This indicated posting is from a publication called Daily News, which is based in Sri Lanka. Although the title is a somewhat universal exercise amongst payments industry participants, this particular piece is generally focused on Asia, most notably some considerations and initiatives underway in southeast Asia (now often referred to as ASEAN, an organization of 10 member states that was originally set up in 1967).
The fundamental point is that consumer payments have advanced quite rapidly in the past few years, with parts of Asia becoming world-leading innovation markets. The author thinks B2B should be rapidly following, extracting paper from corporate processes and creating eventual digital ubiquity; we certainly can’t disagree with that.
‘But to pay less attention to the B2B payments segment would be a short-sighted approach. Estimates show retail e-commerce sales were US$2.3 trillion in 2017 while B2B online sales stood at US$7.7 trillion , excluding non-e-commerce B2B payments. And the number of non-cash transactions is expected to grow 28.8% annually in emerging Asia and 9.9% in mature Asia Pacific through 2021 . More importantly, electronic invoicing reduces administrative costs by 60-90% compared to paper invoicing processing, translating into savings of US$12.80 per invoice …..To capitalise on the potential of B2B digital payments, we need a concerted approach to bring about a new mindset towards regular corporate payments practice and a change to businesses’ reliance on paper invoicing. Governments, banks, financial services companies, and technology firms have a role to play in this digital shift.’
The author is a senior at one of the well-known international financial institutions, and goes on to point out some of the capabilities in existence, with one example being Singapore’s PayNow Corporate, launched in 2018, which enables entities to pay and receive Singapore Dollar funds instantaneously by linking their Unique Entity Number (UEN) issued in Singapore to their Singapore bank account. This is different from the FAST system launched a few years back in Singapore, which is consumer-oriented and requires bank account information, as opposed to the PayNow social proxy for consumers or the assigned registry UEN for corporates.
‘In the B2C payments area, many Asian governments are launching their direct debit networks to encourage digital adoption. Indonesia’s central bank unveiled a direct debit feature in their national clearing system in 2016, and is in discussions to launch additional payment options to provide digital alternatives. PayNet, owned by Bank Negara Malaysia, has also revamped its direct debt infrastructure to include business-friendly features to promote usage. These direct debit systems allow for the drawing down of payers’ accounts after a one-time authorisation. Businesses can leverage the existing instant payments infrastructure capabilities to do the same with their vendors or suppliers.’
As we have often advised readers, most recently in the 2019 Outlook for commercial & enterprise payments, digitalization is the major top-line structural thinking that needs to permeate industry as we move towards 2025 and deeper into 4IR.
‘To leverage the full potential of these technologies and simplify the business payments process, corporates need to accept and apply new technologies to their own payments systems and work together to synchronise the instant payments mechanism across their digital platforms. Partnerships between banks and technology firms are critical to develop digital payments solutions that are safe, secure, and convenient for businesses to use.’
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group