Payments make the world go round

Each transaction appears simple but belies a multi-layered infrastructure spanning a bevy of payment-related fintech, some of which are headquartered in Singapore.

Payments are eating the world. Despite crushing interest rates and falling valuations, payments remained the most well-funded fintech sub-sector globally in 1H2023.

A KPMG report in August says fintech companies in payments accounted for US$16.2 billion ($21.9 billion) in funding across M&A, private equity and venture capital (VC) in the first half of the year. Of these, three big deals stood out: a US$8 billion buyout of Coupa by Thomas Bravo, Stripe raising US$6.5 billion in a VC funding round and a US$4 billion acquisition of Evo Payments by Global Payments.

See also: CMC Invest leans on wider market access to set it apart

This trend has trickled down to Singapore, where payments reigned as the top-funded segment in 1H2023, amassing US$119.6 million across eight deals. Thunes, a payment platform based in Singapore and London, raised US$60 million in Asia Pacific’s largest round for the period, with participation by Singapore’s EDBI, the venture arm of Singapore’s Economic Development Board.

On the regulatory front, the Monetary Authority of Singapore (MAS) has received over 580 applications for the Payment Services Act (PSA) since it was enacted in 2021. Shadab Taiyabi, president of the Singapore Fintech Association, says this is a “testament to the constant expansion of the local payment scene”.

In Taiyabi’s view, Singapore’s regulators have set the players in fintech up for success as the PSA covers seven activities, including money transfers and account acquisitions.

See also: SC Ventures' Libeara will soon let accredited investors in on tokenised Singapore-dollar government bond funds

“Regulators are very collaborative and forthcoming in having an activity-based approach instead of keeping it as an entity-based approach, so there’s room for companies to pivot and evolve their business models that suit the demands of their target clients themselves,” he says.

Besides the large amounts of capital being pumped into the space, a point frequently echoed about payments is the potential that Asia Pacific as a region has to offer. With an anticipated consumer base of 630 million people by 2030, of which most are still unbanked and underbanked, the opportunity to monetise the financial inclusion of these individuals is huge.

Market research firm BlueWeave Consulting estimated the digital payment market in Asia Pacific to be worth US$17.85 billion in 2021. It anticipates this to grow at a CAGR of 21.1% between 2022 and 2028, reaching US$67.42 billion by 2028.

Ravi Menon, managing director of MAS, said it best — it is not about how much the world stands to profit, but rather how inclusive we can become. With the global average cost for sending remittances standing at 6.4% of transfer value, Menon says this cost is “particularly painful” for a migrant worker who wants to send money home, or a small business trying to reach overseas markets through e-commerce.

Menon’s speech at last year’s Swift International Banker’s Operation Seminar positions fintech payment companies as the great social equaliser for those with inadequate access to financial services.

“The current state of cross-border payments is not fit for the 21st century; it is slow, costly, opaque and inefficient, relying on an archaic network of correspondent banks.”

- Ravi Menon, managing director of MAS

It is not enough that we can pay one another digitally within our countries, says Menon in a separate speech in June. “Be it for migrant workers or students or small and medium enterprises, it is the ability to send money across borders cheaper, faster and more securely that really matters for efficiency and productivity.”

To stay ahead of Singapore and the region’s corporate and economic trends, click here for Latest Section

One solution is to enable faster cross-border payment systems, he notes. For instance, Singapore has successfully connected its instant payment infrastructure PayNow to Thailand’s PromptPay and to India’s Unified Payments Interface (UPI).

From having just bank transfers as an option a decade ago to the multitude of payment options and choices available today, how might the payment space evolve in the future?

With so many players eager for a slice of the pie, albeit growing, is there enough go around?

Will there be more consolidation or further fragmentation, and who will come out on top? And perhaps most crucially, can today’s payments facilitate a more equitable future?

Nium shoots for NYSE, SGX

Over the past five years, fintech investments in Singapore grew 18-fold from US$230 million in 2017 to more than US$4 billion in 2022.

