HSBC will double the size of trade facilities available to e-commerce merchants in Hong Kong after signing a partnership with the territory’s export credit insurer.
As part of the agreement, announced today, the Hong Kong Export Credit Insurance Corporation (HKECIC) will backstop loans to Amazon platform sellers that HSBC has onboarded to its merchant financing programme.
HKECIC’s credit insurance will allow the bank to “broaden its lending capacity” and means “eligible Amazon merchants” can apply for trade loans worth up to US$2mn, up from US$1mn, the bank says.
The insurer’s coverage is reserved for trade facilities extended to Hong Kong-based exporters – not those in mainland China – and firms must be vetted by the bank’s proprietary assessment model.
“We are pleased to become the first banking partner of HKECIC in this innovative credit insurance arrangement,” says Aditya Gahlaut, HSBC’s co-head of global trade solutions for the Asia Pacific.
“The insurance coverage underwritten by HKECIC is a testament to our robust and sophisticated data-led lending model tailored for e-commerce merchants. Since the inception of our merchant financing collaboration with Dowsure in Hong Kong and mainland China, we have seen positive response from e-commerce merchants with more than 100 businesses onboarded.”
HSBC announced a tie-up with China-based API platform Dowsure Technologies in July 2023, and in the time since, has used the technology to streamline the trade finance application process for Amazon merchants.
Dowsure’s technology uses transaction data such as inventory, sales and refund records, thereby removing the need for SMEs to present collateral or financial documents when applying for a loan from the bank. This can be a key hurdle for smaller merchants that may lack a physical shop.
Global banks have for years leveraged their cash management expertise in the e-commerce market, ferrying payments between the buyer and supplier, or a third-party lender. But increasingly, they are looking to assume a more direct role by financing the trade flows themselves.
In China, the epicentre of the continent’s e-commerce boom, HSBC expects cross-border trade conducted via digital channels to hit US$500bn in 2025, up from US$155bn five years ago.
“The remarkable and rapid growth of cross-border e-commerce trade has brought a new opportunity for Hong Kong exporters to explore and expand into international markets,” says Terence Chiu, commissioner of HKECIC.
Chiu notes that SMEs face “challenges… in acquiring funding to develop their cross-border e-commerce businesses”.
HSBC has signed various partnerships aimed at transforming its credit assessments of e-commerce sellers through third-party data. In 2021, the bank launched a digital merchant finance programme in collaboration with HKTVmall that leveraged commercial data for credit assessment. This followed a 2020 partnership with Alibaba’s logistics arm Cainiao Network Technology.
While HSBC may be the first bank to sign a credit insurance deal with HKECIC for e-commerce financing, Hong Kong-based fintech FundPark struck a similar agreement with the state insurer and (re)insurer Scor in June.
