A recent study by Airwallex and the Centre for Economics and Business Research (Cebr) has uncovered that inefficiencies in legacy Business-to-Business (B2B) cross-border payment systems are costing Singaporean businesses approximately US$7b each year. This ‘Global Growth Tariff’ highlights the hidden costs that businesses face due to outdated payment infrastructures.
The research attributes these costs to several factors. Payment failures, which require manual intervention, result in repair fees amounting to US$420m annually in Singapore. Additionally, foreign exchange spreads and correspondent banking fees globally erode about US$6.3b in business capital each year. Slow settlement cycles further immobilise US$220m in working capital in Singapore, impacting liquidity and operational efficiency.
Firdevs Abacioglu, Head of Data Science and AI at Airwallex, stated, “Legacy payment systems are quietly draining billions from businesses that can least afford it. Payment failures, high FX fees, and slow settlement cycles don’t just hurt the bottom line — they freeze the capital businesses need to move fast in an unpredictable world.”
The study emphasises the significant impact on Singapore, a major global trade and financial hub, where these inefficiencies translate into higher costs and reduced liquidity. Liam Daly, Senior Economist at Cebr, noted, “For a globally connected economy like Singapore, these frictions translate directly into higher costs, reduced liquidity and less efficient capital allocation.”
Airwallex plans to release further research in June, which will explore how the Global Growth Tariff varies by industry and business size, providing detailed insights into sectors such as SaaS, tourism, and e-commerce.