One Singapore-headquartered name made headlines in July with its plans to go public. At the official opening of its office at Capital Tower on July 3, Nium announced plans to list on the New York Stock Exchange (NYSE) by 2Q2025.

The fintech’s CEO Prajit Nanu told reporters that the company aims to break even within 12 months and turn profitable before the IPO.

Nium, which is dual-headquartered in San Francisco, is also eyeing a secondary listing on the Singapore Exchange (SGX), says its co-founder and COO Pratik Gandhi to The Edge Singapore.

The primary listing will be in the US “just because of the depth of the market”, says Gandhi, who is based here.

These are “initial thoughts” and the secondary listing “will eventually depend on the advice that Nium gets from investment bankers”, says a Nium spokesperson in a subsequent statement to The Edge Singapore.

“I’m not saying we are going to be crazily profitable,” says Gandhi. “But we want to be able to do a lot of our investments leading up to a year from now. After this, the investment stage can slightly taper off and we can start to show the profits for it.”

Nium, which helps companies handle payments, says it grew net revenue 2.7 times y-o-y to US$82 million in 2022 and its payout network supports 100 currencies and spans more than 190 countries.

Read the full cover story

See also: Gunning for a licence in Singapore, the payment gateway to Asia Pacific

Backed by both GIC and Temasek, Nium became Southeast Asia’s first B2B payment unicorn following a US$200 million round in July 2021. The fintech company doubled its valuation to US$2 billion following the close of its Series D round in early 2022.

The company has raised some US$300 million in total. Temasek is reportedly Nium’s largest shareholder, owning more than 20% of the company together with its unit Vertex Holdings, says a spokesperson for the fund. Nium, however, declined to disclose its shareholders’ stakes.

From some 90 staff in Singapore today, Nium aims to grow this number to around 300 “over the next couple of years”, says Gandhi. Among Nium’s nearly 400 clients are Thailand commercial bank Kasikornbank and Singapore Telecommunications (Singtel).

CEO Nanu first spoke about a secondary listing in Singapore in July 2021. In an interview with Bloomberg, he revealed that the company was planning to pursue an IPO in the US “in 18 to 24 months”.

On Sept 7, Nium announced it had joined Singapore’s FAST and PayNow networks. With direct integration, Nium will be able to provide virtual account numbers and PayNow proxies to customers, as well as send and receive Singapore dollars in customers’ names.

As fintechs begin to chip away at banks’ dominance in the global payment ecosystem, Gandhi says the sector has not been “completely mapped”, suggesting further new markets will develop. He adds that Nium sees a US$60 trillion market opportunity for B2B cross-border transactions.

“Most of this is dominated by banks today,” says Gandhi. He should know; prior to joining Nium’s consumer and SME arm Instarem in 2016, Gandhi was CFO at Fullerton India Credit, a Temasek subsidiary. From 2009 to 2011, he was CFO and head of portfolio management at Standard Chartered Bank Singapore. For a decade until 2007, he was the regional CFO for Citibank’s consumer finance business.

“Payments are not really transparent, they’re not quick and they’re expensive. For all of those reasons, the fintechs are the right ones to come and make some splash in the area,” adds Gandhi.

To facilitate cross-border payments, the world’s banks use Swift, a messaging network that started in 1977. “There’s nothing wrong with it,” says Gandhi, “but it’s just an old method of messaging.”

Swift, or the Society for Worldwide Interbank Financial Telecommunication, has long been criticised for being inefficient, as it sends transactions through multiple correspondent banks. Transaction fees are also opaque, adds Gandhi.

In its place, Nium has created a global network that is largely integrated into each country’s payment system. When this is not possible, Nium has tied up with banks directly, says Gandhi. “Unlike a bank, we don’t do hundreds of things. We’re not into lending, we’re not into wealth management, we’re not into all the different things that banks are known for. We want to do something really well, which is payments.”

