Five Asean nations have inked a pact to boost connectivity and facilitate speedier cross-border payments. The agreement further supports the region's ambition to establish connected payments to drive down the cost of such payments.
The central banks of Singapore, Indonesia, Thailand, Malaysia, and the Philippines would look to "enhance cooperation on payment connectivity to support faster, cheaper, more transparent, and more inclusive cross-border payments". The Memorandum of Understanding was inked by Bank Indonesia, Bank Negara Malaysia, Bangko Sentral ng Pilipinas, Bank of Thailand, and Monetary Authority of Singapore (MAS) on the sidelines of the G20 Leaders' Summit held this week in Bali, Indonesia.
The Regional Payment Connectivity pact is touted as an important move to drive economic recovery and inclusive growth across the Asean region, with cross-border payment connectivity key to facilitating cross-border trade, investment, tourism, and other economic activities.
"This is particularly beneficial for micro, small, and medium enterprises as it will facilitate their participation in international markets," the central banks said, adding that their collaboration would include several features, including QR code and fast payment.
The partnership could grow to include other markets within and outside the region.
It also backed Asean's ambitions to establish connected payment systems and achieve regional payments interoperability by 2025. These efforts aimed to bring about fast and seamless cross-border payments and reduce the cost of such transactions.
Existing bilateral payment connectivity agreements would be further expanded as part of the region's efforts to bolster interconnectivity and economic integration, in particular, as Asean state members recognised the interdependency of their economies.
The central banks said the agreement would address long-standing painpoints in cross-border payments as well as deliver better efficiencies and cost savings across international financial transactions and economic activities.
Singapore, UN to develop digital ecosystems for small businesses
In a separate announcement, MAS said it signed an agreement with the United Nations Capital Development Fund (UNCDF) to jointly develop "integrated and digital financial ecosystems" for micro, small and medium businesses (SMBs) from least developed countries. The collaboration aims to help these businesses enhance their digitalisation capabilities and facilitate greater access to finance through open digital infrastructures.
To kickstart the partnership, the two organisations would develop the Pacific Islands Integrated Financial Ecosystem--involving government agencies, financial institutions and fintech firms, and technology vendors--to drive digital connectivity for businesses between the Pacific Islands and Singapore.
This initiative would encompass a"Financial Trust Framework" to provide micro and SMBs with better access to secured and unsecured financing and financial services. This would enable financial institutions to use verifiable digital credentials and alternative datasets to assess the credit worthiness of these businesses, such as payment track records and tax payments to relevant authorities.
Digital trade discovery platforms also would be established to offer more business opportunities for the micro and SMBs, providing business-to-business ecosystems to enable them to grow locally, in Asia, and other growth regions.
MAS' chief fintech officer Sopnendu Mohanty said: "Integrated financial ecosystems will provide digital infrastructures to equip [micro and SMBs] with the necessary skillsets to grow their businesses and gain access to financing, through digital verifiable credentials and inclusive credit assessment models."
Neha Mehta, regional lead for UNCDF in the Pacific, added that the collaboration would help drive growth within these business segments by accelerating digitalisation and facilitating access to new data sources from traditional financial data and non-traditional data sources. "It will strengthen the evaluation process of SMBs and enable growth of the SMB lending business," Mehta said. "It has great potential in improving overall productivity and boosting the economies of the Pacific region consequently improving the overall standards of living of the Pacific Islanders."