Local Payment Methods

Payments Resources
Local Payment Methods in Thailand: How PromptPay Works In an International Payment Gateway

Thailand is embracing the dawn of digital payments after being cash-dependent for decades. In the last six years, the nation has made significant strides in rolling out financial technology, increasing the penetration of such services among its populace¹. According to 2022 statistics, approximately 77.8% of Thailand's population of 70.01 million are active internet users, showcasing a high degree of digital literacy². 

A key driver in Thailand's digital transformation has been PromptPay, an interbank real-time payment system, developed as part of the National e-Payment Master Plan¹. PromptPay is not only a popular local payment method but is increasingly integrated into international payment gateways, facilitating cross-border transactions.

What Is PromptPay?

PromptPay is a cornerstone of Thailand's payment systems, operating as an interbank real-time, near-instant payment gateway that simplifies the way users receive and transfer funds. It links payments to a Citizen ID or mobile phone number, and is similar in functionality to India’s UPI and Singapore’s PayNow3

Developed in cooperation with major Thai banks and Vocalink, a Mastercard company, PromptPay is instrumental in supporting the Thai government’s initiative to transition from a cash-reliant economy to a robust digital economy4.

User Trends in PromptPay

Thailand led all countries in real-time payment transactions per capita in 2022, with the payment method accounting for 34% of all transactions5. The significant uptake of PromptPay is attributed to the widespread availability of mobile phones, which have been a major driver of digital adoption and PromptPay transactions. Since its implementation in 2017 to 2023, PromptPay transactions have surged annually from 88.07 million to over 19.9 billion, underscoring its central role in Thailand's digital economy and cross-border transactions6.

Despite these encouraging numbers, the real sentiment towards digital payments in Thailand remains complex. During the pandemic, digital payment methods saw a surge in use, but in 2022, a survey by the Bank of Thailand indicates a revert to cash for many7. Citing convenience and the absence of added fees, over 50% of respondents across all age groups expressed a preference for cash, with only 27% of the surveyed continuing with digital payment apps post-pandemic8.

Benefits and Drawbacks of Using PromptPay for Online Payment Gateways

As read in the previous section, Promptpay might not be the ultimate solution for digital payments. Nonetheless, it continues to grow in popularity as a local payment method in Thailand and as part of international payment gateways. Why is this so? We now explore its key advantages and limitations:

Benefits

  • Smooth Checkout Experience: As an interbank payment system, PromptPay allows users to make purchases seamlessly across all banks in Thailand, enhancing the user experience in digital transactions.
  • Real-Time Payment: Transactions are processed instantaneously, usually completing in under a minute, which is ideal for both local and international transactions.
  • Secure and Simple: With a mobile phone and internet connection, PromptPay offers a convenient and secure way to transact, linking each account uniquely to a Citizen ID to bolster security.

Drawbacks

  • Low Merchant Adoption in Thailand: The preference for cash among local vendors means digital payment options like PromptPay are less common in grassroots markets. This presents an opportunity for international online businesses to differentiate themselves to a digitally literate audience in Thailand.
  • Fixed Price During Checkout: The fixed pricing structure of digital payments contrasts with the traditional bargaining culture in Thai markets. However, innovations in social commerce platforms like LINE are adapting by integrating haggling features into digital payments, offering flexible pricing through payment links9.

How PromptPay Works in an International Payment Gateway

PromptPay is primarily a local payment system in Thailand, but the Thai government is expanding its reach internationally, with agreements already in place with Malaysia and Singapore. For cross-border transactions, PromptPay requires the use of a third-party payment provider, which serves as the international payment gateway.

Transaction Process:

1. Users first transfer funds to the payment provider's Thai bank account via PromptPay. This can be done by either scanning a QR code or entering the recipient's Citizen ID or phone number within the PromptPay app.

2. After the transaction, the PromptPay app confirms the successful transfer of funds with a notification.

3. The funds are then transferred to one of the payment provider’s international accounts. Finally, these funds are disbursed to the foreign seller's bank account.

When selecting a third-party payment provider for international transactions involving PromptPay, it’s crucial to choose one that offers a robust network of localised markets. This ensures that the service aligns with the specific needs and regulations of the target markets, enhancing the efficiency of cross-border payments.

What are the Fees Required in Using PromptPay?

Local Transactions:

As of 2024, PromptPay’s fee structure of local transactions within Thailand are as follows:

  • Transactions not exceeding 5,000 baht: Free
  • Transactions from 5,000 to 30,000 baht: 2 baht fee
  • Transactions from 30,000 to 100,000 baht: 5 baht fee
  • Transactions from 100,000 to the bank maximum limit: 10 baht fee

This fee model makes PromptPay an attractive option for everyday payments and small business transactions within the country.

