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By Benjamin Wong
How cross-border commerce will change in light of the COVID-19-related economic downturn
COVID-19 is the major catalyst for change–be it work, consumer behavior, and business strategies, fuelling growth in cross-border commerce.
We have first to understand that the future of work will change. Governments, corporates and SMEs will have to look at developing a long-term digital vision. Corporates and SMEs will, also, need to reduce fixed costs, rely more on flexible and variable resources, and be more innovative to survive and thrive.
No matter how you see it, in the short term, there will be an economic downturn. For a start, this is where government leaders have to step in to cushion the impact. Citizens will also have to adjust to the new realities.
For example, in China, its leaders stepped in quickly to enforce lockdowns and implement business continuity plans, and businesses communicated and engaged their customers on new arrangements. At the same time, there was a substantial increase in the use of digital technologies and platforms.
Governments in Malaysia, Singapore, UAE, etc., are releasing relief packages to help SMEs to tide through this economy. Video-conferencing platforms see a surge in demand, while food delivery platforms have never experienced better business.
At the same time, we believe digital commerce will be accelerated due to COVID-19, as governments and regulators are compelled to adjust and adapt to the new normal of the physical and virtual. The recently announced Monetary Authority of Singapore’s $125 million COVID-19 Support package for the financial and fintech sectors will further help to boost capabilities and accelerate digitalization through access to funding and better business opportunities.
Cross-border commerce has gone up during COVID-19 as a result of new buying behaviors, as people are forced to make changes to their lifestyle habits. Usage of existing and new technologies will rapidly increase as people have to stay home. As they cannot step out to buy groceries, meals, shop, etc., they have turned to online platforms and rapidly drive up ecommerce.
Globally, Amazon has seen a massive surge in demand from people relying on its home delivery service during this period, and we are also seeing this phenomenon in Asia. Lazada Singapore reported in February that it has seen consumers buying four to ten times more food staples, while delivery company Ninja Van experienced nearly tripled package volume for the health and pharmacy categories compared to a month prior.
In the payment space, countries like the U.K., Europe, the U.S., Australia, China, India, Hong Kong, and even Singapore, are moving towards 24/7 real-time processing and harmonizing the payment standards.
Cross-border payments are also starting to catch-up, especially for individuals, where borderless payments become cheaper and faster. Cross-border payments, especially for businesses, are still driven by legacy systems and have more room to innovate. In the U.K., E.U., and the U.S. with Electronic Money License (EMI), the field is more level playing, and there has been more digital innovation even though it is still at the infancy stage in our minds.
Cybersecurity is also more important than ever and companies must adhere to best practices and safeguard their business. In this regard, payment firms must ensure their platform and processes are closely managed to provide their customers with a peace of mind.
The trend towards borderless payment cannot be stopped. With the paradigm shift in the future of work, workforce and workplace towards the digital twin of physical and digital, we foresee a boom in cross-border commerce as corporates and SMEs accelerate their digital transformation with governmental support.
Both businesses and individuals will want cross-border payment to be available 24/7, 365 days, and in real-time.
About the Author
Benjamin Wong is the Co-founder and CEO of TranSwap, a company that provides businesses with a platform to seamlessly manage and execute payments globally. TranSwap is licensed in Singapore, Hong Kong and Indonesia, and facilitates FX payments in more than 180 countries. Through his extensive industry knowledge and a well-rounded business perspective, Benjamin has successfully launched several startups. Before joining the corporate world, Benjamin worked as an auditor accountant at an accounting firm.