The payments industry is expected to see significant and robust growth this year, driven in part by the continuous shift towards digital commerce and the increasing globalisation of businesses. As borders reopen and businesses start to explore expansion plans again, growth opportunities for the payments industry are aplenty.
As consumers and businesses become increasingly comfortable with online transactions and companies expand their reach into new markets, the need for fast, secure, and cost-effective cross-border payment solutions will only continue to rise.
Two areas that are particularly promising in the cross-border payments market are nearshoring and business process outsourcing (BPO), with Southeast Asia presenting notable opportunities for both areas.
How nearshoring works
Nearshoring is the practice of outsourcing business processes to a nearby country, typically in the same region or time zone. This approach provides significant cost savings compared to onshore operations while aiming to maintain a similar level of quality and control by third-party operators.
Vietnam is an example of a country whose potential to continue growing as a nearshoring hub is undisputed, especially in the manufacturing industry, with big tech such as Samsung and Intel setting up bases there for global production. To harness Vietnam’s full potential as a nearshoring hub and expand operations worldwide, Vietnamese companies can benefit from a more robust payments infrastructure and options for accessing credit for working capital beyond traditional banks.
Any foreign company setting up shop in Vietnam will need payment options specific to Vietnam, such as offering multiple currencies (e.g., Vietnamese Dong and United States Dollar). Timely transactions for payment or for receiving payment without the clunkiness of working with a foreign bank are also crucial for manufacturers.
What is BPO?
On the other hand, BPO involves outsourcing business processes to a third-party service provider, which may include customer service, accounting, or even human resources functions.
In the Philippines for example, the Department of Information and Communication Technology (DICT) is committed to grow 25 areas in the country into full-fledged Digital Cities by 2025. Amongst these, Bacolod City was recognised to be among the top centres of excellence for Information Technology BPO, an essential vertical to the continued and growing relevance of the country as a global investment destination.
To realise this vision, the Philippines government will provide policy and regulatory support to enable an enhanced business-friendly environment through talent development, the formulation of a sophisticated payments system, and infrastructure upgrades. For payments specifically, there will be a healthy demand for processing services such as invoice management and payment options for freelancers.
A trusted payments provider is key
Companies looking to increase efficiency and leverage the operational benefits of nearshoring and BPO will need to rely heavily on a trusted payments provider that can offer seamless, streamlined cross-border payment solutions to facilitate transactions between themselves and their new partners. This enables the company to focus on their core operations and provide a more streamlined and efficient service to its customers.
The support from a payments provider goes beyond transactions. Nearshoring and BPO are both highly dependent on technology and automation – a payments provider with a strong innovative tech background can help streamline payments processing and improve efficiency for the partner company, directly contributing to customer/vendor satisfaction and help to drive revenue growth.
To successfully meet the demand for nearshoring and BPO services, a payments provider must possess a range of expertise, including managing cross-border transactions, multiple currencies and exchanges, and risk management solutions. They must also have in-depth knowledge of each country’s payment system to best support a company’s global expansion efforts, facilitate entry into new markets, and manage associated risks. The payments provider should not be viewed as simply a vendor, but rather as an extension of the company that can help navigate complex challenges and uncover new opportunities in the global marketplace.
There is a strong value proposition for nearshoring and BPO to be adopted more rapidly in the coming years as businesses seek to improve operational efficiency and enhance their competitiveness in the global marketplace. In tandem, payments providers must shore up their propositions around various areas including pricing, speed of execution, convenience to end-users such as integration and a suite of products like FX, and an efficient digital back end that enables seamless operations. This would set them apart from their competitors and enable the provision of reliable services to their clients worldwide.