International Transactions:

When it comes to cross-border payments facilitated through a third-party payment provider, standard charges apply. These include FX costs, platform fees, and setup fees, which vary depending on the provider chosen. For more information, read our blog article on The Actual Costs in Using a Payment Gateway.

Selecting a reputable and secure international payment gateway is thus crucial to manage these costs effectively and ensure transaction security.

How can Tazapay help?

Understanding the nuances of PromptPay and its fee structure arms you with the knowledge to more effectively penetrate the Thai market. If you're exploring further solutions to enhance your business operations, consider Tazapay. Offering specialised payment solutions for a wide range of needs—from eCommerce platforms to exporters and importers—Tazapay tailors services to help your business thrive in international markets.

Contact us to find out more

Sources

  1. The Dawn of Thailand’s e-Payment Era - Thailand NOW
  2. Digital 2022: Thailand — DataReportal – Global Digital Insights
  3. Bangkok Bank PromptPay
  4. Transforming Thailand to a digital economy | Mastercard
  5. Thailand Ranked First Globally in Real-Time Payments Transactions per Capita
  6. Thailand Volume of PromptPay Transactions from 2017 to 2023 
  7. Thailand Rejects Digital Payments in Favour of Cash (cashmatters.org)
  8. Cash still king, people reject app payments - Thai Examiner
  9. Social commerce in Thailand - statistics & facts | Statista

Payments Resources
The Actual Costs in Using a Payment Gateway

Understanding the True Costs of Using a Payment Gateway

As the eCommerce market expands, so does the array of payment gateways available to merchants worldwide. Many are tempted by platforms advertising free or low-cost services, thinking they've secured a great deal. However, the reality of hidden costs of payment gateways often emerges only after transactions begin, potentially eroding profit margins.

Are you grappling with the complexities of global transactions? Consider Tazapay, your global payment gateway partner. With a network extending across 173 countries and a suite of fully digitised solutions for marketplaces and platforms, Tazapay helps you make the world your market.

To better understand this landscape, let’s explore the common costs and fees associated with payment gateways, particularly those involved in cross-border payments.

Platform Fees: Decoding the Cost Structures

Platform fees are relatively straightforward—they represent the costs of using a payment platform. Most reputable payment gateways impose some type of fee. These fees can vary, typically appearing as a combination of a flat fee plus a percentage of the transaction, or as a simple percentage-based fee.

For example, some payment gateways may charge fees such as $0.30 plus 2.9% per transaction, or $0.11 plus 3.95%, depending on the payment method. In contrast, Tazapay offers a more streamlined approach, charging either 1.8% or 3% for non-card transactions. To illustrate the differences in cost structures, consider the expense of a $50 transaction versus a $1000 transaction:

Using a $0.30 + 2.9% fee structure, a $50 transaction incurs a cost of $1.75, while a $1000 transaction costs $29.50.
However with Tazapay’s fee, starting from 0.8%, the same transactions would cost just $0.40 and $8, respectively.

Comparing these fee structures highlights significant differences. Opting for a straightforward percentage fee, such as Tazapay’s, can be more cost-effective, particularly for larger transactions where flat fees add up. This comparison underscores the importance of understanding payment gateway fees and how they impact your costs, especially in a cross-border payment gateway context.

Payment Gateway Costs

Understanding payment gateway costs is essential when considering the financial implications of various payment methods. These platforms may absorb fees, integrating them into overall platform fees, or pass them directly to consumers.

1. Bank Transaction Fees

Bank transaction fees play a significant role in the costs associated with direct bank payment methods like local bank transfers and bank redirects. Typically, local bank transfers might incur a surcharge for cross-bank transactions, while in-bank transfers often avoid these fees. Bank redirects, similar in operation to local bank transfers, usually carry minimal processing fees, influenced by national e-commerce policies.

