Skip to content

Growing beyond borders: Reimagining the role of foreign exchange (FX)

21 Sep 2022

The second of a two-part series on the rise of New Economy business models, part two dives into the role of foreign exchange (FX) and explores how cross-border eCommerce will be the next frontier for the eCommerce industry.

Cross-border eCommerce will be the next frontier for the eCommerce industry. 

In the last few years, online eCommerce sales have reached unprecedented levels, rapidly becoming the default as businesses continue to strengthen their online presence and make it their primary sales channel. According to AllTheResearch1, the global cross-border eCommerce market will expand at a compound annual growth rate (CAGR) of 17.4% to reach US$2248.57 billion by 2026.

Sellers are taking note of this opportunity because it is not capital intensive to take their franchise online and beyond borders to access new market segments and customers. Furthermore, customers are increasingly getting comfortable buying from reputable overseas sellers online as eCommerce business models mature.

As eCommerce becomes borderless, financial institutions have a much larger and crucial role to play in facilitating cross-border eCommerce flows and bringing trust and transparency to the involved parties.  

This article uncovers insights on how a strategic approach to foreign exchange (FX) can differentiate the customer experience offered by businesses, enhance profitability, and enable efficiencies for business operations and working capital. Successful digital models can gain a competitive advantage by considering FX holistically and providing integrated solutions across the entire ecosystem of eCommerce participants, whether within a marketplace or across a physical supply chain.   

Providing customers with transparent, real-time pricing 

eCommerce success is predicated on a flawless and frictionless customer journey — from browsing, payment at checkout and order confirmation, to order tracking and delivery. Desiring a convenient and seamless checkout experience, customers expect to see prices and pay in their preferred currencies.

To achieve this, eCommerce players integrate a holistic FX solution into the purchase journey to offer customers their currency-of-choice, including a seamless refund process. One way to do so is through Standard Chartered’s transactional FX suite of solutions, which offers access to FX pricing across 135+ currencies and 5,000 currency pairs. A multi-currency pricing engine instantly sources executable FX rates 24/7 via API and delivers real-time, transparent rates back to eCommerce platforms – whether it is a website or a mobile app-based business. When customers have a change in plans, they can request for a refund and the eCommerce company can execute a refund payment in a currency of the customer’s choice.

A leading online travel agency has pioneered the adoption of such a multi-currency pricing engine, allowing travellers to see hotel rates in the currencies they choose and in real-time. This enhances the overall customer purchase experience by making it much more convenient to decide and make a reservation, removing the need for travellers to manually convert the FX rate themselves.

In face of local competition, eCommerce players are also localising purchase journeys to provide a better customer-centric experience. Successful eCommerce players often offer a range of local payment methods available such as instant payments, e-wallets, mobile wallets, and QR-code-based payments. Such an offering, enabled by Standard Chartered’s omni-channel online collection gateway Straight2Bank Pay, is particularly important for some markets in Asia, the Middle East and Africa where significant portions of the population are either unbanked, underbanked or do not have credit cards.

Providing price certainty whilst mitigating FX risk exposures

In addition to offering a transparent FX rate, it is imperative for some cross-border eCommerce businesses to also offer competitive FX pricing for customers to lock in prices – from a few seconds to a few days.

The airline industry is an example. Customers can select the price of airline tickets in their preferred currency (often local currency) and pay using credit card immediately, with payment confirmation and airline ticket issuance happening in seconds. However in another construct, customers can select the price of airline tickets online in their preferred currency, choose to reserve the price for 24-hours and complete the transaction either online or offline by the deadline.  In the latter scenario, Standard Chartered’s transactional FX suite of solutions can configure the frequency of FX rate data feeds based on the airline’s business needs. This capability, combined with the Bank’s omni-channel online collection gateway Straight2Bank Pay, enables the airline to offer customers prices in local currency in real-time, with the option to pay using local payment methods.

Payment service providers (PSPs) playing a vital role in the eCommerce ecosystem will also find such a feature useful in providing a more streamlined, cost-effective multicurrency sales collection for cross-border merchants selling on marketplaces. The end-to-end collection journey includes providing merchants an easy and fast conversion of collections back to their home currency so that they can fund their working capital in time. PSPs can also consider increasing FX transparency further by letting merchants quote the price and decide the time to withdraw funds in home currency.

Standard Chartered has a full suite of API-enabled cash and transactional FX solutions across its network and connects to over 100 clearing networks globally, which reduces the friction faced by merchants served by PSPs. Furthermore, using the Bank’s account management and reconciliation tools, PSPs can efficiently manage large volumes of collections on behalf of their customers and segregate funds as required.  In their day-to-day treasury operations, PSPs can source FX rates in real time through the Bank’s transactional FX offering at a pre-agreed margin and manage their aggregated FX exposures in a timely manner – whether remitting sales collections to merchants, paying fees to third-party vendors and couriers, or paying salaries to their own employees.

Addressing broader needs for treasury management

Besides improving the payments, collections and overall FX experience for customers, eCommerce businesses would benefit greatly from addressing broader treasury needs.

From improving cash visibility and multi-currency cashflow forecasting to enhancing liquidity positions and optimising yields, businesses are partnering with banks to co-create automated solutions that remove pain points related to multi-currency flows and explore ideas to improve treasury management.  

As businesses scale regionally or globally to capture the opportunities brought forward by the new economy, having an integrated cash and transactional FX solution is not only a key strategic consideration but also a competitive differentiator. The winning solution will need to be holistic to support evolving eCommerce models, bridge the needs of the old and the new ecosystem players, and drive pricing transparency and cost efficiency. This will pave the way for progressive digital transformation and lay a strong foundation to create a smart treasury for the New Economy.

Talk to us, and accelerate your journey in the New Economy today

  • This field is for validation purposes and should be left unchanged.

Privacy policy

If you missed it, read Part One – “Is your treasury ready for the New Economy?” for opportunities brought about by the New Economy as a platform for business growth, and explore ways to scale your business for global expansion.

1 Source:

Straight2Bank Pay

Available in 21 markets across Asia, Africa and the Middle East – and growing – Straight2Bank Pay is a one-stop global platform and your go-to solution to provide customers with different digital payment options, online and offline.