Nium is focusing on what Gandhi calls “mission-critical payments”, such as payroll. Financial institutions were Nium’s priority clients last year, as it focused on helping them target new markets with instant bank payouts and expand into emerging markets. Its clients in this industry include the likes of Aspire, Mastercard, Rippling, Payoneer, Amadeus and eDreams.

Nium’s payout network supports 100 currencies and spans more than 190 countries. According to Gandhi, close to 70% of such payments are now processed in real-time.

Frequent travellers may also be familiar with Instarem; Nium’s predecessor was a consumer remittance platform launched back in 2014. Today, Nium’s Amaze card lets users pair their existing credit or debit cards, top-up a multi-currency digital wallet and withdraw up to $1,000 per day at any ATM overseas. The company says it issued 30 million of such cards in 2022.

However, moving from the consumer space to B2B was “really the turning point” for the company, says Gandhi. “It gave us the ability to acquire that scale in a way that we could have never imagined.”

The company’s second wind came when it gained unicorn status.

“It was a recognition of the fact that the company had arrived. It gave us a lot of benefits, for instance, getting the right talent. We used to struggle getting talent, but the moment the company became a unicorn, suddenly, a lot of good talent came to us rather than only us going to them.”

- Nium co-founder and COO Pratik Gandhi

Banks, too, began viewing Nium in a new light, says Gandhi. “Again, they thought: ‘This is a company that has reached a certain scale; they must have something in them.’”

Stars and stripes

Besides putting their money in Nium, GIC and Temasek are hedging their bets by also investing in fellow payment peer Stripe. In March, the Irish-American company announced that the two heavyweight Singaporean investors had joined its Series I fundraising of more than US$6.5 billion at a lofty US$50 billion valuation.

Stripe says it does not need this capital to run its business. “The funds raised will be used to provide liquidity to current and former employees and address employee withholding tax obligations related to equity awards, resulting in the retirement of Stripe shares that will offset the issuance of new shares to Series I investors.”

Irish entrepreneur brothers John and Patrick Collison founded Stripe in Palo Alto, California, in 2009. In 2011, the company received an investment of US$2 million, including from PayPal co-founders Elon Musk and Peter Thiel, Irish entrepreneur Liam Casey and VC firms Sequoia Capital, Andreessen Horowitz and SV Angel.

Patrick Collison, co-founder and CEO of Stripe, at the Mobile World Congress in Barcelona, Spain, in 2016

Stripe is available to businesses in nearly 50 countries; it touts a “financial infrastructure platform for businesses” and aims to “grow the GDP of the Internet”. The company says: “Stripe has built a global payment and treasury network that can power payments and financial automation. This includes setting up payment infrastructure for businesses of all sizes; powering complex business models, such as marketplaces and subscriptions; preventing fraud; automating billing, invoices and tax calculation; and more.”

Stripe Connect is its core technology for managing platforms and marketplaces, and it enables payouts to more than 116 countries. The company also offers physical terminals for point-of-sale transactions, with more than 100,000 devices currently in use.

Stripe’s enterprise users include Amazon, Ford, Salesforce, BMW and Maersk; and the company says it handles more than 500 million API requests a day, “often upwards of 10,000 per second”. Globally, businesses on Stripe processed more than US$817 billion in volume in 2022, up 26% y-o-y.

The number of new businesses joining Stripe increased 19% in 2022, and the company says more than “1,000 new ventures” were launched each day. Stripe adds that 55% of business that came onboard in 2022 were based outside of the US.

In Singapore, one of Stripe’s clients is Levande by Electrolux, the subscription platform of the Swedish home appliance manufacturer. “Electrolux worked with Stripe to provide its customers with flexible subscription terms ranging from six months to six years, and subscribers can renew or upgrade their subscription at any time,” says Stripe.

Singapore-headquartered online marketplace Carousell is another client. The Heliconia Capital-backed company used Stripe to introduce GrabPay in October 2020, and its in-app payment feature relies on Stripe Connect and Stripe Radar, which uses machine learning techniques to detect scammers and block fraudulent payments.

