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Powering the Efficient Economy: Innovation in Payments & Collections

Powering the Efficient Economy: Innovation in Payments & Collections

An HSBC Industry View

by Helen Sanders, Editor, in conversation with Mark Evans, Head of Payments Advisory, Global Liquidity and Cash Management, HSBC

How would you characterise the payments landscape in which TMT companies operate, and how is this changing?

Technology, media and telecom companies are expanding internationally at an unprecedented speed, fuelled by customer demand on one hand, but newly accessible business models on the other, particularly in e-commerce, m-commerce and the growth of multi-seller marketplaces. It is in these industries too where some of the technologies that are shaking up the payments landscape are originating, from blockchain through to the internet of things, biometrics, wearables and big data. Technology companies in particular, therefore, play a dual role, both as consumers of payments and collections on one hand, and providers to banks and the wider retail and corporate community on the other.

As TMT companies continue to pursue international growth, what would you identify as some of the biggest challenges experienced by TMT companies, and what opportunities exist to overcome these challenges?

One of the biggest dilemmas for TMT companies is how they can take control of their international payment operations whilst maintaining central visibility and control over cash and payments processing. Some of these payments are familiar to every company operating internationally, such as regular supplier, staff, tax and customs payments. However, technology and media companies in particular face additional difficulties:

Firstly, for example, technology companies that are most frequently headquartered in United States incur most of their manufacturing costs and generate a large proportion of their revenue outside their home market, particularly in Asia. Techniques such as payments-on-behalf-of (POBO) and effective repatriation strategies are vital in resolving this mismatch in where the funds are both used and generated, and where they are ultimately required.