## Overview: Cross-Border Payments and the Merchant of Record Model

Cross-border payments in Asia-Pacific continue to undergo rapid transformation, driven by growth in digital commerce, evolving regulatory frameworks, and the rise of both incumbent and disruptive payment service providers. However, merchants—especially those dealing internationally—face major challenges: low approval rates, heightened fraud scrutiny, complex compliance, foreign exchange (FX) costs, and friction-intensive checkout experiences.

The merchant of record (MoR) model, which localizes transactions by allowing a third-party entity to acquire payments in the buyer's market, is increasingly leveraged as a solution. This model helps address approval rates, reduces FX costs, and streamlines customer experience by making payments appear domestic, even for cross-border sales.

Focusing on Australia, Vietnam, and Malaysia—three distinct markets in the region—this article examines the current state of cross-border payments, explores recent developments from the most current two weeks, and provides recommendations for small and medium enterprises (SMEs), medium-sized businesses, and large/multinational corporations (MNCs) in each market.

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## Australia

### SMEs

**Challenges**
- SMEs face hurdles navigating complex domestic and international payment regulations, especially as regulatory frameworks are evolving rapidly with the introduction of new systems like the New Payments Platform (NPP)[1].
- International card payments and legacy cross-border solutions often lead to lower approval rates and higher transaction costs.
- Fraud threats and regulatory compliance (e.g., anti-money laundering) demand resources beyond what many SMEs have.

**Opportunities**
- The NPP enables instant account-to-account payments without per-transaction limits, lowering friction for B2B payments and providing an alternative to card rails[1].
- MoR models allow SMEs with limited overseas legal entities to offer seamless local payment experiences, improving conversion.
- New regulatory initiatives aim to link instant payment schemes cross-border, promising faster settlement and lower costs in the near future[1].

### Medium-Sized Businesses

**Challenges**
- Medium enterprises, often growing across APAC, must navigate increased transaction volumes and remain compliant with evolving standards, increasing operational complexity.
- Pressure to provide seamless digital experiences intensifies as customer expectations rise.

**Opportunities**
- NPP's expansion and its upcoming cross-border integrations will allow faster, more reliable settlements for growing businesses[1].
- Adoption of MoR solutions can optimize FX management, improve fraud detection, and localize checkout, which is critical for mid-sized firms scaling regionally.
- Australia’s emphasis on beneficiary verification and scam management offers security benefits to both merchants and customers[1].

### MNCs / Large Enterprises

**Challenges**
- Large firms must harmonize payment solutions across multiple jurisdictions, often facing siloed infrastructure and disparate compliance rules.
- Integrating with Australia’s fast-evolving payment rails (e.g., NPP, RITS, and soon-to-be-retired Direct Entry) requires significant investment[1].

**Opportunities**
- Direct access to real-time payment rails supports high-value, high-volume B2B transactions.
- MoR models enable global brands to localize both payments and settlement, drastically increasing approval rates and minimizing FX costs compared to traditional cross-border acquirers.
- The regulatory landscape is poised for significant streamlining, likely increasing efficiency in the next 3–5 years[1].

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## Vietnam

### SMEs

**Challenges**
- SMEs often struggle with limited access to efficient cross-border payment solutions, leading to higher costs and settlement delays.
- Fragmented banking infrastructure and regulatory scrutiny on cross-border flows create friction.

**Opportunities**
- New digital payment initiatives, regional agreements, and the entrance of disruptor fintechs are rapidly expanding access and reducing barriers for small businesses[2][5].
- MoR models provide SMEs with simplified compliance and customer journey, shifting regulatory burdens to expert partners.

### Medium-Sized Businesses

**Challenges**
- Mid-sized companies require scalable solutions that balance regulatory compliance with growth ambitions.
- The pace of regulatory change and risk management expectations are rising, particularly as Vietnam seeks deeper integration with Southeast Asia[5].

**Opportunities**
- Increasing interoperability between Vietnam’s domestic systems and regional payment networks is improving settlement speed and transparency[5].
- Passporting rights and Digital Economy Agreements (DEAs) are on the horizon, which will make it easier for medium enterprises to manage cross-border commerce with minimal duplicative checks like KYC[5].

### MNCs / Large Enterprises

**Challenges**
- MNCs must manage inconsistent cross-border payment practices across different Vietnamese banks and regulatory regimes.
- Dealing with both legacy systems and new fintech disruptors increases complexity in reconciliation and reporting.

**Opportunities**
- Adoption of preventive technologies (biometrics, analytics) by major providers is improving fraud controls and approval rates for high-value corporate transactions[5].
- MoR platforms, particularly those operated by APAC leaders, can handle compliance, FX, and localization at significant scale, positioning large firms for seamless expansion[2].

