SMEs can leverage alternative payment solutions to address challenges

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SMEs can leverage alternative payment solutions to address challenges

According to the World Bank, small and medium-sized enterprises (SMEs) represent 90% of businesses and more than 50% of employment worldwide. Globalisation and the inherent weaknesses of local banking mean SMEs are increasingly looking for alternative payment solutions offered by fintechs to help them send and receive cross-border payments. 

With so many choices, it can be hard to choose. Here’s a tip: any alternative payment solution worth its salt must always be able to address the 2 following pain points.

High fees

With foreign exchange typically representing 8-14% of overall bank payments revenue, the existing banking infrastructure simply doesn’t support SMEs when it comes to sending and receiving payments. Markup by banks and intermediaries means SMEs are often paying a high fee: an average cross-border transfer through a bank can cost 2 times as much as one done via an alternative solution. This is significant, especially for businesses operating on a smaller scale or those that just started their business overseas. 

Slow transactions

Most SMEs race with time when it comes to maximising their cash flow. But a transaction through an interbank network, like Swift, can typically take as long as 1 to 5 business days. Slow payments prevent businesses from using funds for additional business activities. This can cause operational headaches, lower productivity and, eventually, profitability. 

Alternative payment solutions

Alternative payment solutions can help SMEs send and receive funds more efficiently. One such example is Tranglo Business, an all-in-one payment solution that fits businesses of all sizes.  Most alternative payment solutions use smart systems that optimise route selection for real-time payments to ensure funds are sent and received instantly. Some, like Tranglo Business, even offer volume discounts, so a business with a consistent payment trend will enjoy huge savings.

Alternative payment solutions are perfect for SMEs like online stores with social media-only presence as virtual displays, local merchants, travel agencies and more. For example, vendors can shortlist and find the most reliable suppliers within the Tranglo network of payment corridors. Most SMEs that have used an alternative payment solution also say they cut down on operational costs, thanks to direct integration with existing payment systems (e.g. Tranglo supports SOAP and REST API).

This study by Juniper Research found that the transaction value of B2B cross-border payments of all payment types will exceed USD42.7 trillion in 2026, from USD34 trillion last year. The growth of over 25% is being driven by increased popularity of eCommerce marketplaces, among others. For SMEs, there is no better time to scale up than now. 

Having a hard time finding the ideal payment solution to grow your business? We can help. Contact us to know more about how to send and receive payments reliably. 

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