You could soon be able to travel to Southeast Asia later this year or at any time after that without having to deal with complicated currency exchange procedures. You won't need to use the US dollar as an intermediary; instead, you'll be able to pay for your goods and services using simply a QR code and local currencies.
Prior to the end of the year, Southeast Asian central banks plan to connect their payment systems to ensure smooth transactions for visitors within the area. As a result, customers will be able to use their own country's app to make purchases rather than the local app to make QR code payments.
The nations involved in this collaboration are Malaysia, Indonesia, Thailand, Singapore, and the Philippines, in particular. Since the tie between the region's five biggest economies was revealed by Bank Indonesia Governor Perry Warjiyo during a G20, it is unclear at this time whether other ASEAN nations will join the conflict moving forward.
In order to facilitate smooth transactions for passengers within the area, the central banks of five Southeast Asian nations have agreed to integrate their payment systems by November 2022.
The agreement will enable people to make purchases using their won country's app rather than a nearby app to conduct QR code payments. The participating nations are Indonesia, Malaysia, the Philippines, Singapore, and Thailand.
Despite this, there is still work to be done on the integration, and a pact linking the financial systems of the five nations is intended to be signed by November. Now that they are connected to one another, Malaysia, Indonesia, and Thailand have enabled cross-border payments via QR codes.
Only three nations (Malaysia, Indonesia, and Thailand) are currently connected and have enabled cross-border payments via QR codes, therefore the integration is still in its early stages.
In parallel, a pre-signed agreement between Singapore and Malaysia calls for the connection of PayNow and DuitNow by the end of 2022. Beginning in 2021, the Philippines will have a similar cross-border agreement with Singapore, and there are proposals to expand the partnership with Malaysia and Thailand.
Customers will be able to save money and receive more for their money by using local currency settlements between countries rather than the USD as an intermediary coin for QR code payments made through the ASEAN-based cross-border system.
The PayNow and DuitNow integration was proactively agreed to by Singapore and Malaysia, with the debut scheduled for the upcoming fourth quarter. Although Touch 'n Go is certain that would go as planned, it has gone above and above by enabling cross-border QR code payments with Singapore using its e-Wallet. At the moment, it is only available for ComfortDelGro taxi services.
Regarding the Philippines, efforts are moving forward for similar agreements with Malaysia and Thailand. The country had struck a cross-border agreement with Singapore last year.
According to Bloomberg, the central bank intends to build a comparable structure for continuous bank transfers and central bank digital currencies. It will also aim to connect the Southeast Asian network with other regional clusters around the world.
Instead of using the US dollar, QR code payments made through the cross-border system will use local cash settlements between the countries. This means that transactions made, for example, in Thailand using an Indonesian app would allow for a simple exchange of Rupiah and Baht.
Market analysts are generally optimistic about the payment method's future growth because to the widespread acceptance and use of QR codes among retailers and customers worldwide, as well as the rise in smartphone usage and better internet access.
In fact, a recent study by Juniper Research found that the amount spent worldwide with QR code payments might reach over US$3 trillion by 2025, up from US$2.4 trillion this year.
Five of the largest economies in the area, including the Philippines, are scheduled to sign an agreement to connect their networks by November.
Source: Bloomberg.com, TimeBulletin.com, TechWireAsia.com, BusinessTime.com.sg
