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Cross-border payment firm XTransfer is leveraging its success in China to fuel an ambitious global expansion plan.
With a focus on emerging markets across Southeast Asia, the Middle East, and Latin America, the company aims to support small and medium-sized enterprises (SMEs) in their international growth with fast and convenient payment solutions.
Speaking to Fintech News Singapore during the Singapore Fintech Festival 2024, Bill Deng, Founder and CEO of XTransfer, shared the company’s future plans and growth strategy, including expanding its global footprint and obtaining licenses in additional jurisdictions.
Bill Deng
“In Singapore, we have received in-principle approval for a major payment institution (MPI) license, and we will have the full license soon. In the Netherlands, we expect to get a license by this Christmas, and in Dubai, which serves as a gateway to countries in the Gulf Cooperation Council (GCC), we’ve just submitted our application,”
Deng said.
“The next layer will be major markets such as Brazil, Mexico where we will be submitting license applications.”
A focus on Southeast Asia
Founded in 2017 and headquartered in Shanghai, XTransfer is a business-to-business (B2B) cross-border payment specialist.
The company provides a full-featured global payment platform designed to reduce global trade expenses and address gaps in the financial services available to SMEs. Its key offerings include multi-currency accounts, secure and compliant payments, and global transfers.
In its first six years in operation, XTransfer focused on the Mainland China market, assisting SMEs with their foreign trade collection needs.
In 2023, the company took its first step toward global expansion by entering the Hong Kong market. Since then, it’s achieved significant milestones, especially in Southeast Asia.
Deng emphasized the strategic importance of Singapore, a global trade hub, for XTransfer. Once fully licensed there, the company plans to roll out a comprehensive wallet services offering for SMEs in country.
These services will aim to improve international business transactions and address common pain points faced by SMEs such as high transaction costs, long remittance times, and difficulties opening traditional bank accounts, he said.
Surging trade between China and ASEAN
XTransfer’s focus on Southeast Asia aligns with the region’s dynamic economic activity and strong trade ties with China.
Trade between China and the Association of Southeast Asian Nations (ASEAN) has more tripled since 2010, soaring from US$235.5 billion to US$696.7 billion in 2023. In 2023, foreign direct investment (FDI) from China to ASEAN amounted to US$17.3 billion, making China ASEAN’s largest trading partner and third largest source of FDI.
This upward trend continued in 2024. XTransfer reported that from January to September 2024, the collection volume of the company’s Mainland Chinese SME clients from countries in the Association of Southeast Asian Nations (ASEAN) increased by nearly 100% year-on-year, reflecting soaring trade activity between the two regions.
An underserved B2B payment market
Deng explained how his extensive experience in payment systems and money movement at organizations including Alipay and Visa motivated him to tap into the underserved B2B vertical.
“Everyone was talking about what will be the next big thing, with most innovations being focused on consumer-related services, like paying merchants,” Deng said.
“But in B2B payments, the size of that market is much larger, ten times larger than business-to-consumer (B2C).”
Despite the opportunity, the B2B payments market remains vastly underserved and traditional banks are often unwilling to cater to SMEs due to low profit margins, high risks, and elevated operational costs.
“This creates a massive paint point: many SMEs cannot find banks willing to open accounts for them,” Deng said. “Without bank accounts, they have no way to receive payments from international clients.”
XTransfer was founded to address these gaps. The company has built an extensive international network, with partnerships involving leading banks like JPMorgan, Deutsche Bank, DBS, and Barclays, to provide global account services in more than 200 countries and local account services across 35 different countries.
These partnerships allow XTransfer’s SME customers to receive money in local currencies from local bank transfers, significantly reducing the costs and delays associated with international wire transfers, Deng said.
Since its inception, XTransfer has grown into a leading cross-border payment provider, establishing a presence in over 14 countries and regions, and serving a growing network of more than 550,000 business customers.
Overcoming challenges
However, operating in the B2B payment market comes with a unique set of challenges. Unlike consumer payments where robust infrastructure like Visa and Mastercard is layered on top of traditional banking services, B2B payments often rely on outdated bank transfer systems that are slow, complex, and riddled with risks.
Moreover, customer acquisition is more difficult in B2B. Small businesses prioritize reliability and stability over costs, and establishing trust with them requires substantial time and effort.
Risk management is another challenge. Transaction data is often unstructured and inconsistent, requiring market players to build their own systems to manage risk. Increasing anti-money laundering (AML) regulations further add complexity.
“Risk management in B2B payments is very different from B2C payments. In B2C, there are well-established industry standards, but in the B2B space, there are no universal standards,” Deng said. “Regulators only require ‘due diligence,’ but the definition of what constitutes adequate due diligence can vary.”
To address these challenges, XTransfer has expanded its risk management team to about 150 people and heavily invested in technology, particularly artificial intelligence (AI).
“Our approach is straightforward: we digitalize as much processes as possible and leverage AI to optimize these processes,” Deng said.
“We start by collecting all the data we need, and then convert all these unstructured data into structured way.
We then do manual checks, reviewing all the transactions and gathering supporting documents from our customers. We then feed these learnings into our AI systems, so that these machines would then be able to automatically review these transactions. Today, 90% of our transactions are reviewed automatically. ”
