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Mastercard plays its part in digitising trade

The move, aligned with Singapore's efforts in digitising trade value chain, comes as large gaps in the business-to-business process in international trade remain.

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MASTERCARD is tying up closely with Singapore's efforts in digitalising the trade value chain as it integrates Mastercard Track, its own unique global trade platform developed in collaboration with Microsoft, with Singapore's own Networked Trade Platform (NTP).

The NTP, officially launched in September, is meant as a one-stop point for service transactions between individual businesses, as well as between businesses and the government. The new service is meant to replace the government's current TradeXchange and TradeNet platforms.

Its aim is to turn the physical paper trail involving customs documentation and business invoices into a digitised one. The trillion-dollar trade finance market can be made more competitive, given in part the potential of more accurate data analysis. Firms pay a monthly fee to use NTP.

The digitalisation effort is expected to be made a global endeavour, with the Singapore Customs in ongoing discussions with China on linking the trading systems of both nations, and the Netherlands on trade regulatory processes.

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The Asean member states may also extend its Asean Single Window initiative to transmit more trade documents, achieving greater economic integration and expand intra-Asean and intra-Asia trade, The Straits Times reported in September.

Mastercard has pointed out that in today's international trade environment, despite parts of the business-to-business process being digitised, large and costly gaps still remain - coming to an estimated US$500 billion in annual administrative costs. These costs look to be rising, and add to the inefficiency of the nearly half of all global business transactions that are still done in paper.

To that end, Mastercard Track - which is integrated into the NTP - facilitates secure and efficient electronic transactions and payment reconciliation between buyers and suppliers all around the world.

This will enable end-to-end digital trade, helping companies raise productivity, boost competitiveness, and gain access to new opportunities, the company said.

Explaining the Mastercard Track, vice-president of Enterprise Development in Asia Azeem Azmi told The Business Times that it holds on its platform, records of more than 150 million companies from around the world.

These records, which are increasing by the day, help to feed into compliance demands and solve pain points for local companies such as in authenticating trade suppliers who may not be domestic peers.

From early 2019, businesses will be able to maintain, retrieve and exchange key information relating to themselves and their trading partners through the secure, permissioned repository of these company registrations worldwide. This central directory will integrate feeds from more than 4,500 compliance lists into one place, making the screening and onboarding of suppliers more efficient.

These pain points go beyond the traditional payment flow issues that Mastercard traditionally handles, and help companies deal with risk management in ensuring that their business partners are not on sanctions lists, for example, said Mr Azeem.

NTP, with the support of Mastercard Track, hopefully will simplify the way companies do business with each other, boosting exports especially by small and medium enterprises. The view is that Mastercard Track will also help level the playing field for these businesses as they seek to supply large corporate buyers globally, said Mr Azeem.

And as the platform expands, Mastercard Track will help connect all types of payments - be they account-based, card-based or bank transfer - while also connecting purchase order and invoice information. This will provide better cash-flow visibility and simplify back-office reconciliation, one of the largest burdens facing businesses today.

Meanwhile, Mastercard continues its work on interacting with fintech companies from all around the world through its programme called Start Path, which supports later-stage startups that are re-looking at the future of commerce.

The programme, which has been running for some three years now, attracts some 1,600 fintech applications each year, with just 40 taken in, said Toby Puehse, vice-president, Innovation Management for Digital Payments and Labs, Asia Pacific, at Mastercard. These participants work with Mastercard to build pilots in areas such as payment acceptance, invoicing and accounting, and financial management.

Mastercard does not force an exclusivity agreement with these fintech firms, and the programme acts almost like a means to create an alumni network for fintech firms, he pointed out. "We don't by default force investments (on the fintech companies)," said Mr Puehse. "It's about how we create better digital relevance for our customers."