Read the full cover story

See also: Gunning for a licence in Singapore, the payment gateway to Asia Pacific

In the three years since, Carousell’s in-app transactions have more than tripled in Singapore and Malaysia, while cases of fraud have plummeted to fewer than three in every 10,000 transactions, says Stripe.

Perhaps the most recognisable Stripe partnership lately was the launch of in-app payments on WhatsApp. The Meta-owned messaging app rolled out the feature to “a select group of Singapore-based businesses” on May 9, enabling Singapore residents with a local mobile number to pay using credit cards, debit cards or PayNow — all without leaving the app.

In a May 18 article, The Edge Singapore columnist Nirgunan Tiruchelvam posits that “Stripe may be today’s Diners Club”. Unlike the impetus for one of the earliest charge cards, however, “the driver is not restaurant payments but online shopping, which has exploded in scale in the last 20 years”.

Tiruchelvam, who is the head of consumer and Internet at Hong Kong-based advisory firm Aletheia Capital, notes that Visa, American Express and Mastercard are traditional players. “Their growth has been in the offline world. Players like Stripe and PayPal are the lubricant of the e-commerce industry.”

Stripe’s latest US$50 billion valuation may appear eye-watering, but the company was valued much higher at US$90 billion in 2021 before the pandemic-era tech selloff.

At present levels, Stripe is at about 3.5x EV/Ebitda, writes Tiruchelvam. In contrast, listed rival Adyen trades at around 21x by the same metric — and that is after the Netherlands-based firm’s share price halved recently after some investors were spooked by slower-than-expected growth in its 1HFY2023 ended June.

Temasek’s stakes

Besides Nium and Stripe, Temasek is invested in yet another payment firm, Adyen. According to Bloomberg data, Temasek is Adyen’s single largest shareholder with a stake of 7.72%, nearly double BlackRock’s 4.04%, the second-largest. Founded in 2006 by Dutch billionaire Pieter van der Does, Adyen’s unique selling proposition is that its technology cuts out three middlemen from the value chain of payments — the payment gateway, risk management and acquisition — so that clients can reach merchants faster and at lower cost.

Unlike other payment platforms, Adyen boasts that it has not made a single acquisition in its 17 years of existence. “Our technology is spectacular,” says Priyanka Gargav, country manager for Singapore, “and if we did that, our entire single platform would get compromised.”

Adyen means “start again” in Sranan Tongo, a creole spoken in the South American state of Suriname. The name is a reference to it being the second project by the founders after Bibit, one of the world’s earliest online payment companies. In 2011, five years after its inception, Adyen recorded its first year of profitability, and has achieved several significant milestones to date.

In 2014, the company announced a funding round of US$250 million led by growth equity firm General Atlantic, which was joined by existing investors Temasek, Index Ventures and Felicis Ventures.

Three years later, it surpassed EUR100 billion in processed volume, and shortly after, in 2018, it listed on the Amsterdam Stock Exchange at EUR240 per share. In 2021, its net revenue hit EUR1 billion. Adyen posted net revenue of EUR1.3 billion ($1.9 billion) for FY2022, representing 33% y-o-y growth, despite the ensuing global macroeconomic trends in the last two years.

From the perspective of its customers, Adyen enables an experience known as “unified commerce”, which means a business based out of Singapore only has to work with Adyen if they wish to access different markets.

Using Agoda as an example, Gargav explains that without Adyen, Agoda would have to go through local banks, different gateways and account for foreign exchange costs in each jurisdiction to manage its business. But Adyen’s platform serves as one single consolidated touchpoint, which makes the experience “seamless”.

Typically, Adyen attracts customers with the following characteristics: high growth, high reliability and quality, and having very good customer experience across multiple countries, online and offline, says Gargav.

Companies like Expedia, Klook, Uber, McDonald’s Online and Singapore Airlines make up some of Adyen’s most important clientele. These are companies that need a system to handle the sheer mass of volume they receive daily, all without experiencing outages, Gargav adds.

