In April, Sopnendu Mohanty, chief fintech officer at the Monetary Authority of Singapore (MAS), said at an event in London that Singapore is a gateway for B2B fintechs to enter the Asia Pacific region. Hearing this, Ivan Zhiznevsky felt a surge of confidence.
The company he co-founded, 3S Money, had been considering applying for a payment services provider licence under the Payment Services Act (PSA) and the speech confirmed that they fit the profile of companies MAS was looking for.
Founded in 2018, Zhiznevsky’s 3S Money had already received three licences in three “very different” markets — UK, Luxembourg and Dubai. It now has its eyes on a fourth influential country: Singapore.
“Ninety-six per cent of SME payment decision-makers in the UK lack understanding of the payment process,” says Zhiznevsky. “The figures could be worse in Southeast Asia.”
To Zhiznevsky, a green light from the region’s most reputable regulator and financial authority will lend weight to his company. In addition, the licence will allow them access to a bigger region with a bigger demand for cross-border services, as Singapore is the biggest trading hub in the region.
Like several other B2B fintech companies The Edge Singapore spoke to, 3S Money was founded on the idea of bringing “a fairer banking proposition that will never discriminate on the colour of passport” for SMEs. With his American passport, Zhiznevsky recounts being unable to open a bank account for a business he started in 2016 in Amsterdam.
3S Money’s co-founder Ivan Zhiznevsky (right) is aiming for a payment licence in Singapore to open doors in Asia Pacific. Photo: 3S Money
So, he created 3S Money with two other co-founders at a fintech accelerator in London. The premise of 3S Money begins by allowing enterprises to open a global multi-currency business account with them in minutes and make money transfers in over 60 currencies across 190 countries globally.
Most of 3S Money’s customers have an annual volume starting at GBP1 million ($1.71 million) to GBP100 million and are “significantly underserved by banks across the world” who prefer multi-billion-dollar multinational corporations as clients, says Zhiznevsky.
3S Money offers a rate below 1%, a “significantly lower” cost than the 3%–4% of foreign exchange fees charged by banks. That said, the company charges businesses GBP100 per month for access to the platform.
3S Money started working with companies established in Europe but had founders or suppliers worldwide. Some of their customers include Pangaia, a high-end loungewear brand based in New York and London, with manufacturing outsourced to Spain and Portugal.
Zhiznevsky says that the company broke even in November 2020 and raised GBP3 million in its Series B funding round in April 2021.
The company processes GBP400 million worth of payments each month and onboards about 300 SMEs per month, a figure that is growing 10% m-o-m, according to Zhiznevsky. He aims to go public within the next 24 months.
As it stands, 3S Money may have several competitors in the market offering fairly similar products to SMEs, but Zhiznevsky is confident that they will be awarded a licence to operate in Singapore in the next 12 months.
To him, as long as SMEs are looking to scale in a foreign market, they have the tools to get them closer to their clients in these new regions by offering them local bank accounts in the shortest possible time.
“We’ve done it before, and we have a good track record across three different jurisdictions,” he says, “and I think that’s more than enough to get the regulator comfortable with our existing processes.”
Uruguayan financial technology company dLocal has a slightly different approach to licences and regulation. While others may chase legal recognition from the few globally recognised financial jurisdictions, dLocal’s presence in Singapore and other major financial hubs like London has commercial purposes.
dLocal caters primarily to emerging markets, but many merchants they work with have regional offices in these cities. This makes it easy for them to host meetings and connect in person with clients, but most of their operations take place in emerging markets.
Founded in 2016, dLocal connects global enterprise merchants such as Shein, Amazon, Spotify, Zara, and others with emerging market consumers in over 40 countries across Latin America, Africa, the Middle East, and Asia Pacific.
They quickly became Uruguay’s first unicorn in late 2020 after raising US$200 million in new investments, with a valuation of US$1.2 billion.
In a statement in late 2020, the company said it had been “profitable every year, achieving over 100% annual organic growth over the past four years and is now serving 450 merchants in 20 countries, with connectivity to more than 300 alternative payment methods”.
In 2021, the company listed 29.4 million shares on Nasdaq at US$21 a share, raising some US$617.7 million. Its market capitalisation then was at US$9 billion.
dLocal’s target of emerging markets include countries like Nigeria, Argentina and Indonesia, which are volatile. However, it presents the most growth opportunities to them.
Joaquin Moreno, head of Asia at dLocal, says that unlike other B2B fintech payment companies, Uruguay’s first fintech unicorn brings global merchants closer to players in emerging markets like Argentina, Pakistan and Indonesia. Photo: dLocal
Taking Indonesia as an example of a country of individuals that have increasing access to the internet and are engaged in online shopping, Joaquin Moreno, head of Asia, says the average Indonesian has more than three e-wallets in their mobile phone and use them on a daily or weekly basis, which presents a problem of fragmented collection of payments for merchants.
Unlike other B2B fintech payment platforms, dLocal opens a local entity in all the emerging markets they operate in. Next, they set up local connections with local payment schemes and methods and aggregate them onto their single application programming interface (API). So far, dLocal has over 900 connections globally.
“So, the merchant that processes our card payments with us in Brazil can, with the same integration, process our wallet payments in Malaysia or car payments in Nigeria,” says Moreno.
Moreno adds that it is easy for other payment companies to boast that they can process payments in over 50 countries if they work with an international acquirer. However, working with local entities and charging end users in a local currency currency when remitting funds is a much more complex challenge.
It is for this reason that dLocal has reaped success. Most recently, dLocal reported a net income of US$44.7 million for the 1HFY2023 ended June, compared to US$30.57 million a year ago. Its reported sales were US$161.14 million, an increase from the US$101.18 million a year prior, and earnings per share came in at 15 US cents, beating analysts’ consensus estimates of 13 US cents per share.
Following the results, dLocal’s share price doubled within August and now trades at around US$21.