For example, Singapore's PayNow service was free of transaction fees from its launch in July 2017 until January 2021, under a full subsidy. However, a nominal fee of SGD0.22 was introduced in 2022 to cover gateway pricing models adjustments.1

2. Card Processing Fees

Credit card processing fees are another critical aspect of payment gateway costs. Merchants may apply a surcharge for transactions using card networks like Mastercard or Visa. For instance, as of 2024, credit card processing fees for merchants range from 1.3% to 3.5%, depending on the card and transaction type.2

3. Wire Transfer Costs

The cost of wire transfers, particularly for international payments, is a notable part of gateway costs. Domestic wire transfers generally incur lower fees and are processed faster compared to international transfers, highlighting the variability of bank surcharges across different institutions.3

International Transaction Fees and FX Costs

When transactions span multiple geographic regions involving different currencies, international transaction fees and currency exchange costs, or FX costs, are inevitable. Payment gateways often manage these costs by adding a percentage-based fee over the market’s FX rate, or by setting their own buy and sell rates.

This adjustment allows payment gateways to cover the risks and operations involved in currency conversion, forming a significant portion of the payment gateway costs. Understanding these fees is crucial for businesses operating internationally, as they can impact the total cost of transactions significantly.

Gateway Setup Fees

Setup fees are a common initial cost associated with various online payment methods, including payment links and payment APIs. These fees often reflect the technical expertise required for integration and the complexity of the setup, especially in sophisticated online marketplaces and platforms.

In Malaysia, the variability in gateway setup fees is evident, with the top ten online payment methods charging anywhere from zero to RM300 per year.4 This range illustrates the diverse pricing models that payment gateways employ based on the services and technology they provide.

Making Informed Choices in Payment Gateways

With a clear understanding of the various payment gateway costs, including transaction fees, setup fees, and FX costs, you are now equipped to make more informed decisions when selecting a payment gateway that offers the best value for your money.

As you consider your options, take a look at Tazapay. Tazapay offers competitive platform fees at just 0.8 - 2.5% for non-card payments and 3.8% + $0.50 for card transactions. Moreover, it provides some of the lowest FX rates in the market and even promises to match any better rates you might find. Making the right choice for your payment gateway could mean the difference in creating significant savings and efficiency for your business operations.



Sources

1 2020 E-commerce Payments Trends Report: Singapore Country Insights (jpmorgan.com)

2 Average Credit Card Processing Fees (fool.com)

3 Wire Transfer Definition (investopedia.com)

4 Top 10 Online Payment Methods in Malaysia for Ecommerce - ZCOM MY Blog



Payments Resources
Local Payment Methods in Europe: How Sofort Works In an International Payment Gateway

Europe is one of the largest E-Commerce markets in the world, with revenue projected to reach USD$632.70B in 2024 and a projected market volume of US$977.40bn by 2029 according to predicted annual growth rates.1 This region boasts dynamic digital markets, including Germany, which ranks as the 7th largest globally after China, US and UK.2 This impressive growth is driven by the flourishing digital economies, creating an environment ripe for robust digital payment infrastructures to prosper.

Local Payment Methods in Europe play a crucial role in this growth, and one of the standout systems is Sofort, a pan-European payment service provider. Sofort is integrated into international payment gateways, facilitating cross-border payments and supporting e-commerce businesses. By leveraging online payment solutions like Sofort, merchants can offer user-friendly payment options that cater to the diverse needs of European consumers, enhancing payment security and boosting online transactions.

What Is Sofort?

Sofort is a payment service provider based in Germany that enables users to make payments using their own online banking details, with transactions processed in real-time.3 Operating in over 13 European countries, Sofort's extensive reach is powered by Klarna Kosma’s open banking PISP-based infrastructure.4 This infrastructure allows Sofort to facilitate seamless online transactions and secure online payments across different banks, making it a key player in the European payment methods landscape.

The payment process with Sofort is similar to that of Trustly, as it involves direct banking facilitated via PISPs. This method allows users from various banks to make payments effortlessly, supporting the growing need for alternative payment methods and user-friendly payment options in the region. By integrating Sofort into international payment gateways, businesses can enhance their cross-border payments capabilities and offer reliable online payment solutions to their customers.

User Trends in Sofort

The 2023 European E-commerce Report reveals that 78% of all European internet users have purchased goods and/or services this year, with the overwhelming majority of those users coming from Western Europe.5 This indicates a strong preference for local payment methods in Europe, such as Sofort, among consumers. 

B2B e-commerce constitutes a significant portion of the European e-commerce market, holding a market share of approximately 63.1%. While B2B dominates, B2C e-commerce has also seen substantial growth, particularly during the pandemic, when over 87% of internet users in the region were e-shoppers in 2020. Although this number has slightly dipped to 85% this year, it still represents a robust market for online payment solutions.6 This trend underscores the importance of payment service providers like Sofort, which cater to the evolving needs of European consumers by facilitating secure online payments and enhancing online transactions.