Adyen’s processed volume for 2022 was EUR767.5 billion, up 49% y-o-y, comparable to Stripe’s US$817 billion in volume in the same calendar year. But when asked about the competition in the space, Gargav maintains that Adyen is looking to be enablers of its clients.

She cites the integration of GrabPay, WeChat Pay, Alipay and PayNow as an example.

“We build products so that payments do not become a bottleneck for what the business wants to reach, so whether you want to enable your students who eat at your quick-service restaurant to pay via PayNow, or you want to be a luxury retailer who gets all its payments through high-end credit cards, we’re hopefully going to enable both.”

- Priyanka Gargav, country manager for Singapore, Adyen

Today, Adyen operates across four major regions — Europe, Middle East, and Africa; North America; Asia Pacific; and Latin America — with Asia Pacific ranking as its third-most profitable region.

Gargav cites a recent interview the company did with its merchants, where about 40% of them expressed a desire to expand into new markets, and 29% wanted to open up physical stores in these new markets. Gargav believes that Adyen is well-positioned to help them succeed in their ambitions, as its strategy is to follow its clients into the new territories they want to explore.

“We like to follow our merchants,” she says, “but that doesn’t preclude homegrown players in Singapore as well.”

Perhaps a testament to the success of Adyen throughout the years is its employee retention rates. Gargav, who has been with the company for almost five years, notes that Adyen made no lay-offs last year. The company’s largest operating expense for 2022 came from employee benefits, which totalled EUR380.6 million, up 58% y-o-y.

However, Adyen’s growth trajectory hit a speed bump recently. In 1HFY2023, Adyen reported net revenue of EUR739.1 million, an increase of 23.1% y-o-y from EUR608.5 million recorded for 1HFY2022. Despite the topline growth, earnings held steady at around EUR282.2 million, as Adyen incurred higher costs, especially wages.

“While we see the changing industry tides reflected in this period’s results, we remain focused on building Adyen for the long term. Global digital brands continue to emphasise that today and in the future, online payments are a vital part of their commerce strategies, which further underpins our conviction in our sizeable, untapped opportunity,” says Adyen in its earnings commentary on Aug 17, as it stresses its “historical investments” on its “single platform”.

‘Acquiring platform as a service’

The payment ecosystem is not linear and some platforms like Stripe run on another payment unicorn. Stripe is a “long-term partner” of PPRO, says Tristan Chiappini, Asia Pacific vice-president at PPRO. “We provide Stripe with access to local payment methods via our payment infrastructure.”

Founded in 2006 and based in London, PPRO gained unicorn status in early 2021 and counts among its investors Citi Ventures and PayPal.

“Currently, we work with more than 100 leading payment service providers and banking partners in the industry to serve hundreds of thousands of global merchants. This generates billions of dollars worth of transactions on a monthly basis,” says Chiappini.

Partners like Citi, PayPal and Alipay depend on PPRO to accelerate growth, boost conversions and simplify digital payments, adds Chiappini.

Many merchant acquirers — or financial institutions that process card transactions — suffer from “fragmented, outdated and inflexible” acquiring processes and systems, says Chiappini. These cost them time and money to maintain, restricting their ability to scale and offer new products and services to their merchant customers, he adds.

To solve this, PPRO offers a modular infrastructure that lets partners launch their own solutions within six months. PPRO can also plug into their existing infrastructure to solve specific issues.

This “acquiring platform as a service” is one of PPRO’s two major product categories, while the other is accepting and managing payments.

Chiappini says 20% of online shopping carts are abandoned because the customer’s preferred payment method is not offered at checkout. “PPRO enables our partners to enhance their checkout conversion rates by solving the complexity of adding these locally preferred payment methods via one API, one contract and a single settlement.”

PPRO also allows businesses to deploy “hundreds of products” from “dozens of third-party providers and their APIs”, says Chiappini. “This can be done using clicks and not code.”

