With a highly skilled international workforce, long-established support for innovation and a well-developed reputation as a global finance hub, cross-border payments in Singapore have the makings of a global hub.

Moving forward, Singapore’s presence in the global payments landscape will continue to grow to become one of the most important global cities for cross-border payments, both as a source of new companies and as the headquarters for established and rising players in the sector, a new analysis by FXC Intelligence, a provider of cross-border payments data and intelligence, reveals.

This growth will be driven by the evolving Southeast Asian market and increased interest from Western companies which are expected to fuel the maturation and development of Singapore’s payments sector.

Cross border payments in Singapore – Key Players

The report, released on January 18, 2024, examines MPI license holders in Singapore to provide an overview of the market both as a whole and within key segments.

It identifies 15 companies with a Standard Payment Institution (SPI) license and 207 companies with a Major Payment Institution (MPI) license. Among MPI license holders, 93% have a cross-border money transfer license, a rate that stands at 40% for SPI license holders. These figures emphasize the high focus on cross-border payments in the domestic payment market.

The report highlights the diversity of the cross-border payment ecosystem. Looking at the key demographics of Singapore’s cross-border payment players, it reveals that domestic-only companies are mostly small and micro-businesses, with 78% employing under 50 people and only 3% having more than 5,000 employees.

However, for international-serving companies, there is a broad range of company sizes, with all but one segment (5,001-10,000) representing at least 5% of the total. Companies with 51-200 employees are the most common, which may indicate scale-up companies and which reflects the long-standing focus on providing a supportive environment for startups to develop that Singapore has cultivated.

When it comes to the headquarter location of the license holders’ parent companies, Singapore is the most prominent country, reflecting the broad international appeal of the country as a cross-border payments market.

Long-established payments hubs the US and the UK come next, followed by Hong Kong and China. The report notes that there is also a strong presence from international companies headquartered throughout Southeast and East Asia, as well as the wider Asia-Pacific (APAC) region, the Middle East, Europe and North America, with prominent locations including Malaysia, Australia, the United Arab Emirates (UAE) and South Korea.

Also, the presence of Bangladesh and the UAE in the list reflects the strength of payment flows between these corridors as a result of large numbers of migrants.

The report notes however the lack of a notable presence from many companies headquartered in the emerging markets of Latin America and Africa, the one exception being a single company headquartered in Mexico. With players in these regions seeing significant and rapid growth, FXC Intelligence expects this to change in the coming years.

Most common verticals

Further highlighting the diversity of the market, the report emphasizes the wide range of products and services available in the Singaporean cross-border payment industry.

The report categorizes license holders into consumer remittance, B2B payments, B2B2X payments, and payments processors.

In Singapore, consumer remittance companies are the most common vertical. These companies mainly cater to domestic customers, with various sizes and digital or retail-focused services.

Within this segment, 66% of the companies only serve outbound customers in Singapore, with the rest largely being headquartered in key remittance corridors with the country. Many of these players are small companies with single retail units, often without their own dedicated websites, which is reflected in the fact that most companies have under 50 employees.

B2B payments companies, the second-largest vertical in Singapore’s cross-border payment sector, serve both domestic and international customers, with the majority being smaller enterprises. The report notes that in this vertical, there is a notable division between domestic and international companies when it comes to size, with smaller companies tending to only be serving customers in Singapore. Among those serving customers in multiple countries, the US and the UK are the most popular locations, with the UK being more prominent in this sector due to its strong presence in B2B payments in particular.

B2B2X companies, offering infrastructure services, have a larger average company size, typically serving large enterprises. B2B2X typically represents infrastructure providers and others providing domestic or cross-border payment services to other businesses to sell on to their own customers. It is a category that has seen numerous newer players emerge over the past decade or so.

B2B2X service providers mostly cater to customers in multiple countries, highlighting the global nature of their operations within the Singaporean cross-border payments landscape. This segment mainly comprises large companies headquartered overseas which serve corporations and enterprises.

Finally, the last vertical, payments processors, comprises companies offering processing, acceptance or orchestration services, alongside cross-border transfers. In this vertical, domestic-only companies again tend to serve smaller organizations, although there are a few larger companies only catering to the Singapore market mostly because they providing widely users services within the country. Also, the report notes that the vertical comprises a larger number of bigger players than in other cross-border payment verticals.

Featured image credit: edited from freepik

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• Source: https://fintechnews.sg/84561/payments/cross-border-payments-singapore-how-the-lion-city-is-poised-to-be-global-hub/