Scaling your marketplace globally with embedded finance solutions

Expanding your business into new markets is an exciting opportunity for growth, and there are many ways to go about it. Offering embedded financial services on your platform can be one.

According to Bain & Company, the transaction value of embedded finance will hit US$7 trillion by 2026 in the US alone*. This projected growth suggests that embedded finance will continue to play a crucial role in shaping how businesses access and use financial services. There's a significant opportunity for marketplaces to capitalise on this. By offering integrated financial capabilities such as embedded payment acceptance into your platform, you can keep shoppers on your platform, increasing engagement, and in turn, your appeal with merchant brands. If your payment offering supports multiple currencies and accepts payment via local payment methods, you also enable merchants to sell into new markets and reach a wider shopper base, driving growth for your marketplace.

Here, we look at the benefits of scaling your marketplace globally and how to get started by choosing the right markets to enter. We then explore how embedded finance solutions can be the game-changer that helps your platform reach new markets with more speed and flexibility.

Benefits of global expansion for marketplaces

Venturing into new markets can be challenging. You often have to navigate intricacies such as local currencies, differing customer expectations, regulatory requirements, and more. However, there are many benefits of successful global expansion:

🔸 Increased revenue opportunities

Entering new markets unlocks access to new customers. For marketplaces, growth is often directly proportional to the number of merchants and shoppers on the platform. When you offer financial services to merchants that help them capture a broader customer base globally, it can bring in more transactions. More transactions processed means more opportunities to create new revenue streams that were previously untapped, generating more profit.

🔸 Improved competitive advantage

When you operate in multiple markets, it gives you an edge over competitors who only operate in their domestic markets. Not only do existing merchants benefit from ‌selling into these new markets through your marketplace, you may also attract new merchants seeking increased global exposure. Merchants with local offerings in these new markets may seek to partner with your marketplace to tap into the global reach, robust cross-border financial capabilities, and localised customer experiences you offer. If you offer additional capabilities such as fast local payouts, card-issuing, and multi-currency wallets, this creates an additional advantage against both established and new competitors.

🔸 Enhanced brand recognition

As your marketplace reaches new corners of the world, your brand's presence grows. This increased visibility can build greater customer loyalty and trust, as shoppers are naturally drawn to the familiar. Good branding can set you apart from the competition, positioning your marketplace as the preferred choice for merchants and their shoppers. You may even end up attracting high-quality partners and vendors.

Choosing the right markets for your global expansion

An important step to scaling your marketplace globally is to select the right markets to enter. By strategically planning on where and how you want to expand, you can increase your chances of success and sustainable growth.

Start by looking at market demand and customer demographics. Ideally, the market of your choice should have a sufficiently large customer base to tap into, based on the demographics of your current customer base. It's also important to find out if existing merchants on your platform would want to sell in the new market, and if there are local merchants in the new market you could onboard.

You should also have a sound understanding of the competitive landscape. Learn about your competitors and what they offer, so you can identify opportunities where your offerings can stand out and give you a competitive edge. For example, if your competitors only accept payments in a few methods, you can differentiate your marketplace by offering more payment methods that local shoppers prefer.

Do consider the ease of entry into a new market, which can be determined by several factors. One key factor is the local regulatory environment. Every market has its own set of rules that businesses should adhere to so they can operate successfully and compliantly. It's important to ensure your marketplace is compliant with local regulatory requirements, such as obtaining the necessary licences to operate and accept payments, and tax requirements.

If your marketplace only operates in English at the moment, you might not want to enter a non-English-speaking market since you would need to invest in multi-language support, as would the merchants on your platform. That’s not to say you should only enter markets that operate in the same language as where you’re based, but prioritisation for growth is important.

Another factor to consider is how established the local infrastructure is and whether it can support your marketplace’s operations. If you’re running an eCommerce marketplace, it would be more cost-efficient for you to enter a market with a well-developed logistics infrastructure that your merchants can tap into readily.

How embedded finance can support your international growth

Embedded finance refers to the integration of financial services, such as payments, lending, or banking, directly into a platform, enabling shoppers to access these financial capabilities seamlessly without leaving the platform. Embedded financial capabilities can help you shorten go-to-market time by leveraging pre-existing financial infrastructure and bypassing lengthy processes during international expansion. Embedded finance also lets you expand globally while retaining shopper and merchant familiarity with your marketplace, allowing for a more consistent experience.

▪️ Access to local licence support

Any business that offers financial services must obtain and maintain licences in the regions in which they operate. To process transactions for merchants on your platform, you'll need a money transfer licence or the local equivalent. Such licences can take up to a year to be granted (longer in some regions) and must be maintained on an ongoing basis by a team of specialists. Partnering with an embedded finance vendor that has the necessary local licences helps you avoid the complexity of having to secure and maintain them on your own, which significantly reduces your time-to-market and lets you start operating in no time. This also ensures your adherence to regulatory requirements, so you can remain compliant without having to navigate complex processes independently.

▪️ Access to local payment methods

Fast transaction processing is essential for fostering strong relationships with suppliers, partners, and shoppers. Payment processing through local payment methods is typically faster because they rely on established local payment rails. But it can be very time-consuming for you to collaborate with local payment providers individually to enable their payment methods on your platform. Instead, you can partner with a provider that already has local payment methods set up in your target markets. This way, you can leverage the provider’s established local payment network to seamlessly enable these payment options on your platform. Through an embedded finance provider, this process is streamlined, and a range of payment options are available immediately to your merchants and their shoppers. Localised checkout experiences build confidence among international shoppers, creating a stickier customer base and contributing to the overall growth of your platform.

▪️ Access to fast, cost-efficient payouts

An embedded finance partner who can process multi-currency transactions through local payment rails means merchants can pay out and receive funds faster, while avoiding costly international wire transfer fees and conversion fees. Merchants can manage their cash flow more flexibly, allowing them to pay suppliers, pay out to external bank accounts and reinvest in their business, and cover operational expenses without delay. Such efficiency can enhance merchant satisfaction and make your platform more attractive to existing and potential merchants.

Accelerate your growth globally with Airwallex

Airwallex is an end-to-end financial operations platform that serves 100,000+ businesses worldwide. By leveraging the 60+ licences and permits we have globally, you can focus on scaling your marketplace without having to spend time obtaining licences market by market, or worrying about compliance with regulatory requirements.

Our global payment acceptance capabilities let you collect payments in 180+ currencies and process payments with all major schemes like Visa, MasterCard, and Amex, and 160+ local payments methods. By integrating these capabilities into your platform, you can enter new markets readily and provide merchants with the flexibility to sell internationally with localised checkout experiences.

Our extensive payout network supports fast and cost-effective payouts in over 150 countries, with more than 120 countries leveraging local payment rails instead of SWIFT. 90 percent of our transactions clear within one day, giving you and your merchants greater control over your funds.

With Airwallex Embedded Finance solutions, you can also offer value-added services to merchants. These include a multi-currency Wallet to hold funds, card issuing to access Wallet funds anywhere Visa is accepted, and cost-effective transfers for vendor payouts, making your marketplace an all-in-one solution.

Ready to take your marketplace global? Airwallex’s embedded finance solutions are here to help you unlock global growth faster, with greater flexibility.

*Source: https://www.bain.com/about/media-center/press-releases/2022/embedded-finance-transaction-value-to-more-than-double-to-$7-trillion-in-us-by-2026-but-financial-institutions-must-move-quickly-to-keep-upbain--company-and-bain-capital-report/