The steady demand for user-friendly payment options and the growing preference for alternative payment methods suggest a positive outlook for Sofort’s business prospects in the region.

Benefits and Drawbacks of Using Sofort for Online Payment Gateways

While many strides in technological improvement have led to significant advancements in the online payment gateway market, none are perfect. It is crucial to consider their benefits and drawbacks before making a decision. Here are the pros and cons of using Sofort:

Benefits

  • No Account Needed: Users can make payments directly from their bank account without having to create an account with Sofort, allowing for greater convenience. This feature enhances user-friendly payment options and streamlines online transactions.

  • Simple and Secure: Payments made via Sofort can be conducted anywhere within Sofort-supported countries. All transactions are encrypted with 256-bit encryption and require the user to input their PIN and TAN, ensuring both simplicity and payment security. This aligns with the increasing demand for secure online payments.

  • Little to No Cost: Users can make most payments with Sofort at no cost, while merchants integrating Sofort are only charged standard rates per transaction. This makes Sofort an attractive option for businesses looking to optimize their payment processing costs.

Drawbacks

  • EU-only: Sofort is only available in the EU and primarily accepts Euros as the preferred currency. Additionally, only European banks are recognized by Sofort, meaning that any prospective user with a non-EU bank account needs to have an EU bank account to reap the benefits of Sofort. This limitation may impact businesses and users outside the EU looking for comprehensive cross-border payments solutions.

How Sofort Works in an International Payment Gateway

Sofort, being a pan-European payment gateway, is already an international payment gateway in some respects. It is supported in 12 countries: Austria, Belgium, Finland, France, Germany, Italy, Norway, Poland, Spain, Switzerland, The Netherlands, and the United Kingdom. This extensive connectivity enables cross-border payments and integration within international payment gateways across these major European markets.

However, this list, while comprehensive for the larger markets in each quadrant of the EU, does not cover all EU countries, nor does it include markets outside the EU. This limitation means that for transactions made outside Sofort’s supported countries, a third-party payment service provider is required as the international payment gateway to facilitate them.

This understanding of how Sofort fits within international payment gateways is crucial to optimise cross-border payments and cater to a diverse European customer base.

How Sofort Payments Work

Sofort payments normally involve the user accessing their bank account directly via Sofort and inputting their PIN and TAN to complete the checkout process. Once the user’s credentials are verified, the funds are simply transferred directly from the user’s bank account to the merchant’s account. 

In the event of an international transaction outside of the EU, the buyer would first pay through the merchant’s third-party payment provider of choice, selecting Sofort as the payment method at checkout. The payment process proceeds normally until checkout is finalised. After this, the funds are transferred from the user’s bank account into the third-party payment provider’s local bank account. Subsequently, the funds are moved into the payment provider’s international accounts before being disbursed into the foreign seller’s bank account. This multi-step process ensures that secure online payments are maintained even in complex international transactions.

What are the Fees Required in Using Sofort?

Currently, there are no fees for using some of Sofort’s payment services, including the app itself and certain BNPL options. However, as Sofort functions as a payment gateway, it employs various methods and rails to process transactions. Sofort’s transaction fees typically range from €0.10 + 1-2% to €0.25 + 3.29%.

When using Sofort as a payment method through a third-party payment service provider acting as an international payment gateway, additional costs such as setup fees, FX costs, and potential hidden costs may apply. These costs can impact the overall payment processing expenses, making it essential for businesses to consider them when planning their cross-border payments strategy.

Understanding Sofort’s fee structure is crucial for businesses aiming to optimise their online payment solutions and enhance their e-commerce payments strategy. By leveraging Sofort’s cost-effective transaction methods, businesses can offer user-friendly payment options to their customers while maintaining secure online payments.

How can Tazapay Help?

To further improve your prospects in the European market, consider partnering with a robust and reliable third-party payment provider like Tazapay. We offer access to over 173 countries and are secured with 256-bit encryption, ensuring that every transaction is safe and secure. By integrating Tazapay as your international payment gateway, you can lower your transaction fees, enhance your payment processing capabilities and effectively manage cross-border payments.

Contact us to find out more

Sources

  1. Revenue in Europe’s eCommerce Market - Statistica 
  2. Ecommerce Market Size by Country [2023 Update] - Oberlo
  3. Sell with SOFORT - SOFORT
  4. About us - SOFORT
  5. European E-Commerce Report 2023
  6. The eCommerce Market in Europe: Trends, Growth and Statistics - Paycec.com

Payments Resources
PayNow: Revolutionizing Singapore's Digital Payment System

In recent years, Singapore has rapidly evolved into a digital-first economy, with the island nation at the forefront of adopting innovative financial technologies. The emergence of digital wallets has signaled a shift in consumer preferences, with predictions suggesting they might soon eclipse traditional card payments. Central to this digital revolution is PayNow, a system that has transformed the way transactions are conducted in Singapore, promising a seamless, efficient, and secure method of payment.

