Why payment speed is key for businesses entering emerging markets

In fast-moving cross-border trade, payment speed can determine whether a transaction happens at all.

A fund transfer using fintech platforms between developed markets – say, Singapore to the US – can clear in under an hour, said Kanupriya Sharda, co-founder and chief business officer of fintech start-up Tazapay.

But a transfer through an emerging market corridor may take multiple days, passing through several banks, she said.

Founded in 2020, Singapore-based Tazapay provides cross-border payment infrastructure that lets businesses collect, hold and pay out funds across markets. It holds a major payment institution licence – granted in 2023 – from the Monetary Authority of Singapore (MAS).

Tazapay also holds licences and registrations in Canada, Hong Kong, the US and Australia, and supports pay-ins and payouts in over 100 markets.

She pointed to a Tazapay customer, a US-based freight-booking marketplace, to show what delay can cost.

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Timing matters here, Kanupriya said, as freight space released by airlines can sell out within hours.

As it expanded into Vietnam, the firm found incoming wire transfers too slow. By the time a customer’s payment arrived, prices would have moved, or the freight space would be gone, she added.

Tazapay addressed this by providing the company with local virtual bank accounts in Vietnam, she said.

Payments now arrive nearly instantly through the virtual accounts, letting the firm allocate freight space fast. Tazapay then handles the cross-border settlement, she said.

Faster, larger transfers

For cross-border transfers, holding local currency liquidity in recipient markets allows certain payment solutions to pay out instantly, Kanupriya said.

But this is limited to small value transactions; larger ones still take about two days. Holding liquidity in many countries could be costly, she added.

Stablecoins solve for both speed and size, said Kanupriya. These digital payment tokens are pegged to a fiat currency and can move near-instantly, round the clock.

Tazapay processes over US$40 billion (S$51 billion) of payments annually; about 60 per cent involve stablecoins in some part of the flow, she added.

Stablecoin-related services are provided only by Tazapay Canada Corp; Tazapay Singapore does not provide digital payment token services.

Firms can send stablecoins through Tazapay, which converts and pays out in local currency, she said.

Firms can also collect payments in local currencies. Tazapay then converts to stablecoins to settle with them instantly.

For businesses who want to collect and pay out in fiat, Tazapay uses what Kanupriya calls a “sandwich” model, where the fiat funds are converted and moved using stablecoins.

Key to scaling stablecoins use is regulatory clarity, she said. In Singapore, MAS finalised its stablecoin regulatory framework in 2023, which aims to safeguard users and ensure a high degree of value stability for stablecoins regulated in Singapore.

But in many emerging markets, she said, rules on whether they can be used for payments or trading remain “ambiguous”.

A second constraint lies in the local networks. She said that systems like Singapore’s FAST (Fast and Secure Transfers) were built for consumer payments. This pushes bigger sums back to wire transfers.

Singapore’s FAST transfers are capped at $200,000 per transaction.

“The last mile infrastructure needs to evolve further for us to be able to support the entire value chain of payments.”

This was produced in partnership with the Monetary Authority of Singapore and the Global Finance & Technology Network.

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