With the rise of remote work, therein lies the potential issues around the payment for services rendered. Do you use traditional banks that have been known to be a bit flexible with how they view currency rates or maybe digital providers like PayPal?

At Tech Collective, we use a variety of writers and operations staff that work everywhere in Southeast Asia and we primarily use Wise (this is not a sponsored post) to make payments. This is because we were paying about 11% more when we used a traditional bank service and for some reason, PayPal was super buggy. So when we got the chance to speak to the folks at Wise about payment transparency, we jumped at the chance.

To share more about this topic, we spoke to Paik Wan, who is responsible for leading and expanding Wise’s presence and growth in APAC. Based in Malaysia, Paik Wan had a stint in Bank Negara Malaysia and is well-versed in the region’s payment industry.

We wanted to understand what we are actually paying for when we see the final sum that we send over is quite a bit more than the amount we actually should be sent over, and it is almost always referred to as ‘transaction fees’. Read the full interview to find out how you’re charged whenever you make a transaction.

How do you foresee payment providers being able to implement transparency in their fees and transactions? 

A transparent market is one where banks and providers show their fees clearly, with all charges shown upfront and with no hidden fees. There are a few simple steps that all financial institutions can take to be more transparent: 

  1. Provide a clear breakdown of the costs associated with every transaction
  2. Show the difference between the exchange rate offered by the provider benchmarked against the mid-market rate
  3. State all fees upfront before a customer makes a transaction. Terms such as ‘free’ and ‘0% commission’ can be misleading — providers often say they have low, or even no fees, but sneak extra charges in the fine print or hide hidden fees in the form of a marked-up exchange rate

However, traditional financial institutions and providers have benefited from the current system for decades and it’s unlikely things will change anytime soon. The old adage of ‘if it ain’t broke, why fix it?’ is what keeps this opacity of fees going.   

There’s no reason why understanding the true cost of international transactions should involve complicated math. As part of our efforts to help people understand exactly what they’re paying for, we built a comparison tool on our homepage that shows the cost of sending money internationally across different service providers. This way, consumers can see for themselves how much our service costs compared to other players and choose wisely. And if a competitor has a better deal, we don’t hide it either. 

Your study highlighted that Singaporeans shop overseas – are you seeing cross-border online payments on the rise in the region?

International online payments are growing fast, buoyed by the continued shift to digital. And this behaviour is here to stay. Take digital commerce, for instance, a sector that was booming in APAC even before the pandemic. According to Accenture, unprecedented growth in mobile and internet use has fueled online purchasing, with 2.5 billion internet users expected in the region by 2022, and half the region’s people coming into their prime spending years of ages 18-25. We also know that Singaporeans are avid shoppers — our independent study showed that 42% now shopping from international websites at least once a month, and nearly 20% have increased their shopping more than twice as much a month.

This growing digital-first mentality reminds us that consumers want convenience, flexibility, and seamless experiences, including for payments — whether it’s shopping, paying bills, or sending money abroad to loved ones. Digital providers offer not just an alternative, but a solution to a real problem, and I anticipate that better cross-border online payments will be even more crucial as consumer behaviour evolves with digitalisation and rising tech adoption.

What are some of the key trends you’re seeing in online payments in Southeast Asia?

Southeast Asia is a vibrant, fast-growing region and several trends we’re seeing in the digital payments space make it stand out for us. 

Firstly, it’s a fintech-forward region. The trajectory of digital payments in Asia and Southeast Asia is exponential – a study by Google and Temasek estimates that digital payments in Southeast Asia alone will hit US$1.2 trillion by 2025, and mobile wallet usage rates here are also well above those in advanced economies. Consumers in Asia are looking for better, more convenient solutions that suit their diverse needs, and in doing so are driving the digital payments revolution. 

Secondly, we’re seeing economies in Southeast Asia driving innovation in payments. I’m not only referring to the surge in local payment methods driven by players like GoPay in Indonesia or PayMaya in the Philippines. It’s also been exciting to see innovation coming from governments and regulators themselves who are modernising domestic infrastructure with payment schemes like PayNow in Singapore and DuitNow in Malaysia. One really exciting development lately is MAS’ recent announcements to link Singapore’s PayNow with Thailand’s Promptpay and India’s UPI, which will bring benefits and a better cross-border experience to customers in these countries.

Finally, consumers and businesses in Southeast Asia are very global, which makes solving cross-border payment issues here even more critical. Over 70 percent of SMEs in Asia-Pacific are already exporting beyond the region, with many of them having cited high costs in foreign exchange as a top barrier to operating internationally. Additionally, people here are also more connected than their counterparts in other regions. 

And when you combine these three factors — comfort with digital financial services, government investment in digital payments and a savvy population who have a distinct international outlook — it shows a growing need for better cross-border payments. 

Do you believe that COVID has fundamentally changed shopping habits for the region?

Going into a physical shop or dealing with cash just wasn’t a great option when the world was in lockdown, so it’s natural for people to look for digital alternatives. Today, spending time online and using digital services have become an indispensable part of people’s daily lives, to the point where 9 in 10 new digital consumers intend to continue using these services after the pandemic. People are increasingly finding digital ways to do things that they may have done in other ways before, including the way they shop.

People around the world are clearly shopping online more, with online retail sales accounting for 19% share of total retail sales in 2020, up from 16% in 2019, according to a report by the United Nations. This is also the case in Singapore — our independent study also showed that two in five Singapore shoppers now shop from international websites at least once a month, and 40% say they have increased their shopping frequency from last year. 

Which markets have the most potential for you in terms of growth in the next few years? What is next for Wise in Southeast Asia?

We are working hard to bring more of Wise to new and existing customers in APAC. Since our launch in Singapore, home to our APAC hub office, we have been able to bring international money transfers to Malaysia, Hong Kong, Indonesia and India, as well as introduce new features such as the multi-currency account and debit card in Singapore, Australia, New Zealand and Japan. Beyond deepening product availability, we’re also focusing on making our product faster, cheaper and more convenient. For example, we recently lowered transfer fees for half of Wise customers around the world when sending money to and from selected currency routes. We’re also significantly investing in infrastructure for the long term through direct access to payment systems. I’m excited to share that after months of investment and commitment to building a highly resilient system, we became one of the first non-bank financial institutions to connect directly to FAST, Singapore’s real-time payments rails in February this year. This integration means we can make transactions even faster and cheaper for customers in Singapore over time and overall takes us closer to our mission of making money move across borders — instant, convenient, transparent and eventually free. More broadly, it levels the playing field between fintechs like us and traditional banks, allowing for greater competition and innovation in the payments space. 

That said, there’s still a long way to go in achieving our mission. We’re thrilled to be helping our customers around the world save over £1 billion a year compared to using a bank, however, this is just a drop in the ocean of hidden fees. The problem of high fees, slow speeds and exchange rate markups on international transactions is a universal one — a staggering £150 billion are lost in hidden fees on foreign currency transfers yearly around the world, according to an independent report. Our journey is only just getting started! There’s so much more to do in reaching our mission to make fast, easy, low-cost and transparent international transactions a global standard, and we look forward to growing further in the region.