B2B Cross-Border Payment Part 3 - Can B2B cross-border payment especially in import and export payments to Vietnam last in 8 seconds
On Wednesday, February 2nd, MEPs adopted new rules to ensure transferred funds arrive immediately into the bank accounts of retail customers and businesses across the EU. With these new rules, the duration for a transaction right now is only maximum of 8 seconds.
In this article, let's join FinFan in analyzing this newly passed law and answering the question of whether cross-border payments in Vietnam can take place in under 8 seconds.
Overview of B2B Cross-border Payments in 2022-2023
*Analysts estimate that $39.3 trillion of cross-border business-to-business (B2B) payments will be made in 2023, and reach $56.1 trillion by 2030. Add the wholesale banking sector to that (which includes institutional investments and currency trading), and the current value of cross-border B2B payments is $186.2 trillion, accounting for 98% of all international transactions.
Growth has been a consequence of globalisation that has increased trade, and so the need to transfer currencies across borders. That commerce has been driven by large enterprises trading in physical goods, but the growth in B2B ecommerce will see it become the leading contributor by 2030, worth $22 trillion.
*Source: bvnk.com
MEP adopted new rules of transfer EUR of cross-border
According to the provisions laid out in this regulation, the primary beneficiaries are small and medium-sized enterprises, as their payment transactions within the area will be minimized to a maximum of 10 seconds instead of enduring prolonged waiting times as previously experienced.
Especially, accepting payments through virtual credit using using products of payment service providers, typically virtual cards, is also allowed. This is of great help to businesses involved in the import-export sector who often had to face cumbersome procedures and complex processes (usually lasting at least 2 days) in the past.
Furthermore, information security policies and verification procedures have garnered unprecedented attention from the governments of EU member states to mitigate issues related to terrorist financing, fraudulent transfers, as well as corrupt practices and money laundering.
From the European Union to the matter concerning instant cross-border payments globally
Not only the EU, making instantly cross-border payments is also an issue of concern worldwide.
Accordingly, in Qatar, the Qatar Central Bank plans to roll out the Fawran instant payment service in March.
The new application will allow users to send and receive money within seconds, 24/7, using their mobile phone numbers as identifiers.
Another example comes from Colombia, where the nation is also diversifying and developing its own instant payment system called Wompi Colombia.
This application integrates Nequi's QR code system, a platform of the country's largest bank, Bancolombia.
Continuously, example comes from Asia, specifically India, which has also made significant progress in the cross-border payment revolution.
The National Payments Corporation of India (NPCI) unveiled an initiative to establish a real-time payment link between India and the United States.
And the last example comes from Vietnam's neighbor country, Cambodia, where the Cambodian state bank has had discussions to accelerate cross-border payments between them and India's NPCI International Payments Limited (NIPL).
The common characteristics of these alternative solutions come from its instant payment acceptance and bypassing the complicated procedures that previously hindered small and medium enterprises in their import and export payment process.
Concurrently, the prevailing global trend in utilizing cross-border payment services is to ensure both speed and cost-effectiveness, while also prioritizing security and authentication of the parties involved to effectively mitigate serious financial issues related to money laundering, corruption, terrorist financing, fraudulent asset misappropriation, and so forth.
So we have learned together about updates on upcoming trends of B2B cross-border payment around the world.
What about B2B cross-border payment issues related to Vietnam's imports and exports?
Can cross-border payment especially in import and export payments to Vietnam last in 8 seconds?
With Vietnam's current modern technological conditions, it is very likely that in the near future, cross-border payment activities especially in import and export payments may arrive in Vietnam in 8 seconds.
However, there are still some issues that make it difficult for fintech companies to provide support solutions for the B2B payment sector, specifically import payment and export payment.
Next, let's join FinFan to learn more about recent advances in cross-border payments to Vietnam, the difficulties this country is facing and solutions for cross-border B2B payments to Vietnam only took place within 8 seconds.
Advances in the fintech sector, especially in the cross-border payments field in Vietnam recently
The fintech sector in general
In recent years, amidst Vietnam's burgeoning fintech landscape, a remarkable surge in development has been witnessed.
Evident across bustling urban hubs and tranquil rural settings alike, the ubiquitous presence of electronic wallet transactions and the burgeoning prevalence of digital banking exemplify this trend.
Industries related to embedded finance (fintech enabling) service are also of great interest to the government, always offering appropriate policies to promote further development.
At the same time, this is also an industry that receives great attention from venture capitalists because the capital invested is not too high, but the profits earned are very large in the context of Vietnam's economy, which has been and is growing rapidly. transformed as it is today.
Read more:
Particularly in cross-border payment
- C2C cross-border payment
In the field of C2C or P2P payment, in Vietnam there are fintech companies that provide connection solutions between international money transfer partners to domestic banks or e-wallets, typically FinFan when they I was and is the first company in Vietnam to research, develop and launch the e-wallet aggregator product.
- B2C and C2B cross-border payments
Regarding B2C and C2B payments segments, Vietnam also marked outstanding development when giants such as Lazada and Shopee simultaneously invested in and expanded testing sales segments of countries outside of Vietnam on their sites.
Through a synergistic collaboration with Thunes, FinFan has provided extensive support to numerous international partners in facilitating payments within Vietnam.
This extends beyond the realm of e-commerce to encompass advertising and sales via social media platforms (social payments).
Moreover, the solution provided by Thunes and FinFan or Payooner also provide a lot of support for foreign companies that want to pay drop shipping, affiliate sellers, or even freelancers in Vietnam.
