This referenced article is posted in Forbes and reviews Southeast Asia’s vast population and continued growth in economic activity during this century. We have covered the region on a regular basis, most recently in a member report on commercial credit cards, and also in a viewpoint on B2B cross-border payments, which represents more than 80% of use cases.
Although there is a wide range of sophistication in many respects, the adoption of real-time payment systems has been keeping pace with the rest of the world. The author focuses on a sub-region called ASEAN as a potential launch point for combining some of these payments capabilities into a real-time cross-border platform for the larger region.
‘Although this diversity adds to the character of the region, it has also made it challenging to achieve any sort of regional political or economic cooperation.…One of the few is the Association of South East Asian Nations, or ASEAN, which was established in 1967 with a focus on accelerating economic growth, social progress, and cultural development across the bloc’s member countries. The sub-regional group has grown quickly in the years since….From 2005 to 2018, total merchandise trade across ASEAN grew from US$1.2 trillion to US$2.8 trillion, of which 23% was related to intra-ASEAN trade. E-commerce grew even faster from US$11 billion in 2017 to US$24 billion in 2018.’
Now one could say that the only regional real-time cross-border payments system is SCT Inst, but that is a single currency proposition. There is the Nordic effort underway called P27, which is purported to launch during 2021, making it the first real-time cross-border system dealing in multiple currencies. In effect, that is what the author suggests will be coming from an ASEAN collaboration sometime in the near future.
‘However, the lack of uniform regulations, a common currency, and a consistent economic agenda within ASEAN, have impeded the development of a region-wide agreement on cross-border payments. The ASEAN organization itself is still undecided on how to approach the creation of an APN and fundamental questions such as who will own the underlying infrastructure and what settlement currency should be used, remain unanswered….As both public and private initiatives progress, we can see the broad brushstrokes of a real-time cross-border network in Southeast Asia forming. Leveraging domestic real-time payment central infrastructures (CIs) as a basis and establishing cross-border linkages are creating a network of payment rails increasingly being used for both retail and commercial real-time, cross-border payments.Indeed, it is the private sector rather than government which is leading the way in the development of a regional real-time cross-border payment network in what is a natural evolution of the payments industry in the APAC region.’
We know that SWIFT is working in the region as well, using SWIFT gpi as the connective tissue between China, Australia, Singapore and Thailand (the last two of which are part of ASEAN). We are not aware of specific progress. The author goes on to touch on how a SEPA-like approach would work, and then also bringing in QR codes as another method. In any event, the improvement of cross-border payments experiences across the globe continues to be a main target of innovation.
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group