Known as PPRO’s “service orchestration layer”, Chiappini likens this to an “industrial-strength app store” for banks, acquirers and payment service providers. This also allows businesses to add and swap out third-party applications quickly, he adds. “For example, instead of trying out just one fraud provider, our service orchestration layer allows partners to try and test out multiple providers, switching and replacing them without going through tiresome contractual processing.”

Over the past year alone, PPRO has integrated Asia Pacific payment methods like GoPay (Indonesia), GrabPay (Malaysia), Touch ‘n Go (Malaysia), Toss Pay (South Korea), Zip (Australia) and, most recently, UPI (India).

“We are anticipating more integrations in the pipeline as Asia Pacific continues to be a market with the biggest growth potential for us,” says Chiappini. “Partners include the likes of Worldpay, Airwallex, Stripe, Alipay and ByteDance, to name a few.”

Purpose over prestige

Even with multiple unicorns featured in this story, few players have managed to enter China. Nium’s Gandhi calls it “one of the most exciting areas for any payment company, or any company, for that matter”.

One Singapore-headquartered “soonicorn” bearing a French name has achieved exactly that. Thunes, or “pocket money” in French, opened its Beijing office on June 15.

Thunes is valued at over US$900 million following a US$72 million Series C round that closed in July with participation from Visa and EDBI. The company says it provides global payment rails that enable Chinese-licensed banks, payment service providers, marketplaces and businesses to make faster and more affordable transactions.

In China, specifically, Thunes enables cross-border payments, says Peter De Caluwe, CEO of Thunes. “There are so many countries that deal with China [such as Southeast Asia and Africa. There are] massive amounts of cross-border trade, and that still goes over the old Swift network.”

According to China’s central bank, the cross-border use of renminbi reached RMB9.7 trillion ($1.83 trillion) in 1Q2022, up 8% y-o-y. Swift reports that the renminbi’s share of global payments placed fifth at 2.77% in June, up from 1.81% some five years ago — although the dominant currency being shuffled around remains, unsurprisingly, the US dollar.

In order to capture China’s “enormous economic potential”, Thunes brought in Daphne Huang, formerly Swift’s head of China, as its senior vice-president of Asia Pacific in November 2021. “We gave her almost a full company; [she’s] budgeting a team and she’s cracking it now,” De Caluwe says.

He explains that Thunes treats China “as a separate company in our company”. He recalls telling Huang, who is based in Beijing: “Look, the flows that go in and out of China, we would like to get a big part of that in the future. So, you have to run China and make sure that we can have inbound and outbound [payments].’”

Thunes announced a partnership with Tencent in November 2022, bringing its collections service to one billion WeChat and Weixin users. De Caluwe says Thunes offers multiple solutions. “We help them collect [money] from emerging markets for the games they sell; we help them pay out to consumers. Tencent also has a wallet — WeChat Pay. We help them receive money from abroad into their wallets.”

De Caluwe says he is focusing on two growth stories in China.

“First of all, we are focusing on the thousands of SMEs in China selling to Indonesia, the Philippines, Singapore et cetera, to help them collect money from these countries. If you have a Chinese seller who sells five scissors to Indonesia, we collect the rupiah and we turn it into Chinese yuan, and we move it into China.”

- Peter De Caluwe, CEO of Thunes

The other focus is the reverse of such a transaction, he adds. “You also have a lot of Chinese suppliers who need to pay business lines [of credit], and that runs through the traditional banks … So, we’re going to go to these banks in China and say: ‘We are an alternative to Swift; we can move money for SMEs in China to Turkey or whatever.’ It’s an extremely difficult market, super complex. We are having very good traction there. We have a great team on the ground.”

Thunes may be just shy of joining the league of global payment unicorns, but De Caluwe says acquiring “4%, 5% or 10%” of cross-border volume in China “is way more valuable than saying I’m worth a billion”. “It’s where we focus,” he adds.