---

## Malaysia

### SMEs

**Challenges**
- SMEs are disproportionately burdened by high bank charges, slow settlement, and complex regulatory requirements for international commerce[4].

**Opportunities**
- Malaysia’s fintech sector is booming—projected to double in value from $54 billion in 2025 to $111 billion by 2030—offering a rapidly expanding array of cross-border payment options[4].
- New entrants like PingPong are expanding B2B payment access, lowering costs, and speeding settlement for small businesses[4].

### Medium-Sized Businesses

**Challenges**
- Continued reliance on legacy payment systems leads to delays and potential loss of business to more agile competitors[5].
- Heightened requirements for real-time fraud detection amid regulatory tightening[5].

**Opportunities**
- The entry of disruptor fintechs is forcing incumbents to modernize, resulting in more affordable and efficient services for mid-tier businesses[4].
- Digital connectivity and regulatory harmonization throughout Southeast Asia (SEA) will benefit Malaysian firms scaling regionally[5].

### MNCs / Large Enterprises

**Challenges**
- MNCs require robust, scalable solutions, which are not always available from older bank infrastructure.
- Managing compliance in a rapidly changing ecosystem, especially with new players, can be resource-intensive.

**Opportunities**
- Major global and APAC-born MoR platforms offer integrated cross-border solutions that align with regulatory best practices and customer demands for seamless experiences[2][5].
- New risk management and beneficiary verification tools, driven by regulatory and market needs, enhance approval rates and reduce fraud[5].

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## Aggregated Comparison: Incumbents vs Disruptors by Company Size (Australia, Vietnam, Malaysia)

| Segment        | Incumbents (Traditional Banks & Gateways) | Disruptors (Fintechs & MoR Providers) |
|----------------|------------------------------------------|---------------------------------------|
| SMEs           | Limited agility, high costs, slow onboarding. Compliance is self-managed. | Lower entry barriers, localized payment support, faster settlement, compliance often handled by provider. |
| Medium         | Network reach, but slower innovation, variable customer experience. | Flexible, digital-native platforms, rapid rollout of new features, regional network effects. |
| MNC / Large    | Robust infrastructure, regulatory expertise, slower to integrate new rails. | Seamless regional expansion, single-platform compliance, high automation, advanced fraud/risk controls. |

**Key Insights:**
- **Australia** is at the forefront of payments modernization, but legacy systems persist; disruptors and the MoR model are crucial for SMEs and mid-market firms to succeed internationally[1].
- **Vietnam** benefits from disruptor-led innovation, improving access, but must address fragmentation and regulatory harmonization to fully benefit SMEs and MNCs alike[2][5].
- **Malaysia**'s fintech surge is democratizing cross-border payments; new entrants like PingPong are particularly influential for SMEs and medium companies looking to scale regionally[4].

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## State of the Market: June 2025 Snapshot

- Regulatory frameworks are becoming more open and interoperable, especially in SEA, reducing friction and cost for cross-border B2B and B2C payments[5].
- APAC-born payment companies are increasingly listed among the world’s top cross-border transaction leaders, reflecting regional innovation and competitiveness[2].
- Transparency is improving, with a notable decline in the costs of cross-border payments and a focus on real-time fraud management systems[3][5].
- Instant payments and real-time rail integration are growing rapidly, with Australia’s NPP poised to be a model for cross-border real-time settlement[1].

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## Recommendations

**For SMEs:**
- Prioritize MoR or disruptor-led platforms that simplify compliance, offer local acquiring, and reduce FX costs.
- Partner with providers that bundle KYC, fraud prevention, and reporting, freeing resources to focus on growth.

**For Medium-Sized Companies:**
- Invest in scalable, regional payment solutions with strong API integration.
- Seek partners participating in regional agreements or with passporting rights to reduce duplicative onboarding and regulatory work.

**For MNCs/Large Enterprises:**
- Prioritize cross-border payment solutions that offer full localization—including tax, settlement, and compliance capabilities.
- Leverage APAC-born MoR platforms and real-time rails for end-to-end visibility, reconciliation, and fraud management at scale.

**Across All Segments:**
- Monitor market developments in digital connectivity, instant payments, and regulatory harmonization in the region.
- Use risk-adjusted, preventive fraud controls—biometrics, real-time analytics—to protect revenue and customer trust, particularly as transaction volumes rise[5].

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## Conclusion

The cross-border payment landscape across Australia, Vietnam, and Malaysia is rapidly modernizing, fueled by fintech disruptors, regulatory openness, and a collaborative push for instant, low-cost, and localized payments. Whether you are an SME, a rapidly growing regional business, or a global multinational, embracing the merchant of record model and aligning with disruptor platforms are critical steps to overcoming legacy friction, boosting approval rates, reducing costs, and preparing for a fully connected Asia-Pacific payments ecosystem.

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