As a B2B platform provider, Singapore’s Commerce Exchange (Comex) had the task of finding an e-payment solution that will work for its e-marketplaces. But as Comex found out, there is no one solution that will fit all B2B environments, as Danny Lo, Comex’s chief operating officer explain why.
In real world commerce, payment is transacted through a number of payment instruments, including letters of credit, open account, checks, direct debit, and electronic transfer. According to Comex, any or all of these mechanisms must be supported in order to fulfill the needs of a B2B portal
“The first thing that needs to happen in a marketplace is that someone wants to buy something. Then they go through all the front-end negotiation of prices, import and export, pick-up and delivery and insurance. Once this has happened, you’d need to support it,” said Danny Lo, Comex’s chief operating officer. “You’d need to support it in terms of material flow, which is where e-logistic comes in. The other part of the supporting piece is that once a supplier sells something, money needs to exchange hands, that is where the e-payment piece comes in.”
Even within the same industry, according to Lo, an enterprise can be classified into buyer, supplier, manufacturer and raw-materials provider. Different sets of payment instruments will be appropriate for different enterprises according to the role they occupy on the value chain.
Making matters worse are the legislation and regulations surrounding payment mechanism in individual countries around the region. The finance sector is the most heavily regulated industry in any country, with different sets of rules applied in different countries, governing the transaction of each payment mechanism. Comex’s role, according to Lo, is to find the set of instruments that best match its customers given the nature of their business and the region that they operate in.
“The challenge is that there is no one system that fits all. Every bank does it slightly differently, in principle they are almost identical, but because the international standard for some of the payment instruments is not worldwide, a payment instrument that has a certain reach and scope within a certain country may not apply in other countries,” explained Lo.
“At present, in e-payment, those are some of the challenges, to understand what kind of payment instrument makes sense and are well protected, and under what kind of situations should you deploy them,” Lo added.
More onThe State of ePayment.
Last year, Comex deployed a purchasing platform for the health industry to overcome two major problems that the pharmaceutical industry traditionally faces in fulfilling orders from private clinics. The order forms from these clinics were customarily filled by the doctor’s own hand.
According to Lo, this resulted in a lot of errors as the sales department of pharmaceutical companies were required to decipher the doctor’s hand-writing. The collection process was also cumbersome, requiring clinic doctors to keep track of invoices and remit payments on time.
Comex’s platform was designed to cut down these inefficiencies and errors. Linking up the clinics to form a clinic system and connecting it to a distributor network, Comex created a platform from which doctors place their orders with a purchasing card issued by Comex.
As soon as an order is placed, an authorization message is sent to the bank, who will issue payment to the distributor. The bank will then consolidate the orders and present a monthly bill to the clinic. According to Lo, the previous problems of faulty orders and late payment were completely eliminated by the new system.
Aside from the purchasing card that has been introduced into the medipro.com project, Comex is also working on mobile collection mechanisms, distributor cards, buyer’s cards and other forms of commercial card solution.
“E-payment is not easy to do, you just can’t rush into it because you have to choose the right payment instrument and together with it there are also certain legal protection in terms of certain payment instruments,” said Lo. “This is where the right payment instrument has to go with the right situation.”