Key takeaways

• MSMEs have limited access to credit & lack financial options compared to larger businesses
• MSMEs typically have cash flow problems
• The perceived high cost of tech adoption remains a barrier to MSMEs
• Stablecoins like XSGD & XIDR can make domestic and international payments more efficient with low fees and low settlement times
• XSGD & XIDR can accept and disburse payments offline
• Set up a StraitsX Business Account for free & timely payments 

Micro-, small-, and medium-sized enterprises (MSMEs) are the lifeblood of Southeast Asian economies. However, they lack financial options compared to larger businesses and have large barriers to adopting digital solutions in a post-pandemic world.

MSMEs lack digital & financial access in Southeast Asia

There are more than 70 million MSMEs across Southeast Asia, and they employ over 140 million people. This accounts for at least 90% of all known enterprises, with many more being potentially unaccounted for due to poor digital access. 

Indonesia has the largest share of MSMEs, with more than 64 million of them. The country also has one of the highest unbanked populations – 66% or 180 million people of its 260 million people do not have a bank account. Those that do, are underbanked, meaning that they lack access to essential financial services like traditional loans.

Access to traditional banking also requires personhood – a person needs to have documents to verify their identity, or be part of an organisation. For many unbanked individuals, their personhood is usually undocumented.

With a largely unbanked and underbanked population, MSMEs in Indonesia have to resort to inefficient payment solutions. This could lead to insufficient liquidity and cash flow problems.

Singapore is not immune to these problems despite being a highly-developed economy with large digital penetration rates. The country has no natural resources and has to import many goods and services from its neighbours like Indonesia. 

Inefficient payments lead to cash flow problems for MSMEs in Singapore & Indonesia

Payment woes afflict one in ten MSMEs in Singapore, where they have insufficient cash or liquidity headroom for the next three months. This number is bigger in Indonesia, where MSMEs deal with an underdeveloped payment infrastructure and a lack of digital access. 

Many MSMEs rely on inefficient, paper-based invoicing to process payments. This invoicing goes through the traditional banking system. This takes a lot of time to process, especially if they deal with suppliers, vendors, or merchants in different countries within the Southeast Asian region. These suppliers, vendors, and merchants provide goods and services that are typically cheaper or may provide services that are not available in their origin country.

The length of the processing time can be attributed to the many intermediaries involved in cross-border payments and differing domestic payment networks that lead to an inconsistent payment experience. 

Digitalisation is key to having efficient payments

48% of 1096 respondents in the 2021/2022 Singapore National Business Survey believe that digitalisation could optimise their operations. However, 52% of them cite cost burdens as holding them back. In Indonesia, the barrier to digitalisation is even greater because of the lack of digital access. 

MSMEs can run their businesses more efficiently with stablecoins like XSGD & XIDR

Stablecoins like XSGD and XIDR can facilitate efficient payments for MSMEs both domestically and internationally. They can settle their transactions between 40 seconds and 6 minutes, depending on the token protocol and network load. 

They also can cut transaction costs because they only need to pay the blockchain network fee and the fee is recipient-facing. The fee is agnostic of space or border considerations – it is only based on network load.

Accept & disburse payments offline with XSGD & XIDR

For many Indonesians or areas with low digital penetration, accepting and receiving payments offline is one of their major concerns. XSGD and XIDR are engineered to accept and disburse payments offline – smart contracts innate to them can ensure privacy, traceability, and security. 

This means that unbanked or underbanked individuals can exchange stablecoins if they have a compatible mobile device. They can load their blockchain-enabled card with XSGD or XIDR from their mobile wallet to pay for goods or services. The card-embedded software performs an off-chain signing between the card and the terminal, transferring XSGD or XIDR to the merchant’s wallet. The payment is then verified on the blockchain later.

Open a StraitsX Business Account for free 

StraitsX is committed to solving the barriers of domestic and international payments by offering MSMEs a free and easy-to-understand user experience within the StraitsX Business Account.

It is a simple process:

1. Sign up for a StraitsX Business Account for free.
2. Verify your identity and upload the required documents.
3. Link your bank account with your StraitsX Business Account to get XSGD or XIDR.
4. For transactions of up to S$200,000, use the StraitsX Mint feature.
5. Business Accounts get Personal Account features plus user multi-tenancy and transaction management.
6. Transfer Out your XSGD or XIDR to any one of our DeFi partners via a personal, non-custodial wallet:  DFX, Uniswap, and Zilswap.
7. Pool your XSGD or XIDR on DFX, Uniswap, and Zilswap to swap and redeem between different stablecoins such as USDC, EURS, and others.
8. Alternatively, you can pool your XSGD or XIDR on our partner DeFi protocol to reap attractive yields with low slippages.

Note: If you are a high net worth individual, or institution, you can take advantage of StraitsX’s OTC Desk feature that offers deep liquidity and OTC block trades.

StraitsX and our DeFi partners are especially catered for our Indonesian and Singaporean users because of our native support of XSGD and XIDR. This would allow our regional investors to trade in their home currency, as opposed to factoring in the conversion of their home currency to the US Dollar (USD), minimising transaction fees, and slippages.

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