As the ASEAN chair, Indonesia has been advocating for an expansion of regional payment connectivity within the bloc. During the first meeting of ASEAN central bank governors and finance ministers under Indonesia's chairmanship in Bali, the country revealed that Vietnam would soon join the cross-border payment connectivity network, expanding the membership from the current five member states to six. The current network includes Indonesia, Malaysia, The Philippines, Singapore, and Thailand, who have committed to linking their QR code payment systems. Indonesia and Thailand are already linked, while trials for Indonesia-Malaysia linkage have entered the final stage.
Bank Indonesia Governor Perry Warjiyo emphasized the need for a member country to develop its domestic instant payment system before establishing cross-border linkages. Indonesia has its Quick Response Indonesian Standard (QRIS) and the Bank Indonesia Fast Payment, while the other ASEAN-5 countries also have their respective instant payment systems. As Vietnam is in the process of strengthening its instant payment system, it is now ready to join the network. However, Brunei Darussalam, Laos, and Cambodia are still developing their instant payment systems, although they have expressed interest in joining.
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The Nexus project, led by the Bank of International Settlements (BIS), has successfully linked Singapore, Malaysia, and Eurosystem payment systems, giving hope to the connectivity plan. The ASEAN-5 will work on connecting their payment systems in the next phase of the project. Bank Indonesia Governor Perry Warjiyo noted that the expansion of the network is aimed at supporting economic recovery and catering to the needs of transactions and tourists across the ASEAN region. As more members join the network and multilateral connectivity strengthens, there will be a focus on strengthening oversight, regulations, data security, and cybersecurity.
The ultimate goal is to make cross-border payments more seamless and convenient, allowing individuals and businesses to conduct transactions across the ASEAN region with ease. The expansion of the network is expected to benefit small and medium-sized enterprises (SMEs), which are crucial to the region's economic growth. By connecting their payment systems, ASEAN member states can increase trade and investment among themselves and with other regions, contributing to the overall development of the ASEAN economy.
According to a report by Fitch Solutions, the adoption of QR code payments in ASEAN is expected to grow rapidly in the coming years, with the region forecasted to see the fastest growth globally. The report also noted that the increasing adoption of digital payments in the region is driven by factors such as rising smartphone penetration, government initiatives, and the growing e-commerce sector. The COVID-19 pandemic has also accelerated the adoption of digital payments, as consumers and businesses seek contactless and convenient payment options.
The expansion of cross-border payment connectivity within the ASEAN bloc is part of a wider trend of regional payment integration, as countries seek to facilitate trade and investment and reduce the costs of cross-border transactions. For instance, in the Asia-Pacific region, initiatives such as the ASEAN+3 (ASEAN plus China, Japan, and South Korea) and the Asia Region Funds Passport (ARFP) aim to promote cross-border investment and financial integration.
Overall, the expansion of the ASEAN cross-border payment connectivity network is a positive development for the region's economy and its integration into the global economy. By increasing the ease and efficiency of cross-border transactions, the network can facilitate trade and investment, support SMEs, and promote economic growth and development.
References"
- ASEAN Chairmanship. (2021). About ASEAN. Retrieved from https://asean.org/asean/about-asean/
- Bank for International Settlements. (2021). Nexus: towards a global payments network. Retrieved from https://www.bis.org/cpmi/publ/d202.htm
- Lee, Y. C. (2022, March 24). Vietnam to join ASEAN cross-border payment connectivity. The Business Times. Retrieved from https://www.businesstimes.com.sg/banking-finance/vietnam-to-join-asean-cross-border-payment-connectivity
- Reuters. (2022, March 25). Vietnam to join ASEAN cross-border payment connectivity. Reuters. Retrieved from https://www.reuters.com/markets/us/vietnam-join-asean-cross-border-payment-connectivity-2022-03-25/
- The Jakarta Post. (2022, March 25). ASEAN payment connectivity set to grow with Vietnam's addition: Bank Indonesia. Retrieved from https://www.thejakartapost.com/news/2022/03/25/asean-payment-connectivity-set-to-grow-with-vietnams-addition-bank-indonesia.html
