Improving the SMEs Access to Trade Finance DRAFT
in the OIC Member States
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Perhaps even more notably, the long-standing industry discussion (Trade Card and others
1998) about aligning physical and financial supply chains has matured to the point where the
movement of goods has indeed been more closely linked to the relative financial flow. The
notion of “Global Trade Management” aims to capture the importance of taking a holistic view
of trade activity, from procurement and operations to finance and treasury.
This increasingly integrated view has led bankers and financiers to propose solutions aimed at
supporting the viability and sustainability of global supply chains, extending the notion to
include the importance of large global buyers, for example, to support “strategic suppliers” –
suppliers whose commercial and financial health is vital to the effective functioning of the
multinational’s global supply chain. The imperative of supporting strategic suppliers was
brought sharply into focus during the tsunami and nuclear crisis in Japan, for example, when a
critical supplier to Apple was impacted by the tragedy, and the Apple production lines ground
to a halt.
2.4. Technology in Trade and Payments
The effectiveness and application of technology, in trade management and specifically in trade
financing and payments, has gained significant momentum in the last five years in particular.
While technology was historically focused on enhancing existing processes, such as the bank-
based processing of letter of credit transactions, recent applications of technology have aimed
to transform the business of trade finance, rather than just improve its execution.
Current initiatives to move trade finance from paper-based, process intensive models to data-
based, process-light and “straight through” processing with significantly reduced manual
intervention, are showing success and uptake in the market.
At the same time, related practices and processes such as the realm of international payments,
are presenting complementary and competing propositions to the business of trade finance.
Electronic invoicing, online payment solutions and web-based trading platforms such as China-
based Alibaba are proposing compelling solutions to the needs of importers and exporters,
increasingly in the context of electronic transactions.
The growth and increasing acceptance of online payment and settlement solutions bears
watching as a trend that may impact mainstream trade, and perhaps eventually mainstream
trade financing, once such providers identify an opportunity in the financing space, likely
targeted at SMEs; US-based PayPal is illustrative in this respect:
 PayPal’s 2012 annual revenue was $5.6 billion, up 26% year over year.
 PayPal’s international business accounted for more than half of total revenue in
2012.
 PayPal revenues represented 40% of eBay Inc. revenues in 2012.
 PayPal’s net Total Payment Volume for 2012, the total value of transactions, was
$145 billion, up 22% year over year.
 PayPal’s Merchant Services business processed $97 billion in Total Payment Volume
in 2012, up 25% year over year.
 Approximately 25% of PayPal’s business is cross border trade.