-added services
Digital wallets are gearing up for phenomenal growth at 77% between 2023 and 2028. SMBs in the region previously underserved by banking services will start getting better payment coverage from digital wallets, which will increasingly be offered by SMB-centric platforms or payment networks that have multiple capabilities under one roof, particularly in foreign exchange (FX) and multi-currency transactions.
To stay ahead of the competition, traditional banks are actively enhancing their digital offerings by embedding value-added services such as competitive FX rates and multi-currency wallets into their digital platforms. This integration provides SMBs with a more holistic financial experience, combining the ease of digital wallets with the sophistication of cross-border money management tools.
Furthermore, enterprise and accounting solutions are increasingly being streamlined to sync effortlessly with core business operations. This synergy is critical for SMBs managing cross-border payments, as it simplifies complex processes like invoice management, FX conversion, and real-time multi-currency transactions, which help to alleviate payment bottlenecks and automate key financial operations.
Neo banks are emerging to address the needs of SMBs, offering solutions where traditional banks fall short, such as lower fees for small transactions, personalised financial advice, and flexible credit based on business performance. Neo banks provide integrated financial platforms with end-to-end services, including simplified invoicing, payments, and tailored advice, catering to the unique requirements of small businesses.
3. Payments data will create new business opportunities
With the increased digitalisation of payments, more data will be generated, thereby improving processes and creating new opportunities in areas such as customer experience and transaction safety.
In terms of customer experience, businesses are investing heavily in the use of artificial intelligence and machine learning (AI/ML) to understand their customers' payment habits and patterns over time. This insight can be used to curate recommendations to improve customer experience, forming the basis of greater personalisation.
In 2024, personalisation systems will increasingly learn about customers in real-time, enabling them to offer tailored suggestions throughout the customer journey. This consumer-led journey will evolve as businesses refine their use of data for business payments.
Another way to make use of payment data is to boost security to prevent fraud. By intelligently monitoring transactional data, banks and payment service providers can detect abnormalities early to help proactively mitigate potential problems before they occur.
4. The payments ecosystem will help accelerate business payments
Payment providers continue to overcome cross-border money movement challenges with different initiatives to make payments more interoperable. One area that is gaining traction is transparency, whether it is commercial transparency or visibility of real-time payments.
Payment tracking will become more important with increased visibility of where the money is being held, in which account and from which provider, making it easier to ensure the safety of money transfers. These are factors that businesses can address with the right partners in the payment ecosystem.
Business solutions offering convenience, access, and capabilities to manage cross-border money movement for business growth will be in demand. It is important to collaborate with multiple partners in the ecosystem to get the full spectrum of payment options to improve payments and meet their operational objectives.
Continued focus on digital payments
As the global economic volatility persists into 2024, businesses in Asia-Pacific continue to focus on digital payments with instant, reduced-cost transactions and value-added services, insights from their payments data, and more efficient cross-border payments amid a shift towards user-friendly, integrated financial solutions.
For SMBs, the path to efficient cross-border payments lies beyond a single solution. Convenience, speed, and transparency necessitate a holistic approach. Collaborations among fintechs, traditional banks, neo banks, and financial institutions are essential to enable comprehensive, streamlined payment solutions. Banks and financial institutions that master these partnerships by offering integrated solutions will achieve greater success in today's competitive business landscape.
