payment gap
Europe Paytech Thought Leadership

Airwallex: How Globally Native Platform Businesses Can Bridge the Payment Gap

Many platform-native businesses are being held back from international expansion and accelerated growth due to the payment gap. 

Ryan O’Holleran, is the head of sales, enterprise, EMEA, Airwallex, the global payments and financial platform. Discussing the legacy pain points which have been stunting growth and the strategies and tactics that businesses use to grow, O’Holleran looks at how globally native platform businesses can bridge the payment gap.

How globally native platform businesses can bridge the payment gap
Ryan O’Holleran, is the head of sales, enterprise, EMEA, Airwallex
Ryan O’Holleran, head of sales, enterprise, EMEA, Airwallex

In the digital era, platform businesses have emerged as powerful intermediaries that connect buyers, sellers and service providers to shape how we transact.

More than ever before, these businesses are expanding internationally in their quest to connect even more participants into their marketplaces. Whether it be e-commerce platforms like Shopify or wealth management platforms like Public, the clear route to growth is to go borderless from inception.

Cross-border payments are an important part of the puzzle to aid market expansion. But too often, inefficient cross-border payments are actually slowing down growth into new geographies. Platform businesses often encounter fragmented financial operating systems in different markets, which creates complexity and friction.

But it’s fast becoming a problem that fintech is helping to solve. Leveraging new technologies, fintech is providing the building blocks needed to help platform businesses effectively bridge the payment gap and scale globally.

Pinpointing the cross-border pain points

A number of cross-border payment pain points are directly impacting end users who have little tolerance for any disruptions in their customer journey. This alone can make or break success in a new market.

One of the big challenges is forced and costly currency conversions. Platform businesses need to be able to convert currencies as money moves between markets. However, traditional banking providers typically offer unfavourable exchange rates and charge high fees for currency conversions.

For example, a US-founded investing platform wants to expand overseas but would need the right payment infrastructure to allow UK-users to invest in US equities. But without a seamless and cost-effective conversion from GBP to USD, this is only going to cost customers and eat into the platform’s profits. This ultimately creates a fragmented customer journey.

Another problem with traditional cross-border payment systems is they often involve complex processes and multiple intermediaries, which can result in delays in settlement. Delays disrupt the cash flow of a business which can lead to problems such as not being able to fulfill orders or pay suppliers. The more markets you’re in the harder it gets to manage.

As does integrating with different payment methods and systems in different geographies. If you have a European eCommerce platform looking to expand into Southeast Asia, it needs to be equipped to accept payments via local methods such as GrabPay. Not to mention the different regulatory and compliance requirements that the business must adhere to in each market.

All of this can become a headache that diverts focus away from core operations, slows international growth and hinders the customer experience.

How can platform businesses bridge the payment gap?

Thankfully, new innovations in technology are providing the building blocks needed to help platform businesses navigate their cross-border payment needs.

Increasingly we’re seeing that platform businesses are shifting away from their traditional banking providers to fintech providers that can tackle each of these payment pains, often via one single integration.

One such way is by offering platform businesses more feature-rich FX capabilities that directly integrate into their tech stack. For example, a fintech might be able to offer ‘lock FX’ which enables users to lock in an FX rate during times of volatility, which could eliminate any FX market risk arising from cross-border payments. This can all be enabled seamlessly through an API, meaning businesses can spend more time focusing on what really matters, rather than hedging their FX costs.

To hold and manage funds in different currencies, businesses typically have to open separate bank accounts in each market. But fintech providers are taking away that obstacle and allowing businesses to hold and store money in multiple currencies within a single account. This means a business could receive payment in euros, hold the funds in GBP and make payments to suppliers in USD.

With a customisable API, platform businesses can simply plug into a global payments network and send and receive payments without the need for extensive banking relationships in each market.

As well as tightening control of financial operations, platform businesses are increasingly leaning on fintechs to guide them through KYC or AML adherence in each market. Fintechs are taking care of the hard bit to relieve businesses of the extra compliance burden. This gives platform businesses greater control over their financial operations, enabling them to localise their offerings and successfully scale across borders.

Creating a win-win for businesses

There is no denying that financial infrastructure can make or break a multi-market strategy for globally-native platform businesses. Getting this right offers a win-win for businesses that can reduce the time and cost spent setting up payment processes in each market, while end customers benefit from a more seamless experience. This is going to be essential as platform businesses look to scale, compete and thrive on a global stage.

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