Turning Payment Data Into Trade Finance for SMEs

SMEs frequently encounter difficulties securing trade finance, reportedly due to a lack of collateral, limited credit histories, incomplete financial statements, and less established relationships with financial institutions. These factors make it challenging for banks to assess creditworthiness or verify transactions, particularly across varied legal and regulatory systems. The Asian Development Bank (ADB) estimates the global unmet demand for trade finance totaled US$2.5 trillion in 2025.

The ADBI report suggests that integrating digital payment data with commercial, logistics, customs, and financial records could create a more comprehensive digital transaction record. This consolidation would offer lenders a clearer, verifiable picture of an SME's operational credibility and transaction history. For example, a lender, with appropriate authorization, could confirm order placement, goods shipment, customs completion, and payment history, thereby complementing conventional financial statements and collateral in credit risk assessments.

Programmable payments could further enhance this system by allowing funds to be released automatically upon the satisfaction of specified conditions, such as the presentation of an authorized electronic document or trusted data confirming goods have reached a designated transaction stage. While this framework aims to improve transparency and certainty, its effectiveness depends on establishing solid domestic groundwork, including dependable domestic payment systems, shared data standards, and legal acceptance of electronic trade documents, rather than relying on a single technology.

Across the Asia-Pacific region, governments and development banks are working to reduce this trade finance gap through various initiatives. The ADB’s Trade and Supply Chain Finance Program (TSCFP) offers guarantees and loans, while Singapore's Enterprise Financing Scheme – Trade Loan (EFS-TL) provides government risk sharing. Singapore's Infocomm Media Development Authority (IMDA) also introduced TradeTrust in 2019 to standardize digital trade documents and cut inefficiencies from traditional paper processes.