ASEAN nations are consolidating and ramping up its payment systems. Only then, it can start building regional links with fellow ASEAN neighbours.
By Joelyn Chan
In November 2017, leading ASEAN payment system operators moved a step closer towards regional real-time payments connectivity. They signed a Memorandum of Understanding (MoU) to enable real-time cross-border payments. Together, Payments Network Malaysia (PayNet), National ITMX Co. Ltd (ITMX) of Thailand, National Payment Corporation of Vietnam (NAPAS), Singapore’s Network for Electronic Transfers (NETS) and Indonesia’s PT Rintis Sejahtera (Rintis) will connect their respective payment infrastructures.
By no coincidence, these signatories are members of Asian Payment Network (APN). Back in 2006, four central banks of ASEAN nations established APN to create a common payment settlement platform. Today, they achieved yet another milestone. NAPAS Acting CEO Le Quoc Hung said, “In an increasingly digitalized economy, the ability to execute cross-border transactions instantaneously has never been more crucial. The initiative of interconnecting real-time payment infrastructures throughout the region will bring opportunities for each national switch in expanding and developing payment services, which is in line with global payment trends.” With this MoU signed, the ASEAN communities can expect much more in the year 2018.
Bringing cross-border e-payments to another level
Such cross-border collaboration shows the possibility of integrating ASEAN’s economies further. Instead of having to wait for days and incur administrative fees from banks, both businesses and consumers stand to enjoy immediate payment routing and addressing via mobile numbers, in addition to real-time request-to-pay for cross-border payment collections.
Though progress and capabilities in the ASEAN countries are unequal, ASEAN has moved up one notch. As part of Thailand’s National E-payment initiative, the nation has been slowly progressing towards a cashless society. Thailand no longer relies on internet banking or ATMs (Automated Teller Machines) alone. Transactions are faster and at lower costs.
Similar to Singapore’s PayNow, PromptPay allows customers to receive and transfer funds using their citizen ID or mobile phone number. Account numbers are no longer needed, and customers can transfer across banks. It can also receive retirement payments, tax refund and social security benefit from government agencies. Currently, there are plans to link PayNow with PromptPay. With both retail customers and businesses on board, transactions and trade between nations will likely increase.
This unprecedented alliance could be the first of the many upcoming deals seen in ASEAN. But, the developing nations must first stabilise and consolidate its e-payment systems. While the society adopts the new innovation in banking, payment systems should continue to welcome more banks on board. It will be easier to sway new customers to utilise the mobile payment service.
Constant changes in the e-payment space
The e-payment scene is immune to changes. Although Singapore has PayNow service, there is Singapore Quick Response Code (SG QR) coming up in 2018. The government authorities have developed this new SG QR. According to Monetary Authority of Singapore (MAS), it is first of its kind globally. SG QR can accept electronic payments by both domestic and international payment schemes, e-wallets, and banks. When it launches, payment service providers have promised to update their mobile applications. Customers can then, transfer funds via PayNow using QR codes.
Malaysia is following Singapore’s footsteps and learning from its progress. PayNet is building Malaysia’s real-time retail payments platform (RPP). It is also in-charge of the nation’s central infrastructure and main payment network, MEPS. In 2018, it has targeted to address payments using mobile numbers, national registration identity card numbers or business registration numbers. Today, e-payment systems must continuously improve to bring more benefits for the payments ecosystem. Otherwise, it will miss the opportunity to cash in on this lucrative e-payment switch.
Alternatively, China’s fintech giants can lead the way
If local payment system lack funding to improve its existing payment infrastructure, it can consider waiting for partnership from China’s fintech giants. The giants have been eager to expand overseas and further grow its revenue base. To use e-commerce platforms like Taobao, or messaging platforms like Wechat, the consumers will embrace the giants’ arrival. If not, the influx of Chinese tourists will also convince businesses to get Alipay or Wechat pay to secure the Chinese dollars. Considering the low adoption for e-wallets in some ASEAN nations, the giants have won half the battle against local payment systems.
Recently, Ant Financial’s cashless platform Alipay has sealed a deal with Cambodia’s PiPay. Cambodia joins the other ASEAN nation like Singapore, Malaysia, Thailand, Vietnam, Indonesia and the Philippines. Due to close proximity and volume of Chinese tourist, Thailand was Alipay’s first choice. Essentially, Alipay and Wechat Pay lack neither capability nor incentive to roll out fully into ASEAN. Taping on partnerships or capital investments into startups, the ASEAN community will eventually see Alipay and Wechat pay in their home country.
If ASEAN nations do not consolidate and start building regional partnerships, China’s giants will gladly do it. However, ASEAN’s future is not cast in stone. Given that digital economy and e-commerce are the key themes of Singapore’s ASEAN chairmanship, fellow ASEAN nations can expect some stimuli and digital pushes. Perhaps, the unity and joint efforts of the ten ASEAN nations will surprise the global community with a series of sustainable payment tie-ups.