Singapore will next link up its national real-time payment system, PayNow, to Malaysia's equivalent infrastructure DuitNow, just weeks after announcing similar plans with India. The latest tieup will enable residents in the two neighbouring nations to make fund transfers via their mobile numbers.
The Monetary Authority of Singapore (MAS) and Bank Negara Malaysia (BNM) said in a joint statement Monday that efforts to link their payment systems would be rolled out in stages, with the first phase to kick off in the fourth quarter of 2022.
Apart from transferring funds using a mobile number, consumers in either countries would be able to pay for their purchases by scanning Singapore's NETS or Malaysia's DuitNow QR codes displayed at merchants' stores.
According to the two central banks, the integration would facilitate more seamless payments between both countries, where remittances hit SG$1.3 billion ($959.85 million) last year. There also was high traffic between the two neighbouring nations, which averaged at 12 million arrivals yearly before the pandemic.
After the initial launch, MAS and BNM would look to expand the connectivity to include more features and partnerships. Both central banks would explore the possibility of introducing features such as blockchain-based services to drive greater efficiencies in payments clearing and settlement between participating banks.
They further noted that the connectivity between PayNow and DuitNow was in line with the G20's efforts to drive "faster, cheaper, more inclusive, and more transparent" cross-border payments. It also would put Asean nearer its goal of building a network of linked real-time payment systems.
MAS' chief fintech officer Sopnendu Mohanty said: "Singapore's remittance corridor with Malaysia is our largest remittance corridor; hence, the PayNow-DuitNow linkage will be an important infrastructure to support cross-border payment needs of individuals and businesses, as well as the growing digital economic activity between both countries. The linkage also offers MAS and BNM a valuable opportunity to incorporate the use of distributed ledger and smart contract technologies in the wholesale cross-border payments space."
BNM's assistant governor Fraziali Ismail added: "By bringing the efficiencies observed in domestic payments to cross-border payments, the PayNow-DuitNow linkage will be a game-changer resulting in faster, cheaper, and more accessible payment services for the people of both countries. Not only would this initiative further strengthen the economic ties between Singapore and Malaysia, it would also serve as a key enabler to support post-pandemic economic growth."
Singapore earlier this month said it was linking PayNow with India's real-time payment system, Unified Payments Interface (UPI). Targeted for completion by July 2022, the connectivity would enable residents in both countries to make real-time, low-cost fund transfers directly between their respective local bank account, both countries said.
Singapore in April 2021 inked a similar pact with Thailand to enable users in both nations to transfer funds using the recipient's mobile number. The collaboration tapped the respective country's peer-to-peer payment systems, PayNow and Thailand's PromptPay, and was part of a regional payment initiative to ease cross-border payments.
Singapore earlier this month also announced it was working with the central banks of Australia, Malaysia, and South Africa to develop and test a common platform on which to process cross-border digital payments. The initiative to pilot the use of central bank digital currencies (CBDCs) for international transactions aimed to bypass the need for intermediaries and, hence, slash the time and cost of such transactions.