Ripple Eyeing a Very Lucrative $10-$15 Trillion SME Market for Payments
San Francisco-based payments giant Ripple released a new report which detailed the company currently investigating how blockchain technology could improve the efficiency of one very lucrative sector – SMEs.
The report titled ‘Big Opportunity in Small Business Payments’, explores the ways in which Ripple could improve cross-border payments systems by utilizing blockchain technology for small and medium-sized enterprise (SME) sector.
The report highlights the lack of infrastructure in emerging markets for SMEs to conduct business-to-business cross-border (B2B) payments. The market size is roughly $10-$15 trillion, which presents a massive opportunity.
“Despite recent growth, the SME B2B cross-border payments market is stunted by lack of traditional financial services. Fees for international payments are extremely high, and in some regions, cross-border services aren’t even readily available.”
Ripple’s research adds that the involvement of intermediaries in the existing global payments practices makes the process very complicated:
“Yet, SMEs are increasingly reliant on cross-border payments for growth, both to access new customers and to tap suppliers and outsourced employees Further, traditional global payments systems involve a lot of intermediaries – not only does this slow down payments, it also introduces more margin for error. Any lag-time between paying these suppliers and employees really impacts SMEs’ ability to maintain their business, and grow and scale.”
SMEs, who have been underserved for a long time, do not believe current methods in place are suitable. 71% of SMEs reporting that “cross-border payments are problematic.”
According to Ripple’s report, business-to-business payments usually take up to 2-5 days to settle on average, are very costly ($30-100 or more per transaction), and have a 4%-6% international payment rate error.
According to Ripple, the blockchain technology could provide a solution to this issue and improve SME cross-border payments structures:
“By cutting out the middlemen in the correspondent banking system, blockchain-powered payments increase speed and reduce costs for providers and SMEs.”
