The signing of a connected regional payment system memorandum of understanding has enabled Vietnam to join a cross-border payment system service. It will join the Philippines, Singapore, Thailand, Malaysia, and Indonesia. The purpose of the initiative is to facilitate fast, affordable, and transparent cross-border payments for consumers and businesses across the ASEAN region.
The countries not only will work to connect their payment systems to boost trade and remittances but also will also develop a QR code system to perform retail transactions.
“I believe this cooperation provides equal benefits for all involved countries,” Deputy Governor of the State Bank of Vietnam Thanh Ha Pham said in a prepared statement. “It creates an easy, affordable, and reliable payment system that can drive economic growth.”
ASEAN: The Path to a More Integrated Economy
The fostering of a more comprehensive financial ecosystem within Southeast Asia has been in the works for some time now.
A cross-border payment system was launched last month, allowing residents from Singapore, Thailand, Malaysia, and Indonesia to make payments for goods and services in each other’s countries by using this system.
This regional connectivity will also reduce the dependence on the U.S. dollar for all cross-border transactions, specifically between businesses. The strength of the U.S. dollar has contributed to the weakening of ASEAN currencies, adversely affecting the economies.
Earlier this year also saw the development of a cross-border QR payment linkage between Indonesia and Malaysia. This is in line with the Bank of Indonesia’s plan to develop open banking and a financial market infrastructure.
Another QR payment linkage was established, this time between Singapore and Malaysia, increasing cross-border commerce as well as helping small businesses widen their customer base.
By the end of 2023, and as part of the next phase, regulators in Singapore and Malaysia hope to facilitate real-time fund transfers through the recipient’s mobile phone number.
With so many still underbanked and unbanked in the region, these efforts will move the needle forward in establishing further financial inclusivity.