Quickbytes: The rise of SMBs and borderless ambition

Summary:

• The definition of a small and medium-sized business (SMB) has evolved.
• Cross-border expansion presents significant opportunities and challenges for SMBs.
• Fintech firms such as Payoneer are crucial in enabling global growth for SMBs.
• Access the real stories and hard-won lessons on what it means to build with borderless ambition here.

Thirty years ago, when you said the words “small and medium-sized businesses” (SMBs), people pictured shops or service providers that were rooted in their communities or provided support to larger multinationals in the area. That was usually the extent of what they did.

Today, that’s changed. SMBs are looking beyond their backyards, expanding regionally and even globally to unlock new markets, talent, and growth opportunities. This has led to the rise of a new breed of SMBs, ones that have cross-border ambition built into their DNA.

Nagesh Devata, senior vice president of Payoneer / Photo credit: Payoneer

To learn more about this rising phenomenon, we sat down with Nagesh Devata, senior vice president of APAC at fintech firm Payoneer. He shares his insights about these ”cross-border SMBs,” the landscape in which they’re operating, and the road ahead.

How do you define a cross-border SMB?

Size – in terms of manpower or revenue – doesn’t matter in this definition. Being a cross-border SMB is more about having a footprint, customer base, or operations that extend beyond your home market, even if the team is small and lean.

Within Asia Pacific, we’re seeing the emergence of what we call the “multientity SMB model.” This occurs when a business operates, or plans to operate, two or more legal entities across regional and global hubs such as Singapore, Dubai, or Hong Kong.

They’re also often interested in expanding their subsidiaries in other countries. Global ambition is built into what they do from the get-go.

Why are we seeing more cross-border SMBs emerge?

Let’s start with some context: SMBs account for the majority of businesses worldwide and more than 50% of global employment. In emerging markets, SMBs create 70% of jobs, according to the World Bank. They are the backbone of the global economy.

According to our SMB Ambitions Barometer 2024, a survey of 3,779 SMBs across 15 countries, cross-border business is top of mind for many. On average, SMBs reported that 46% of their customer base is international (up from 42% in 2023), and nearly half of the vendors they work with come from foreign markets (up from 39%).

Image credit: fizkes / Shutterstock

These SMBs believe cross-border expansion is one of the best ways to grow. They’re more aware of how expanding beyond their borders can benefit them, creating avenues to access new markets and customers, acquire skills and technologies, hire and retain talent, and achieve greater economies of scale.

What unique opportunities do these cross-border SMBs have?

SMBs can tap into global growth by combining agility with digital-first strategies. Unlike large multinationals, they aren’t tied down by legacy systems or obligations, so they can quickly enter markets, localize offerings, and form partnerships with regional players.

Leveraging cost advantages across borders, trade incentives, and ecommerce platforms, these businesses can scale without heavy overhead. At the same time, their authenticity and ability to cross-pollinate ideas between markets can give them a branding and innovation edge.

What challenges do they face as they expand?

For all the perks it offers, the journey to going global is fraught with challenges, especially for SMBs in developing and emerging markets.

One of the biggest challenges is navigating the payments space. In recent focus groups Payoneer has had with customers, they’ve brought up concerns such as high fees, delayed transfers, and unclear fee structures.

Image credit: insta_photos / Shutterstock

In my conversations with our customers, we’ve identified some more specific challenges:

• Access to affordable, reliable cross-border payments – Paying suppliers or receiving money from global customers is often costly and unpredictable.
• Opening local currency accounts without setting up legal entities – Many SMBs want to look and operate like a local business in every market. But most financial systems still require a physical office or local bank account.
• Managing foreign exchange costs, compliance, and speed: Traditional banks aren’t built for small businesses selling globally. They offer slow transfers, poor exchange rates, and complex compliance processes.

Other challenges include friction from hiring in a foreign country and a lack of support in legal, regulatory, compliance, and tax issues when navigating these markets.

Learn more: Celebrating Borderless Ambition

How does Payoneer help support SMBs on their expansion journey?

Payoneer’s main goal is to facilitate easier cross-border payments to help break down barriers to global markets. We aim to help multientity SMBs by facilitating numerous payment flows.

We offer business-grade features and a secure platform to aid global SMBs in accessing customers, managing suppliers and vendors, and growing across borders with ease, reliability, and confidence. Our customers can receive payments in multiple currencies directly into Payoneer’s accounts, enabling them to be “local” to their customers, regardless of where they are.

Payoneer also supports withdrawing money to a local bank account or ATM at competitive fees, providing customers with the flexibility to access funds across the world.

Our recent partnership with Stripe, as well as our collaboration with Citi to launch real-time, blockchain-enabled treasury transfers, have enhanced our offerings further, making payments easier for customers.

Image credit: fizkes / 123RF

Within Southeast Asia, we’ve worked with a number of SMBs to streamline their payments journey.

We helped Lifetrack Medical Systems, a healthtech firm based in the Philippines, diversify its payments options. When an existing provider encountered bank clearance challenges in India and other regions, resulting in a temporary freeze on their funds, Lifetrack was able to resolve the issue by transitioning a significant portion of client transactions to Payoneer.

What are the emerging trends or developments that could shape the future growth of cross-border SMBs?

We are seeing a more favorable and more dynamic landscape emerge for cross-border SMBs. Cloud platforms, ecommerce marketplaces, localization tools, and fintech solutions are lowering the barrier for SMBs to operate globally without needing deep in-house resources or local offices. Advances in remote work infrastructure, global hiring platforms, and collaboration tools enable mthe to operate like “micro-multinationals.”

However, developments such as the US tariffs could pose challenges as these companies expand and transact internationally. The good news is that regional trade agreements and policy reforms are reducing friction for international business.

Entrepreneurs aren’t just weathering the shifts in global commerce and waiting for the world to stabilize. These founders – and their SMBs – are taking initiative. They’re leading these shifts, building new bridges, forging into new markets, and rewriting the rules to pave the way for a new era in our global economy.

Payoneer aims to connect the world’s underserved businesses to a rising, global economy. As part of this mission, it’s working to help businesses unlock the opportunities for expansion and growth.

Dive deeper into the growing phenomenon of cross-border SMBs and learn more about what it really means to have borderless ambition by checking out more content here.

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This content was produced by Tech in Asia Studios, which connects brands with Asia’s tech community. Learn more about partnering with Tech in Asia Studios.