Payments, global trade head for digital ‘tipping point’ as coronavirus pandemic forces shift in business environment

Digitisation in payments and global trade has reached a “tipping point” as a result of the challenges created by the coronavirus pandemic, creating a new level of comfort and trust in digitally driven transactions, according to a panel of fintech experts.

Global trade has entered a new era where the digital economy is going to be the centre of the world’s economic structure, according to Jack Zhang, chief executive and co-founder of Tencent Holdings-backed payments operator Airwallex.

Airwallex saw usage by its customers jump by 53 per cent in the second quarter from the first, with some of its e-commerce customers experiencing 200 per cent growth in the April-May time frame, Zhang said. Seventy-five per cent of its customers who responded to a recent survey plan to continue to use the digital channel post-pandemic, he said.

“The speed of e-commerce is being accelerated – probably what happened in a decade happened in a couple of months,” Zhang said.

Zhang was one of the speakers at “Digital Trade in a Post-COVID World”, a virtual briefing organised by the South China Morning Post and the World Economic Forum on Wednesday.

Some industries, however, have not experienced the same growth, because the pandemic cut into their operations and consumer demand, Zhang said. Revenue from customers in the travel industry fell by 85 per cent quarter-on-quarter and international student tuition payments dropped by 40 per cent in the period.

Jack Zhang, chief executive and co-founder of Tencent Holdings-backed payments operator Airwallex. Photo: Xiaomei Chen alt=Jack Zhang, chief executive and co-founder of Tencent Holdings-backed payments operator Airwallex. Photo: Xiaomei Chen

Josh Kallmer, head of global public policy and government relations at video conferencing app Zoom, said the pandemic had reinforced the importance of making sure the regulatory environment is set up to support digital trade, from transactions to the ability to connect with each other.

“For all of us to experience higher living standards, for kids to be able to go to school, for people to get medical care, for business to get done, data has got to move. Digital trade has to succeed,” Kallmer said. “We’ve got to have the rules in place to support that.”

Kallmer said it has
been an “eye-opening experience” for Zoom, which went from a company serving primarily large enterprises to one whose technology is being used for everything from yoga classes to telemedicine overnight. The company went from about 10 million daily users to more than 300 million users in a matter of weeks.

The challenge for regulators and the private sector is how to narrow a gap that is forming between some small and medium-sized enterprises (SMEs) in developing markets and their global competitors because of lack of access to capital as the digital economy grows, said Ankiti Bose, the co-founder and chief executive of Zilingo, a Singapore e-commerce start-up focused on the fashion industry.

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“One of the challenges we are seeing is a lot of smaller and medium-sized businesses that have suddenly digitised and suddenly are part of the digital economy don’t have long enough, well-documented credit history in many of these countries simply because the credit scoring and the risk infrastructure has not existed for long enough,” Bose said. “A lot of these transactions, especially in countries like Indonesia, have historically not been factored in towards creating something in the form of a credit score, which would ease the access to capital for small merchants.”

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