What is PayNow?

Developed under the auspices of the Association of Banks in Singapore (ABS), PayNow is more than just a payment method; it's a cornerstone of Singapore's ambition to become a fully cashless society. This real-time payment platform enables users to send and receive money instantly using just a mobile number, NRIC/FIN, or UEN number, integrating seamlessly with the Singapore Quick Response Code (SGQR) for QR code payments. Supported by a consortium of major banks and financial institutions under the regulation of the Monetary Authority of Singapore (MAS), PayNow is a testament to Singapore's cohesive approach to financial innovation.

The Soaring Adoption of PayNow

Updating the statistics with the latest information, PayNow's trajectory in Singapore showcases the nation's accelerated embrace of digital payments. In 2020, Singapore witnessed a dramatic surge in real-time transaction volumes, reaching 138.38 million, a 48% increase from 2019. The value of these transactions also saw a significant jump of 40%, escalating from US$110 billion in 2019 to US$154 billion. The growth trend is projected to continue, with real-time transactions expected to climb at a compound annual growth rate (CAGR) of 23.2% to hit 392.94 million by 2025. This would elevate the total transaction value at a CAGR of 17.74%, underlining the increasing significance of digital payments in Singapore's financial landscape​ (Fintech Singapore)​.

The recent expansions into real-time cross-border payments further underline PayNow's evolving role in the financial ecosystem. 2023 marked a pivotal year as Singapore initiated real-time cross-border payment connections with neighboring countries. These developments, facilitated by the Monetary Authority of Singapore (MAS), aim to enhance convenience for cross-border fund transfers and small-value payments. The introduction of cross-border QR code payment linkages with Malaysia and Singapore, along with the establishment of a cross-border linkage between Singapore’s PayNow and India’s UPI, highlights the city-state's commitment to fostering financial inclusion and bolstering the ASEAN economy through improved payment connectivity​ (Fintech Singapore)​.

Unveiling the Benefits and Addressing the Drawbacks

Benefits

  • Real-time Payment Processing: The hallmark of PayNow is its ability to process payments in real-time. This immediacy is invaluable for both personal and business transactions, where speed can often be of the essence.
  • Universal Accessibility: PayNow's integration with a broad network of banks ensures that users can make payments across different financial institutions, breaking down the barriers traditionally associated with bank-specific platforms.
  • Stringent Security Measures: Security is paramount in digital transactions, and PayNow upholds the highest standards. Regulated by MAS, the platform employs robust security protocols, offering users peace of mind with each transaction.

Drawbacks

  • Technology Dependency: The reliance on smartphones and internet connectivity can be a limiting factor for some segments of the population, potentially excluding those without access to smart devices.
  • Privacy and Safety Risks: The convenience of using personal identifiers as payment addresses comes with potential privacy risks. There's also the ever-present threat of phishing and fraud, underscoring the need for constant vigilance.
  • Complicated Dispute Resolution: Navigating the process for resolving transaction disputes can be daunting, requiring engagement with recipients and financial institutions which can be time-consuming and frustrating.
pros and cons of Paynow

Expanding Horizons: PayNow in International Transactions

While PayNow excels in facilitating local transactions, its integration with international payment systems like Tazapay represents a significant leap forward. This synergy allows Singaporean businesses and consumers to participate in the global marketplace more effectively, providing a streamlined process for cross-border transactions. Through platforms like Tazapay, users can easily transfer funds internationally, opening up new avenues for commerce and personal transactions alike.

Tazapay: A Closer Look

Tazapay stands out by offering a simplified and secure method for leveraging PayNow in international transactions. By facilitating the transfer of funds to Tazapay's Singapore account via PayNow, and then on to the recipient's foreign account, it bridges the gap between local and global payment ecosystems. This process not only enhances the utility of PayNow but also offers businesses a competitive edge in the international market.

Understanding the Financial Implications

The cost-effectiveness of PayNow for local transactions is clear, with nominal fees and a structure that promotes accessibility. However, the dynamics shift when considering international transactions. The use of third-party platforms like Tazapay introduces additional costs, albeit often lower than traditional banking fees. For businesses looking to expand globally, understanding these financial nuances is crucial in selecting the most efficient payment methods.