Difficulties of B2B export and import payment in Vietnam.
All three segments, B2C, C2B, B2C, FinFan and other fintech brands like Ngan Luong, Vimo, OnePay, Payoneer, etc. have been performing very well in supporting the connection of foreign businesses with domestic payment solutions such as banks affiliated with NAPAS or e-wallets.
However, up to now, B2B payment solutions are still causing Vietnamese fintech companies to not dare to develop products because of the following 3 reasons. These are: complications in the money transfer process in terms of paperwork, difficulty in identifying activities of enterprise, and limitations in money transfer methods.
A brief overview of import and export payment in Vietnam.
The biggest problem that Vietnamese businesses have encountered when paying for exported or imported goods so far is that they have to go through very cumbersome processes to complete the transaction process, while the warehouse space in the port is limited and does not allow the tenant to load goods beyond the specified time limit.
In the case of importers utilizing the Letter of Credit (LC) method, there are specific procedures to be adhered to in order to demonstrate their financial capability to cover the shipment costs, including collateral assets, for the bank's approval and advancement to the exporter's bank.
Subsequently, both parties must execute the remaining 8 out of 10 payment procedures to finalize the payment process for the imported consignment.
If unfortunately, during the procedures to demonstrate their financial capability process there is a mistake in paperwork, leading to a delay in the payment process and forcing the goods to be kept out of the warehouse beyond the prescribed time limit, the company importing the goods must bear a sum of fines are very expensive and that eats into the company's profits a lot when warehousing costs are raised quite high.
Moreover, during the execution of the remaining 8 steps, both the exporting and importing parties must navigate through additional intricate procedures to conclude the payment process, often involving the banks of both parties.
Difficulty in identifying activities of enterprise.
Although business verification is much easier than verifying individual identities (as each business has its own unique tax identification number), B2B providers face significant challenges in verifying the illegal activities of those businesses before they are brought to light.
Limitations in money transfer methods
Unlike B2C or C2C transactions, the 3 most commonly methods for B2B transactions is through a bank transfer, checks, or wire transfers because the process for a complete B2B transaction is extremely complicated and goes through many steps as mentioned above.
Most payment companies in Vietnam focus on building more B2C, C2B, and C2C payments when these three payment segments have a larger market scale (although the volume will be smaller) and spread more easily.
The problem that makes B2B payments more difficult to update more payment methods is large companies in Vietnam often hesitate to embrace changes in new payment methods utilizing technology, as they believe that traditional methods are sufficient to complete B2B payment processes.
Meanwhile, small and medium-sized enterprises, which can easily change and apply technology, have difficulty finding capital to build their own payment systems applying modern technology.
Additionally, some encounter difficulties with irreplaceable payment procedures and numerous operational complications, making it challenging to find technological solutions to assist them.
FinFan's opinion to improve the above difficulties of businesses.
The market insight
Recognizing the challenges that businesses face in cross-border B2B payments related to import and export, many company of fintech been researching to find out the way to provide services for collecting and disbursing payments for cross-border trade.
In cases where the payment amounts are not excessively large, they have introduced a virtual card product to facilitate easy expenditure for businesses on business trips, purchasing office equipment, and other related expenses.
Furthermore, the KYC and AML solutions of fintech companies are continuously updated to assist businesses with authentication and feel safer when transacting with international partners.
Such as the entire staff of FinFan undergoes annual training on matters of preventing money laundering, corruption, and financial fraud to proactively detect and prevent such activities. We are committed to promptly reporting any detected misconduct to the appropriate authorities for resolution.
FinFan's capacity
FinFan is already integrated with almost the world's well-known MTOs, PSPs, switch, and core fintech platforms such as Money Gram, Thunes, Qiwi, Remitly, Sendwave, Bancore, PaySend, Terrapay, Ria Money Transfer (Euronet), Dlocal, Ripple, TripleA, FoMo Pay, Wings, etc.
We are one of the pioneering fintech companies in Vietnam to be granted license number 973 for Foreign Exchange Acceptance and Payment by the State Bank of Vietnam.
Additionally, we are the first company to develop a comprehensive electronic wallet system facilitating connections with international partners in cross-border payments to Vietnam, integrating with widely-used domestic e-wallets such as MoMo, ZaloPay, VNPay, etc.
What are our products?
FinFan is currently operating in the following 4 areas:
We have been supporting international remittance service providers related to the Vietnam market by connecting them with domestic banking and e-wallet partner networks.
We provide virtual card solutions for businesses and support them in international payments, especially in the two areas of e-commerce and traveling.
We are a provider of disbursement and collection services for customers and international partners who need to pay for services and products in Vietnam through cooperation with Thunes.
Together with international partners such as TripleA and Wadzpay, we develop a currency conversion solution during international payments using stablecoins or CBDC to fiat currencies such as VND or USD for transfer to the Vietnamese market.
About FinFan
FinFan is a cross-border embedded financial services company that focuses on mass disbursement, fund collection, card processing, IBAN, and digital APMs solutions, which can provide valuable input and integration on and for the same. FinFan already integrated with almost the world's well-known MTOs, PSPs, switch and core fintech platforms as Money Gram, Thunes, Qiwi, Remitly, World Remit, Bancore, PaySend, Terrapay, Ria Money Transfer (Euronet), Dlocal, Ripple, TripleA, FoMo Pay, Wings, etc.
For more information, please contact us through:
🌐https://finfan.io
📞(+84) 2866 85 3317
✉ support@finfan.vn
LinkedIn: FinFan
