15 May 2021

Crossborder payment linkage sets SEA digital economy alight

The successful linkage of Singapore and Thailand’s Real-Time-Payment (RTP) systems, PayNow and PromptPay, marks not just a world first in cross-border payments, but a major milestone in realizing the potential of Southeast Asia’s digital economy.

Winnie Yap, Head of Global Liquidity and Cash Management

What’s the challenge?

With the value of international payments expected to reach US$156 trillion in 2022, cross-border payments are a crucial interlocker of global connectivity.

This is particularly important as the digital economy takes a more prominent role – and no-more so than in Southeast Asia where, in 2020, 40 million people came online for the first time.

While domestic payments have advanced rapidly in recent years, cross-border payments have struggled to transform. This has brought a myriad of challenges for businesses wanting to move funds overseas including visibility and efficiency in payment times, limited windows, in which to make payments and inconsistency in standards.

Why this matters?

Developing consistent industry standards can be achieved in two way; either when a world power creates a standard that everyone conforms to, or when clusters of interested parties come together to find common ground.

MAS and Bank of Thailand’s announcement is an example of this bottom-up clustered approach, showing the power of government regulators, digital businesses and multilateral organisations coming together to create tangible frameworks.

So what’s next?

Looking ahead we hope to see three things happen:

  1. The pilot to quickly be rolled out to corporates – via the development of UEN-based payments and QRCode support becoming available.
  2. Wider bank participation – to enable a larger ecosystem of financial players and large corporate accounts to ‘plug in’.
  3. Begin to encourage other ASEAN markets to join – with the end goal of making this a truly regional proposition.

By enabling both corporates and consumers to transact across borders, Southeast Asia is on the brink of reaping the huge potential of its digital economy.

A contribution piece by Winnie Yap, Head of Global Liquidity and Cash Management, HSBC Singapore was first published in The Edge on 15th May 2021.