The COVID-19 pandemic has expedited the rise of digital payments, which is driving Southeast Asia's financial transformation. The region must work to fully utilize the available digital payment options as the effects of this shift continue to be seen.
The Association of Southeast Asian Nations (ASEAN), however, ought to take things a step further. The region's 10 existing member states as well as Timor Leste as a new member might all stand to gain significantly from the establishment of an ASEAN-wide, formidable digital payment system.
The seventh edition of the e-Conomy SEA report, which was published in October 2022 by Google, Temasek, and Bain & Company, revealed that more than 60 million people in six Southeast Asian nations (Singapore, Thailand, Indonesia, Philippines, Vietnam, and Malaysia) used digital services for the first time between 2020 and 2022.
More than 75% of people in these six Southeast Asian nations have access to the internet, and most of them have done some online shopping at least once, according to the survey.
According to the survey, e-commerce in this area is only expected to grow. It predicts that by 2025, online expenditure would increase by 162 percent to $179.8 billion, with digital payments accounting for 91 percent of all transactions. These statistics demonstrate the region's enormous potential for e-commerce and digital payments.
The use of blockchain technology in financial instruments, such as cryptocurrencies and Central Bank Digital Currencies (CBDC), has already generated a lot of discussion in the region. Indonesia, Malaysia, the Philippines, Singapore, and Thailand are among the ASEAN nations that are getting ready to sign a general agreement to create an interoperable cross-border payment system.
Through this system, citizens of any nation would be able to pay for goods and services in any of these nations instantly and in real time using QR codes and their mobile banking apps.
While this was going on, Malaysia and Cambodia collaborated to introduce a mobile cross-border remittance service through Bakong, a blockchain-based payment system located in Cambodia. Due to the surge in online banking activity, Indonesia's central bank also declared in May that it would introduce a central bank digital currency.
All of these payment methods and digital currencies have the goal of lowering costs while enhancing regional and domestic money flows as well as cross-border economic activity. Therefore, the discussion of an ASEAN-wide digital payment system based on blockchain technology is quite appropriate at this time.