The Path Forward with PayNow

As PayNow continues to evolve, its potential to shape Singapore's digital economy grows ever more significant. Its integration with international payment gateways heralds a new era of financial connectivity, enabling Singapore to further solidify its position as a global financial hub. The ongoing developments in digital payment technologies promise to enhance PayNow's offerings, ensuring that Singapore remains at the forefront of the digital payment revolution.

For businesses and individuals alike, the journey towards a cashless society is filled with opportunities. Embracing platforms like PayNow and Tazapay not only facilitates easier transactions but also opens up new horizons for global engagement. As we look to the future, the role of digital payment systems in driving economic growth and fostering global connections cannot be underestimated.

In conclusion, PayNow's journey from a local payment solution to a key player in international transactions encapsulates the essence of Singapore's digital transformation. Its continued adoption and integration with global payment systems underscore the importance of digital innovation in today's interconnected world. As we embrace these technologies, the prospects for seamless, secure, and efficient transactions are boundless, heralding a new chapter in the story of digital payments.

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Local Payment Methods in India: How UPI Works In an International Payment Gateway

India stands at the forefront of the digital revolution, marking itself as one of the fastest-growing digital economies worldwide. With over 117 billion digital payment transactions recorded in 2023, and an average of 380 million transactions per day by December 2023, the country's trajectory towards digital integration is unmistakable. Central to this digital transformation is the Unified Payment Interface (UPI), developed by the National Payments Corporation of India (NPCI), embodying India's rapid embrace of digitalization to simplify financial transactions across the board.

UPI: The Cornerstone of Digital Payment in India

What Is UPI?

UPI stands as a beacon of innovation in real-time payment systems, facilitating inter-bank peer-to-peer (P2P) and peer-to-merchant transactions through a seamless two-click factor authentication process. Governed by the Reserve Bank of India (RBI), UPI's framework enables transactions via a smartphone application, heralding a new era of banking and financial services. Its resemblance to Singapore's PayNow underscores a global shift towards government-led digital payment solutions, fostering an ecosystem where transactions are not just secure but also universally accessible.

Embracing Digital Payments: User Trends and Preferences

In 2023, UPI transactions have seen remarkable growth, with the total transactions processed by UPI standing at 117.6 billion for the year. Specifically, for December 2023, UPI payments in India reached 12.02 billion transactions, with payments worth Rs 18.23 lakh crore being processed in just that month. This represents a 54% year-on-year growth in terms of volume and a 42% growth in transaction value annually​ (Economic Times)​ The adoption of UPI spans across diverse demographics, with its popularity not confined to urban centers but also penetrating rural areas, demonstrating the platform's wide acceptance and adaptability.

UPI's International Footprint: Bridging Global Transactions

International Payment with UPI:

The international operations of UPI have notably expanded beyond its initial reach. As of the latest updates in 2024, UPI's global footprint has extended to several new countries, making it a more versatile option for international payments. Specifically, France has recently adopted UPI, joining other countries like Bhutan, the United Arab Emirates (UAE), Malaysia, Singapore, Nepal, Oman, Qatar, Russia, Sri Lanka, Mauritius, and the United Kingdom in embracing this system. These expansions underscore UPI's growing acceptance and its potential as a global payment gateway.

This broadened adoption facilitates cross-border transactions, allowing users in these countries to leverage UPI for seamless and secure payments. The collaboration with various international partners and payment providers highlights UPI's versatility and its capability to streamline payment processes across different markets. This development is part of the National Payments Corporation of India's (NPCI) ongoing efforts to extend UPI's reach, reflecting the platform's potential to influence the global digital payment ecosystem significantly.

Cross-border Transactions with UPI: A Closer Look

For regions yet to establish direct UPI connectivity, international transactions are streamlined through third-party payment providers, acting as bridges between UPI and global markets. Here’s how the process unfolds:

Initiating Payment: Users initiate transactions by transferring funds to the payment provider's bank account in India via UPI. This is typically done by scanning a QR code or barcode within the UPI app, representing the transaction amount.

Global Fund Transfer: Subsequently, these funds are transitioned into one of the payment provider’s international accounts. The final step sees the funds disbursed to the recipient's bank account abroad, completing the international transaction.

This model exemplifies UPI's adaptability and its growing acceptance as a versatile solution for international payments, providing a seamless, secure, and efficient transfer mechanism across different geographies.