That said, Thunes is not only concerned with China. Founded in 2016, the company has since grown to some 350 employees in 20 offices globally, with 140 of them in Singapore. Its proprietary network reportedly connects 132 countries, four billion bank accounts and some three billion digital wallets.

Just like how PPRO powers Stripe, Thunes does the same for Revolut via a partnership that began some two years ago. Revolut, which boasts some 30 million retail customers worldwide and a business product in 40 markets, has been gradually switching to Thunes’ service “country by country”, says De Caluwe.

However, he stops short of revealing the size of this partnership. “We don’t select what type of transaction a customer sends. If it’s B2B, we will process it. I mean, we are just a pipe, and through the pipe you can send B2B [and] C2C transactions … I cannot disclose how much we do, but we do significant volumes for them.”

Thunes also boasts a foothold in another segment of the payment ecosystem: fraud detection and compliance checks. Tookitaki, the company Thunes acquired in 2022, counts United Overseas Bank and the Grab-Singtel digital bank GXS among its clients. De Caluwe says Tookitaki applies machine learning and AI to track its clients’ customer accounts for suspicious activity. “We help the banks drastically reduce the costs of operational compliance.”

On the corporate front, EDBI’s investment in Thunes comes with no strings attached, such as an obligation to list here, says De Caluwe, who rejects the idea of going public for now. “Currently, we are much more focused on growing the business. We have capital from private investors; there’s no need to go public.”

As Thunes’ valuation nears unicorn status, De Caluwe insists he values purpose over prestige. “Whether we pass the US$1 billion mark or not, we are not going to open a bottle of champagne for it. I’ll open a bottle of champagne if we can raise money in the current market conditions.”

Thunes’ Series C round brought its valuation up from some US$794 million, at a time “when a lot of businesses did down rounds, or flat rounds”, says De Caluwe. “My recognition is [that] serious investors recognise us; we can show that we create value over time — that’s what gets us excited.”

Big enough for everyone

Fomo Pay founder Louis Liu was enthralled by the success of WeChat and AliPay in unifying the whole of China into one payment ecosystem in 2015. It was estimated that their success led to a loss of RMB$150 billion in potential transaction fees for Chinese banks when over $1 trillion was transacted through mobile payments using QR codes.

Many Chinese citizens were not eligible to own a credit card and thus an inclusive solution immediately took off. Liu labelled the period as “the beginning of mobile payments” and believed that this “new” technology would eventually become the mainstream payment behaviour in future.

Thus, Fomo Pay was born in 2018 as a payment aggregator that consolidates all mobile payment providers into one. This meant merchants only had to work with a single provider, freeing them up to grow their business, instead of spending resources thinking about how their money could flow.

As each payment method grows in popularity, Fomo Pay quickly integrates them as options for merchants. Today, it enables payments from “buy now, pay later” or BNPL platforms, credit cards, e-wallets and even cryptocurrencies.

For this, Fomo Pay takes a cut of every transaction that merchants receive, a figure Liu says is difficult to disclose as it provides many payment options. However, he says using Fomo Pay is cheaper than a traditional bank transfer, as the aggregation of thousands of merchants allows it to keep its fees low.

Liu adds that Fomo Pay has been profitable for years, with over 10,000 merchants onboarded. He declines to share the full volume of transactions processed, as he believes that Fomo Pay is a market leader with close competitors watching keenly.

Read the full cover story

See also: Gunning for a licence in Singapore, the payment gateway to Asia Pacific

But unlike the Goliath sums of capital his peers have received, Fomo Pay’s relatively humble US$13 million Series A round was led by Jump Crypto, a division of Chicago trading firm Jump Trading Group, and joined by HashKey Capital, Antalpha Ventures, Ab Initio Capital and Republic Capital.

Most recently, it acquired two financial institutions in Singapore: CapBridge and 1exchange. Through this, Fomo Pay now has a capital markets services licence and a recognised market operator licence, on top of the digital payment token services licence that it has already received.

