The challenge
As Coupang strived to improve its user and seller experience, cross-border payments for sales proceeds to international merchants became one of the processes the company identified for transformation. These had been managed centrally to maintain operational efficiency and visibility on funds and were made directly via either telegraphic transfer or third-party payment service provider (PSP).
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Telegraphic transfers resulted in industry-wide challenges such as intermediary bank fees, inconsistent clearing times and lack of transaction status updates to both payer and payees for corporates. These created challenges on advising payment status and became increasingly costly as payment volumes grew. Coupang looked to address this by creating an innovative process that would provide more convenience to merchants and to optimise working capital.
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In markets where PSPs were used, Coupang’s merchants had to sign up for an account with the PSP to receive and transfer funds to their bank account. Coupang looked to develop a process that would allow the company to own the whole end-to-end payment process and pay merchants directly into their accounts. This would enhance the customer experience, while improving payment security.
The solution
Coupang worked with international banking partner HSBC on a sophisticated cross-border payment solution, utilising HSBC’s Global Disbursements solution to drive greater efficiency on international payments. From one account held with HSBC, proceeds are now disbursed globally to merchants’ bank accounts directly in their local currency via lower-cost domestic rails, with full end-to-end visibility on status and FX rates provided for all payments.
The solution enables additional efficiencies in markets where PSPs were used to handle cross-border payments. In one such market, registration has now been simplified, as merchants in these markets no longer need to sign up for accounts with PSPs. Eliminating PSPs has also enhanced security, as Coupang has full visibility on the accounts of their ultimate beneficiaries, providing an additional layer of seller authentication. Coupang has positioned itself for strong growth with a scalable, transparent and efficient cross-border payment process that has differentiated the company to merchants.
Best practice and innovation
Swift adoption of new developments – the solution demonstrates the efficiencies that can be gained by quickly capitalising on new market developments and technology to enable a single cross-border payment process for all current and future global markets. This was key in certain restricted markets where online payments had been limited to either partnering with a local bank, who could only clear payments to accounts within its own network, or via a PSP, which required merchants to maintain an account with the bank.
One account for cross-border disbursements in 130+ currencies – allows Coupang to expand to new markets without sacrificing visibility and efficiency on payments.
Greater transparency and choice – Coupang can now easily identify end beneficiaries, applied FX rates and payment status. This has enhanced security, while improving the seller experience by allowing them to receive payments directly in their local currency.
Lower-cost, consistent settlements – through use of domestic lower-cost rails, payments are received according to standard times. This has reduced uncertainties and costs, while also allowing Coupang to better advise merchants on when payments can be received.
Key benefits
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Cost savings.
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Number of banking partners/bank accounts reduced.
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Process efficiencies.
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Increased automation.
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Risk mitigated.
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Improved visibility.
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Errors reduced.
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Manual intervention reduced.
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Increased system connectivity.
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Future-proof solution.
“By collaborating with our bank on this market-first solution, we have addressed the challenges of cross-border payments, negating the need to embark on a costly process revamp at a later stage. The solution provides us with a transparent and efficient process conducted centrally from a single funding account that can be easily scaled to include additional currencies and markets as we grow our business globally.”
Eddie Hong, Group Treasurer
