The rise of high-risk businesses


The internet has radically changed commerce and the opportunities for entrepreneurs and small and medium-sized enterprises (SMEs) globally. The ability of small traders and businesses to operate internationally has been a game-changer. However, due to the rapidity of the change, many payment problems have arisen, and financial services are struggling to keep up.

Existing infrastructure slows down activity

It is frustrating for many SMEs that they can now operate across borders, but the old banking infrastructure often calls small businesses “high risk”. This can make trading difficult, risky, slow and expensive.

For example, a business receiving an international payment will likely use SWIFT and not receive the money for between one and five days, on average. There is no transparency in the process, there will be costs attached and, possibly, an unfavorable exchange rate.

Then there are the risks to the merchant that arise from credit card fraud. The recent 2021 Chargeback Field Report found that between 2018 and 2021, there had been a 21% increase in criminal fraud.

There are solutions available for P2P transactions and large enterprises, but SMEs have been largely excluded. As small businesses often operate with very tight margins, this holds back many businesses. Fortunately, solutions have emerged through more nimble fintech companies, innovative new platforms, and the adoption of cryptocurrencies.

High-risk SMEs and cross-border transactions are on the rise

Businesses are generally referred to as “high risk” for several reasons. First, the type of industry is one of the broadest and often the most arbitrary. These can include online pharmacies, VoIP providers, and even subscription services to things like magazines.

Some industries deemed to be high risk are large. The online gambling industry, for example, was worth US $ 37.65 billion in 2019 and is expected to be worth US $ 122.05 billion in 2025. Cryptocurrencies and related activities are also considered risky, but Bitcoin alone is valued at $ 1.03 trillion (to 26e November 2021).

Second, SMEs are often characterized as high risk because they tend to have low volumes of sales and transactions. Additionally, small businesses operating outside of richer countries or blocs – such as the US, Canada, Japan, Australia, and the EU – are lumped into this “at risk” category. However, this is incredibly limiting, especially since SMEs represent 90% of all businesses in the world.

The internet is always expanding and small traders are suddenly able to reach global markets. Unfortunately, the old banking infrastructure has fallen behind in how it qualifies risks and penalizes SMEs doing cross-border transactions. However, fintech is finding solutions and banks are forced to catch up.

Cryptocurrencies Solve Major Problems in Traditional Banking Systems

Ironically, given its frequent labeling of ‘high risk’, it looks like cryptocurrency could be a solution. FinTech companies like XanPool, and its platform XanPay, have developed infrastructures that bypass the old banking networks.

XanPool Founder and CEO Jeffery Liu explains how his company’s cross-border payment solution came about. “As an entrepreneur, I’m also on the lookout for problems people face, and then I went out and tried to find a solution. “ he says.

“XanPool was founded in 2019 because of a problem with integrating and disconnecting fiat currencies from crypto. The problem was that in order to buy and sell crypto with the local currency, you had to go through the existing banking infrastructure with all of its fees, delays and risks. Since Bitcoin was invented to bypass traditional systems, the situation was crazy. So we devised a way around that.

XanPool is basically market-building software that allows buyers and sellers – liquidity providers – to trade cryptocurrencies using various digital wallets or bank accounts. “We have a cryptocurrency and a network of local currency liquidity providers that allow users to bypass traditional banking systems. This means they can also avoid additional fees and exchange rate issues and, since transactions are instantaneous, there are no days of delays and risk of chargebacks and fraud, ” Liu said.

After XanPool was up and running, Liu saw another problem that could be fixed. By leveraging XanPool’s existing cryptocurrency and liquidity pool, cross-border payments could also bypass traditional international banking infrastructure.

SMEs had been left behind, but that is changing

“We knew that SMEs had been largely ignored by the banking system when it came to international payments. This was particularly true in countries and industrial sectors that have put in place financing deemed risky. This includes most online businesses and almost all countries in the Asia Pacific region, ” Liu said.

Since there is a estimated at 213 million SMEs worldwide, of which nearly 132 million are in the Asia-Pacific region, many companies are considered “high risk” and excluded from easy cross-border transactions.

“To solve this problem, we created XanPay”, Liu explains. “It’s a payment platform that all high-risk businesses, from SMBs to eSports, can use. As it works with existing local payment platforms, it is simple to set up and use. Plus, because it’s built on XanPool’s infrastructure, these businesses enjoy instant international payments without the risk of chargebacks or credit fraud. Having 40% cheaper and instant transactions lessens the risk of penalizing them in the first place. “

The advantage of fintech solutions like XanPay is that they were able to start from a new slate. Banks are struggling to scale their systems and make them more efficient, but new businesses can start from scratch and incorporate advancements like e-wallets and cryptocurrency.

As more and more SMEs in developing countries move online, the number of businesses labeled “at risk” will continue to increase. A few years ago it was a big problem. Now, luckily, there are several fintech solutions out there – and if the banks don’t catch up, they’ll be left behind.


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