The challenge
To meet growing travel demand over the last few years, Meituan launched a new module on its one-stop e-commerce platform to provide users with access to high quality hotels and travel experiences. The company achieved a record-breaking 392 million in hotel room bookings as of 2019. As Meituan expanded its network of overseas travel providers in 2019, its treasury team was challenged with the growing volume of cross-currency transactions that exposed the company to FX and operational risks including:
Discrepancy between FX rates – the time and FX rate between receivables from customer and payments to vendor were different The differences in conversion rates resulted in significant FX exposures for the company. The payments to vendor across foreign currencies were typically aggregated and FX converted regularly, which exposed them to further currency risks.
Complex workflows – some non-convertible currencies payments were lack of efficiency and flexibility. Meituan needed to optimise insufficient timeliness of payment processing.
The solution
To address its challenges, Meituan partnered with J.P. Morgan to design a robust application programming interface (API)-powered solution to streamline the firm’s internal payments and FX management process. The company also deployed other innovative treasury solutions including the bank’s Global Mass Pay and multicurrency pricing mechanisms to deliver enhanced experiences to more than 457 million transacting users and thousands of vendors.
A key part of the solution includes establishing new, efficient and automated treasury and FX workflows to transform the company’s internal processes. This allows Meituan to access live FX rates, initiated cross currency payments, hedge exposures, track of processed transactions and download detailed reports in real time.
To improve its customer offering, Meituan further leveraged the bank’s multicurrency pricing solution. The solution not only offers customers the best prices each time, but can also execute FX transactions. This allows Meituan to adopt a more proactive FX management approach.
In addition, Meituan also took steps to strengthen its relationships with vendors. Using the bank’s Global Mass Pay solution, Meituan can now process cross-border vendor payments in bulk through low-value clearing systems to effectively reduce associated banking fees while delivering an enhanced overall experience that ensures vendors receive principal payments in full in their designated currencies, quickly and efficiently.
Best practice and innovation
As a leading e-commerce service provider that deals with large volumes of low-value payments, it’s important for Meituan to continue to differentiate itself by ensuring a superior customer experience that continues to deliver the best service offerings. With access to live FX rates and the implementation of a multicurrency pricing solution, customers have the assurance that services are always competitively priced and updated using the latest exchange rates.
Key benefits
- Reduced FX exposures impact on sales margin and financial statement.
- Reduced working hours cost and relevant manual processes.
- Reduce turnaround time for payments.
- Achieved a 99% straight through processing rate.
- Increased visibility and control through the treasury management system.
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