Like many others interviewed by The Edge Singapore, Fomo Pay’s Liu says that he does not see other players in the space as competitors. “Nobody can service everyone,” he says. “Different payment companies have different target customers, and the market size is big enough for everyone.”

However, he says that the criteria and eligibility to become a payment solutions provider is getting higher. With stricter regulatory requirements and more robust compliance procedures to go through, companies that do not have these standards at the core of their business will not survive, he adds.

Fomo Pay currently operates in Singapore, Malaysia and Hong Kong. Having predicted the ubiquity of mobile payments back in 2015, Liu now sees cross-border interoperability as the next goal of the payment space. He cites Singapore’s tie-up with fellow Asian countries like India and Thailand as examples.

Liu also observes that the financial institutions of the world are growing more regional and local, as more underbanked and unbanked nations become included in the narrative.

“It won’t be a winner-takes-all business, it won’t be a global player that comes out with one solution used by everyone, because payments is a highly regulated industry and different countries have different regulations and rules. Instead, the payment space will look more localised and fragmented in the near future.”

- Fomo Pay founder Louis Liu

Swift speeds up

Despite all the jibes made towards Swift by challenger fintechs, the global financial messaging service provider remains the incumbent juggernaut at the heart of the world’s banking system.

Headquartered in Belgium, Swift connects more than 11,500 banking and securities organisations, market infrastructures and corporate customers in more than 200 countries and territories.

Swift has also been wielded as an international geopolitical weapon. After Russia invaded Ukraine in February 2022, the former’s banks were cut off from the Swift system as part of a wide set of sanctions.

Even so, in 2022, Swift processed more than 11.25 billion messages on its core messaging service, up 6.6% over the year. Some 1.63 billion messages came from Asia Pacific, representing 14.4% of the year’s total.

Compared to both listed and unlisted fintechs that are flush with cash, Swift can claim to be a “neutral cooperative”; it is overseen by the G-10 central banks (Belgium, Canada, France, Germany, Italy, Japan, the Netherlands, the UK, the US, Switzerland and Sweden) as well as the European Central Bank. In addition, the Swift Oversight Forum is composed of central banks from other major economies — MAS included.

Now, Swift is attempting to live up to its name. On Aug 22, Swift reported that 89% of transactions processed on its network reach recipient banks within an hour, well ahead of speed targets set by the Financial Stability Board to achieve one-hour processing for 75% of international payments by 2027.

But there is still more to be done at industry level, says Swift.

“At present, only 60% of wholesale payments reach customer accounts in that time frame due to delays at the beneficiary leg caused by issues including regulatory controls, batch processing and opening hours of market infrastructures.”

- Swift

Swift’s survey of “7,000 consumers and small businesses” in Australia, China, Germany, India, Saudi Arabia, South Africa, the UK and the US found that 79% of consumers and 76% of SMEs expect an international payment to be completed within an hour or less.

The results of the online survey, released in July, reveal that only 24% of consumers and 15% of SMEs expect payments to be instant. However, expectations for speed are likely to increase as more domestic market infrastructures move towards instant payments, says Swift.

Customers “overwhelmingly” look to banks first when making an international payment, says Swift. While 87% of SMEs and 81% of consumers prefer banks, three-quarters of respondents said they would consider switching to a different provider if they receive a better offer.

At 50 years old, Swift’s response to challenger fintechs is its own “competitively priced” cross-border payment solution. Launched in 2021, Swift Go has onboarded more than 630 banks across 130 countries.

Low-value cross-border payments, such as sending money to family abroad or a small business trading with overseas partners, have “very real, everyday implications” for people around the world, says Thierry Chilosi, chief strategy officer at Swift.

“Our research confirms there is a real opportunity for financial institutions to offer compelling solutions that combine simple and transparent digital front-end experiences with secure, reliable, and fast back-end processing. This is exactly why we developed Swift Go with our community to facilitate fast and predictable low-value international payments, and we will keep innovating in this space to ensure payments of all sizes can flow across the globe without friction.”