Choosing the Right Payment Provider

Given the diverse landscape of third-party payment providers facilitating UPI transactions internationally, businesses and individuals are advised to select partners offering comprehensive support for a wide range of localized markets. This ensures not only the broad usability of UPI across various international platforms but also enhances the efficiency and security of cross-border payments.

With ongoing discussions to further expand UPI's reach to additional countries, the future of international digital payments looks promising, positioning UPI at the forefront of the global digital economy's evolution.

Analyzing UPI: Benefits and Challenges

Benefits of UPI:

Seamless Payment Experience: UPI's integration with numerous payment apps and digital wallets, alongside its vast network of banks, provides a hassle-free transaction process.

Instant Transactions: The real-time processing capability of UPI ensures transactions are completed within seconds.

Security and Ease of Use: Enhanced with two-factor authentication and a unique UPI ID, the platform guarantees a secure yet straightforward payment experience.

Drawbacks of UPI:

Dependence on Internet Connectivity: The efficacy of UPI is contingent on reliable internet access, limiting its use in connectivity-challenged regions.

Security Concerns: Despite robust security measures, users must remain vigilant against potential phishing and fraud attempts due to the PIN-based authentication system.

Understanding Taxation and Compliance in UPI Transactions for International Businesses

Expanding into India's digital market requires a keen understanding of the country's tax and compliance landscape, especially for SaaS companies and digital eCommerce merchants leveraging UPI for transactions. Critical to this expansion is navigating the intricate documentation requirements, including obtaining a Tax Residency Certificate (TRC) and making a No Permanent Establishment (PE) Declaration, among others. These steps are vital for leveraging tax benefits under Double Taxation Avoidance Agreements (DTAAs) and ensuring smooth operation within the legal framework.

Furthermore, the implementation of GST on digital services and the significance of the Equalisation Levy on foreign e-commerce transactions underscore the evolving tax regime in India. These measures aim to ensure a level playing field between domestic and international players in the digital economy. As such, international businesses must stay abreast of these regulations to optimize their tax liabilities and maintain compliance. Download our eBook to understand this in detail

For businesses looking to streamline this process, leveraging platforms like Tazapay can provide significant advantages. Tazapay simplifies the complexities of tax collection, compliance, and remittance, enabling businesses to focus on growth and market penetration rather than administrative burdens.

Future Outlook: UPI’s Role in the Global Digital Economy and Tazapay’s Integration

As the Unified Payment Interface (UPI) continues to evolve, its influence is set to extend beyond the Indian market, marking a significant shift in the global digital payment ecosystem. UPI’s initiatives aimed at expanding its international reach and enhancing its features for global usability are pivotal. In this landscape of growth and innovation, UPI is well-positioned to facilitate seamless and secure online payments on a worldwide scale, embodying India's ambitious vision for a digitally empowered global economy.

In this evolving scenario, Tazapay stands out as a crucial player, offering an innovative solution that integrates UPI alongside other local payment options across 80+ locations with just one integration. This strategic collaboration enables businesses to leverage UPI’s simplicity and security while also accessing a broad spectrum of payment methods globally, ensuring they can meet the diverse preferences of customers worldwide. Tazapay's one-stop payment solution signifies a leap towards creating a more inclusive and accessible digital payment infrastructure, making it easier for businesses to engage in cross-border commerce without the hassle of managing multiple payment integrations or local entities.

Payment methods
Local Payment Methods: Top Banks in Singapore You Should Know for Your Online Payment Gateway

Familiarising yourself with financial institutions in Singapore is crucial for the successful localization of your business. As one of the most dynamic financial hubs in Asia, Singapore offers a fertile ground for expanding your eCommerce business.

Read on for a full guide to 10 of the top banks in Singapore that are pivotal for your online payment gateway, and a quick overview of the payment landscape in the country.

Banking & Payments Landscape in Singapore

The banking infrastructure in Singapore is not only steadily optimised for an increasingly digitised global economy but also well-integrated into the local populace. In 2022, Singapore topped the area of financial inclusion, beating powerhouse economies such as the United States, Britain, Hong Kong and Japan1, and attained a 92% internet penetration level in the country.2

This digital transformation is further supported by the government's proactive stance towards digitalisation, with initiatives such as PayNow and e-wallet integration enhancing Singapore's online payment gateway capabilities.

