The role digital platforms play in accelerating SMB digital payments

Today, digital platforms, like e-commerce marketplaces and ride-hailing apps, have become indispensable across Asia Pacific. They shape how consumers and SMBs live, work, and engage with each other. From bustling cities to remote villages, these platforms serve as hubs of commerce and connectivity and engage millions of SMBs, including restaurants, supermarkets, and home-based businesses, that offer their products and services on them.1

These digital platforms connect SMBs to a broad range of consumers. Simultaneously, the platforms offer services directly to SMBs, such as working capital financing, providing them with new opportunities for growth. But digital payments are the key to unlocking these products and services. With digital transactions being the primary mode of payment on these platforms, SMBs must go cashless to reap the full benefits.

With their enormous influence on SMB success today, digital platforms can drive digital payment adoption. Take food delivery apps for example. They can now host millions of local hawkers and F&B establishments across Asia Pacific. Their ease of use, financial services, and widespread market presence attract SMBs to use their services. And as more SMBs get onto digital platforms, their usage of digital payments will also rise.

Digital platforms are transforming how SMBs pay and be paid

One of the most compelling factors for SMBs is the low-cost, low-effort digital adoption facilitated by digital platforms. These platforms provide comprehensive support for SMB onboarding, significantly reducing the time and cost of moving to online transactions. For example, major digital platforms have partnered with payment networks, including Visa, to streamline payment processes, encouraging SMBs to embrace digital payments. Additionally, SMBs can enhance their consumer offerings with instalment solutions through Visa’s partnerships with Asia Pacific banks, providing SMBs with another reason to go digital.

Moreover, digital platforms serve as gateways to many value-added financial services, empowering SMBs with tools to manage their finances. Embedded financial services, like working capital loans, insurance offerings, and Buy Now, Pay Later programmes, are seamlessly integrated into the platform ecosystem. In fact, Visa and BCG estimate that embedded finance is expected to unlock more than US$242 billion in market opportunity for financial providers across Asia Pacific by 2025, with majority of the opportunity in the small and medium-sized businesses (SMBs) segment.2

International opportunities and financial education for SMBs

Beyond domestic markets, digital platforms pave the way for overseas growth opportunities for SMBs. Their presence in multiple countries across the region offers SMBs more access to new markets and consumers. These platforms also provide solutions that support marketing, logistics, and consumer engagement, enabling SMBs to penetrate new markets efficiently and effectively. With digital platforms, SMBs can scale their business seamlessly, fuelling business growth and revenue generation.

Further, digital platforms often support SMB financial literacy and understanding of digital payments. By unlocking diverse resources and educational materials, digital platforms help SMBs gain valuable insights and knowledge for effectively leveraging digital payment solutions. In 2022, for example, Tokopedia teamed up with Bank Indonesia (BI) and the Financial Services Agency (OJK) to launch the Financial Literacy Module. The Module is an education

programme aimed at upskilling Indonesian SMBs and covers topics such as financial planning, online transactions, and fund management. The goal is to give SMBs the tools and know-how to thrive in the digital world.3 Such initiatives will boost confidence and encourage more SMBs to embrace digital payments.

Collaboration accelerates SMB digital payments innovation

Given their potential to accelerate SMB digital payment adoption, digital platforms make ideal partners for financial institutions. By working together, digital platforms and financial institutions can maximise their impact, facilitating widespread adoption of digital payments among SMBs in Asia Pacific. Digital platforms possess vast data insights into SMB behaviour, preferences, and selling patterns. With this wealth of information, they understand what SMBs need and can guide the development of impactful solutions. Financial institutions bring expertise in financial services and regulatory compliance. They enhance security and build trust among SMBs and consumers, ensuring the scalability and sustainability of digital payment initiatives.

Recognising the vital role of collaboration, institutions and digital platforms must combine strengths to accelerate digital payment adoption. By breaking down existing silos and promoting progress, they can accelerate innovation and deliver tailored solutions for SMBs.

^{¹ Visa, Unlocking growth opportunities for small and medium-sized businesses (SMBs) with digital payments, 2024.}

^{² BCG research for Embedded Finance, commissioned by Visa (Nov 2022).}

^{³ Tokopedia, Tokopedia, BI, OJK team up to launch Financial Literacy Module for local MSMEs, 2022.}