The antiquated systems of cross-border payments are imposing a substantial financial burden on businesses in Singapore, confining billions of dollars in operational capital and diminishing economic efficiency. This is according to recent research conducted by the financial tech firm, Airwallex, and the Centre for Economics and Business Research (Cebr).
The research suggests that Singaporean companies lose roughly $7 billion per year owing to inefficiencies inherent in the traditional global payment infrastructures. The losses mainly come from payment failures, foreign exchange spreads, correspondent banking fees, and slow settlement processes that plague a vast portion of the global business-to-business (B2B) payment realm.
Airwallex has termed this occurrence as the “Global Growth Tariff,” defining it as the economic pullback instigated by outdated cross-border payment systems. The report estimates that globally, a staggering $330 billion in working capital is stalled within the financial system due to these inefficiencies, an amount that is roughly equivalent to 9 percent of the United Kingdom’s annual gross domestic product.
For Singapore, one of the most internationally linked trade and financial hubs globally, the impacts are especially notable. Businesses involved in cross-border operations encounter higher transaction costs, delayed access to funds, and increased administrative workloads, all of which can influence cash flow and investment decisions.
According to the study, payment failures and manual repair measures account for about $420 million in annual costs for Singaporean businesses. When transactions fail to process automatically, companies often suffer additional operational expenses and delays as payments are manually fixed and resubmitted.
Simultaneously, foreign exchange spreads and correspondent banking fees remain the dominant source of friction. As per the research, these costs annually account for roughly $6.3 billion in lost business capital worldwide.
The report also emphasizes the impact of settlement delays. At any given time, about $220 million in working capital is essentially frozen in Singapore as businesses await the clearance of international transactions. This capital could otherwise be used for investments, recruitment, or daily business operations.
The report’s findings come at a time when businesses are under increasing pressure to optimize liquidity amid economic uncertainty, higher financing costs, and ongoing changes in global trade patterns.
“Legacy payment systems are quietly depleting billions from businesses that can least afford it. Every dollar stuck in the system is a dollar not invested in growth,” said Firdevs Abacioglu, Head of Data Science and AI at Airwallex.
The research was founded on an analysis of cross-border B2B payment volumes, payment failure rates, significant currency corridor foreign exchange costs, and international supplier and contractor payment settlement timelines.
Liam Daly, Senior Economist at Cebr, stated that the findings spotlight the structural inefficiencies that persistently obstruct international commerce. He added that addressing these frictions would promote seamless international trade and free up capital for productive use.
What is the “Global Growth Tariff”?
The Global Growth Tariff is a term coined by Airwallex, referring to the economic drag created by outdated cross-border payment systems.
How much do payment failures and manual repair processes cost Singaporean businesses annually?
Payment failures and manual repair processes cost around $420 million each year for Singaporean businesses.
What is the estimated amount of working capital trapped within the financial system due to inefficiencies in cross-border payment systems?
According to the report, around $330 billion in working capital is effectively trapped within the financial system due to these inefficiencies.