As such, the payments landscape in Singapore is largely digital, with card payments being the most popular online payment method. However, current trends in local payment solutions forecast that e-wallet payments will soon surpass cards by 2026, signalling a significant shift in consumer preferences.3

Top Banks in Singapore by Total Assets

  1. DBS Group
  2. OCBC
  3. United Overseas Bank (UOB)
  4. Standard Chartered Bank
  5. Maybank Singapore
  6. Citibank Singapore
  7. HSBC Singapore
  8. Bank of China
  9. Sumitomo Mitsui Banking Corporation
  10. BNP Paribas

1. DBS Group

DBS Bank, the largest bank in Singapore by total assets (SGD 686 billion as of 2021), was founded in 1968 by the government of Singapore. The bank excels in providing a variety of financial products and services, including personal and business banking, investment banking, and wealth management. DBS Group champions electronic payment methods for its customers:

  • Internet & Mobile Banking
  • Bank Transfers
  • Cards (Credit & Debit)
  • PayNow QR

Most third-party international payment gateways, including Tazapay, support DBS's bank redirected payment methods and card payments, catering to eCommerce transactions. Incorporating the PayNow system enhances familiarity for Singaporean buyers, fostering trust for international merchants.

2. OCBC

Founded in 1932, OCBC is the second-largest bank in Singapore with over SGD 542 billion in total assets as of 2020. It provides robust financial products and services suitable for a thriving digital economy:

  • Internet & Mobile Banking
  • Bank Transfers
  • Cards (Credit & Debit)
  • PayMore QR

3. UOB

UOB, ranking third in Singapore by assets with over SGD 459 billion (2021), has a prominent presence in the region, headquartered in the former tallest building in Southeast Asia. The bank offers:

  • Internet & Mobile Banking
  • Bank Transfers
  • Cards (Credit & Debit)
  • PayNow QR

4. Standard Chartered Bank

A multinational presence since 1859, Standard Chartered Bank boasts over SGD 153 billion in total assets as of 2021 and is a trusted name among Singaporeans due to its long-standing reliability. The bank offers:

  • Internet & Mobile Banking
  • Bank Transfers
  • Cards (Credit & Debit)
  • PayNow QR

5. Maybank Singapore

Maybank, a leading Southeast Asian bank with a strong Singapore presence (SGD 69 billion in assets as of 2021), operates over 2,600 branches across 18 countries. The bank offers:

  • Internet & Mobile Banking
  • Bank Transfers
  • Cards (Credit & Debit)
  • PayNow QR
  • Maybank2u

6. Citibank Singapore

Citibank, with SGD 52 billion in assets as of 2021, offers a diverse range of financial services, reinforcing its significant role in Singapore's banking sector. The bank offers:

  • Internet & Mobile Banking
  • Bank Transfers
  • Cards (Credit & Debit)
  • PayNow QR

7. HSBC Singapore

HSBC, a global financial institution, holds approximately SGD 27 billion in assets as of 2021 and shares a historical lineage with Standard Chartered in British colonial history. The bank offers:

  • Internet & Mobile Banking
  • Bank Transfers
  • Cards (Credit & Debit)
  • PayNow QR

8. Bank of China

With a robust SGD 5.2 billion in assets (2021), the Bank of China marks China’s expanding influence in the Asian digital economy. The bank offers:

  • Internet & Mobile Banking
  • Bank Transfers
  • Cards (Credit & Debit)
  • PayNow QR

9. Sumitomo Mitsui Banking Corporation

This Japanese banking leader, significant in Singapore, manages over SGD 5.2 billion in assets (2021) and has been a solid player since 1963. The bank offers:

  • Internet & Mobile Banking
  • Bank Transfers
  • Cards (Credit & Debit)
  • PayNow Corporate

10. BNP Paribas

Europe's largest banking group, BNP Paribas, holds about 3.7 billion SGD in total assets (2021) and maintains a strong European and global banking footprint. The bank offers:

  • Internet & Mobile Banking
  • Bank Transfers
  • Cards (Credit & Debit)
  • PayNow Corporate

With a clear understanding of the preferred banks in Singapore, you can better tailor your online business for the local market. Integrating with these banks through a payment gateway like Tazapay not only sets your business apart but also leverages localised payment methods to enhance customer trust.

Tazapay, operating with a 0.8%-2.5% fee for international transactions through local bank transfers, offers a compelling advantage for expanding your business in Singapore. Contact Tazapay today for more details and to take your business to the next level.

Sources

  1. S'pore ranked most financially inclusive market - The Straits Times
  2. Internet penetration in Southeast Asia as of July 2022, by country - Statistica
  3. FIS: Cards remain dominant payment method, but digital wallets projected to overtake in Singapore - The Edge Singapore