The payment infrastructure that accelerates Asia’s SME expansion

As Asian businesses diversify their supply chains, customers and markets, cross-border expansion is creating a more complex financial operating environment. For smaller businesses in particular, entering a new market is no longer simply a question of finding customers or suppliers. Small and medium enterprises (SMEs) also need to consider how efficiently money can move between different markets, currencies and payment systems. 

TechTrade Asia speaks with Nagesh Devata, SVP GTM APAC at Payoneer (ND), about why payment infrastructure - the rails and partners businesses rely on to move funds, manage foreign exchange (FX) and
fees, access local payment methods and accounts, and maintain real-time reconciliation and visibility - is becoming increasingly important to Asian businesses operating across borders.

Q: Why should payment infrastructure be a priority for Asian businesses today?

ND: The way Asian businesses trade is changing quite quickly. Companies are diversifying their supply chains, entering new markets and working with customers and suppliers across more countries than before. That creates a lot of opportunity, but it also means the financial flows behind those businesses are becoming more complicated. 

For an SME, it could mean paying a supplier in Vietnam, collecting revenue from a customer in Europe and working with a service provider in the Philippines, all while managing different currencies and payment processes. 

Q: Do things become even more complicated as businesses expand?

ND: One distinction I think is important is the difference between selling globally and operating globally. A business can start by selling to customers in another country, but as it grows, it may have suppliers, employees, vendors and teams in different markets as well. At that point, the business is no longer just selling internationally; it is operating internationally, and that creates a much more complex financial infrastructure to manage.

This is something we are seeing particularly clearly in Singapore. As a regional business hub, Singapore is home to many companies that operate across multiple ASEAN markets. The more markets a business operates in, the more important it becomes to have a clear view of how money is moving between them. 

Q: Is payment infrastructure often overlooked as businesses plan their expansion? 

ND: Absolutely. From my perspective, this is one of the areas businesses can easily overlook when they think about international expansion. 

When a company decides to enter a new market, the conversation usually starts with customers, pricing, supply chains and distribution. Those are obviously critical. But underneath all of them is a very basic question: how is the money going to move? 

Having spent time working with businesses across APAC, I have seen how quickly financial complexity can increase once a company moves beyond one or two markets. What looks simple at the beginning can become much harder to manage as the number of currencies, counterparties and payment flows grows.

I think that is why payment infrastructure needs to be considered alongside the broader expansion strategy. It is not just about getting a payment from A to B. It is about doing that in a way that is predictable, cost-efficient, and manageable as the business grows.  

Q: What could happen when businesses expand into new payment corridors without the right infrastructure?

ND: The first thing businesses tend to notice is friction. You may have a perfectly viable customer or supplier relationship, but the financial processes supporting it can be slower or more expensive than expected. 

There are different sources of friction. You have foreign exchange costs, transaction and intermediary fees, potential discrepancies between what is sent and what is received, and settlement times that can vary depending on the corridor. 

Q: Could you say more about the cost challenge?

ND: Our recent Closing the USD 2.5 Billion Financial Gap in ASEAN’s New Trade Corridors white paper found that these costs can become material when you look across a business' entire cross-border operation. We estimate potential annual financial leakage of approximately US$2.5 billion across five ASEAN markets, based on the methodology in the research. 

But I think the more important takeaway is what sits behind that number. The commercial opportunity may already be there. The question is whether the financial infrastructure is keeping up with it. As we put it in the research, “the leakage occurs in how money moves.” 

FX is an obvious source of leakage, but it is not the only source. Businesses can encounter sending and receiving fees, intermediary deductions and FX markups, as well as costs arising from payment discrepancies or reconciliation issues. 

Our research found that, when these different components are considered together, the all-in cost of moving money across some newer ASEAN corridors can reach around 3% to 8% of the transfer value, depending on the corridor, counterparty and payment infrastructure involved. 

For an individual transaction, that might not immediately look significant. But if you are a business making regular international payments and collections, those costs can add up quickly. 

Q: Is time really such a problem? 

ND: Cross-border payments through correspondent banking networks typically take three to five business days to settle, and less mature corridors can take longer. For an SME, a few additional days can have a real impact if that money was intended for inventory, supplier payments or the next stage of the business. 

That is why I tend to think about this as less a question of whether a business has a global growth strategy and more about whether the infrastructure actually allows that strategy to work. You can have the customer and the opportunity, but if the payment process creates too much friction, you can still lose that opportunity. 

Q: Why is this situation particularly significant for SMEs?

ND: SMEs generally have less room to absorb inefficiencies in their cash flow. That is why I think this issue is especially important as more smaller businesses become international from day one. 

Take Vietnamese digital businesses, for example. The research highlights gaming studios and app developers that are serving international markets and receiving payments from global publishers. Their challenge is quite different from that of a traditional manufacturer, but the underlying issue is similar: they need to receive international revenue efficiently while managing different currencies, payment methods
and local constraints. 

We see a similar dynamic among Philippine IT, business process outsourcing (BPO) and professional services businesses. These companies are increasingly serving US, European and Australian clients, so they are managing cross-border invoices and foreign-currency payments as part of their normal operations. 

What I have seen working with businesses across Asia is that founders are often very focused on their product, customers, and growth. But financial infrastructure can become something they think of as “I'll get to it later.” The problem is that by the time you have customers in several countries and multiple currencies to manage, it is much harder to build around that complexity. 

For businesses like these, payment infrastructure is directly connected to cash flow. If a payment takes longer to arrive or costs more than expected, that can affect when the business can reinvest, pay suppliers or take on its next opportunity. 

Q: What do you advise business leaders to consider when entering a new market? 

ND: I would encourage businesses to think about payments much earlier in the expansion process.
Before entering a market, understand which currencies you are likely to receive and pay in, what your expected transaction volumes will be, how long payments are likely to take, and where FX or transaction costs could arise. 

I would also look closely at reconciliation. As businesses expand across more markets, it becomes much harder to manage everything manually. Our research cites Capgemini data showing that more than 80% of corporate treasury teams still use manual, paper- based processes for accounts reconciliation, with nearly 7% of corporate revenue tied up within the value chain. 

For a growing SME, having better visibility over where money is coming from, where it is going and when it will arrive can make a meaningful difference. It gives the finance team more certainty and allows the business to make decisions based on a clearer picture of its available cash.

For Asian businesses, particularly those operating out of regional hubs such as Singapore, the opportunity to expand across borders is significant. The businesses that can manage the financial side of that expansion with the same level of discipline as their commercial strategy will be better positioned to turn that opportunity into sustainable growth. 

So my advice is to build for that complexity early. You don't need every capability from
day one, but you should ask: if I enter two or three more markets tomorrow, can the
infrastructure I have today support that? 

Q: Could you provide readers with a payments-readiness checklist for a new corridor? 

ND: I would start with four things. 

First, currencies: what do you need to receive and pay in and what FX costs will that involve? 

Second, payment flows: how will customers pay you and how will you pay suppliers and partners? 

Third, cash flow: how long will payments take to settle and what does that mean for your working capital? 

And lastly, visibility: can your finance team easily reconcile transactions and see where money is
coming from and going? 

I would also look at the reliability and compliance of the infrastructure and partners you are using. Cross-border payments are ultimately about trust, so you want to know that the infrastructure can support you as the business grows. 

You do not have to build everything upfront but you do need to think about these questions before the complexity arrives. Ultimately, it just has to work. If you have done the hard work of winning a customer in another market, you do not want payment friction to be the reason you lose that opportunity. 

 *APAC refers to the Asia Pacific region.

Editor's note: Payoneer provides a financial platform for cross-border business and global payments.