Paycelerate

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This community spotlight is trained on Paycelerate, the first accelerated payments marketplace in Asia-Pacific. We got to chat with Rajah Chaudhry, CEO, about accelerated payments, launching in Hong Kong, and how buzzwords can create inaccurate views about innovation and progress.

On why SMEs can’t get banks to cough up cash

For banks, the cost of making a US$50K loan to a SME is the same as making a US$50M loan to a large corporation, so giving loans to SMEs is less economical. There’s also the fact that the risks in lending money to SMEs are higher compared with established large corporations, which is why the lending requirements are tough – requirements that most SMEs and startups cannot meet.

On looking at accelerated payments as a funding alternative

There are corporations who are sitting on large amounts of cash. Their operating cash is usually kept in banks, which cannot do much with it in terms of making it earn since these companies need this cash to be liquid for their payments and expenses. These corporations could pay their suppliers straight away, but there really is no incentive for them to do that so they just sit on their cash and wait for the payment date to come around. What we’re doing at Paycelerate is incentivising these corporations to pay their suppliers earlier, at a discount, and thus provide their SME suppliers with the needed cash injection.

On reaching their market

While our platform benefits both large corporations and SMEs, our approach is through building relationships with the large corporations who have a large number of suppliers and are looking to make their supply chain more efficient. Essentially, we are looking at the 2000 largest corporations in the region and, while the platform is sector agnostic, we are primarily looking at the sectors with large supply chains such as manufacturing.

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On the distinct challenge of operating in APAC

A similar product exists in the United States, but the main difference here is the significant amount of cross-border transactions. In the U.S., most of the transactions are domestic. Here in Asia, we had to take currencies, infrastructure, and government regulations into account. Then there is also the factor of culture. Business in Asia is largely driven by culture and that’s something we need to take into account especially in cross-border transactions.

On the importance of being on the same page with your team

I need people who believe in our vision, in what we are trying to do. Especially for the early team members, it’s important that they understand the pain points you want to address, what you’re doing to address them, and why you’re addressing them. I interview everyone before they come on board – even the interns.

On the merits of testing and launching in Hong Kong

I wouldn’t want to call it a test market because Hong Kong is a real market for us. It is a good place to launch because it’s fairly small (compared to other APAC countries), but it hosts a large number of sophisticated corporations. Our studies and the answers to the question we got from interacting with Hong Kong corporations have led to the development of our product.

On the government’s support of the startup community

Here in Hong Kong, the government supports the startup community and build hubs for them, but the execution is a bit lacking. For example, they put these hubs in places where public transportation is lacking and companies don’t want to use them because it’s difficult to hire people to work someplace that’s difficult or expensive to go to.

But it’s a start, and it really helps that the government is beginning to actively support and is beginning to put in place initiatives that would drive startups and corporations to innovate on their products and services.

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On buzzwords and PR

I think that a lot of people are just using buzzword. Fintech is being used a lot but I don’t think it really means anything. Large finance and banking institutions, for example, are getting in on it – or so they say. There are some who actually get involved, like DBS who I think are doing a lot for the region, as well as HSBC who do have some programmes for innovation. But I think a lot of these large institutions are talking about finance innovation for PR purposes. Finance and banking is still a largely traditional industry. They really have to start working on it though, because those who don’t will get left behind.

On Hong Kong and the long road to finance innovation

In Hong Kong, there are a lot of fintech-related events – I would say about 2-3 every week. But if you attend these events it’s the same people talking about the same things. There aren’t a lot of fintech companies of size here. Having said that, I still think the outlook is bright for finance innovation in APAC. While I think many large companies are saying they’re working on finance innovation, some are only doing it for PR purposes, but the fact that there is buzz about it means that there is at least some focus. But it will take a long time.

On what’s next for Paycelerate

We provide a platform for large corporations and SMEs to work together. Our goal is for large corporations to manage their cash flow and payments more efficiently, and for SMEs to better manage their cashflow. We will soon be launching in Singapore and are looking at Australia and Taiwan, as well.

Any questions for Rajah or Paycelerate? Let us know!

Paycelerate is the first accelerated payments marketplace in Asia Pacific. They work together with CFOs and treasurers across the region, providing a platform to help corporate enterprises and their suppliers optimise terms and working capital through dynamic discounting.