Real-time payment (RTP) platforms such as Singapore’s PayNow have revolutionised how we send money to people and businesses and have proliferated particularly rapidly across APAC in recent years.
But while these domestic platforms have thrived, cross-border instant payments – increasingly important for businesses and consumers in the Covid age – have been found wanting.
This is now beginning to be addressed as a combination of openness, collaboration and innovation from central banks, financial institutions and non-bank players has set the stage for fast, simple and inexpensive international payments to become a reality. However, in a field that has seen non-bank players driving innovation and taking market share, banks need to ensure that they are taking the right steps to avoid becoming irrelevant.
Why APAC is the hot spot for real-time payments
The APAC region has traditionally been a pioneer in terms of fast payments technology, with Japan launching its Zengin payment system over 40 years ago. Eleven countries in APAC now have active real-time payment networks – including Singapore’s FAST network, which was launched in 2014 – whilst five other countries are getting their own networks ready for launch. APAC has also taught the world how to harness mobile apps, QR codes and contactless technology to make instant payments a simple and convenient process, establishing them as the preferred payment methods for many consumers and businesses.
However, whilst simple, fast and free domestic payments have become the norm across APAC, the same cannot be said for international payments. Sending money between countries has typically meant long processing times and high transaction fees, with fees in ASEAN often being well above the UN’s Sustainable Development Goal of 3 per cent, according to the Asian Development Bank. This is far from ideal in a region where an estimated 320 million people rely on money sent from abroad by family members, and at a time where SMEs are seeking to trade more internationally.
This article originally appeared on The Business Times. You can view the original article here: https://www.businesstimes.com.sg/asean-business/the-rise-of-instant-cross-border-payments-boon-or-bane-for-banks%C2%A0
18 October 2021