ASEAN ramps up regional payment connectivity

MANILA, Philippines — The Association of Southeast Asian Nations (ASEAN) is further ramping up cross-border payments to include State Bank of Vietnam (SVB), bringing to six the number of central banks joining the regional payment connectivity initiative.

On the sidelines of the recently concluded 10th ASEAN Finance Ministers’ and Central Bank Governors’ Meeting (AFMGM) in Indonesia, the SBV officially joined the regional payment connectivity initiative.

The signing of the supplemental pages of the memorandum of understanding (MOU) on cooperation in regional payment connectivity by SBV was witnessed by existing participants, including the Bangko Sentral ng Pilipinas (BSP), Bank Indonesia, Bank Negara Malaysia, the Monetary Authority of Singapore and Bank of Thailand.

SBV deputy governor Pham Thanh Ha said the central bank of Vietnam looks forward to the close coordination among all the parties to promote faster, cheaper, more transparent and more inclusive cross-border payments after signing the MOU on cooperation in regional payment connectivity.

“The MOU shows our solidarity and marks a good starting point for cooperation to strengthen regional economic integration and advance payment connectivity toward making ASEAN a global leader in payments connectivity,” the SBV deputy governor said.

The five central banks signed the MOU on regional payment connectivity at the sidelines of the G20 Leaders’ Summit last November 2022 in Bali.

The initiative was established to strengthen and enhance collaboration on payment connectivity through the development for faster, cheaper, more transparent and more inclusive cross-border payments.

The cooperation encompasses several modalities, including QR (quick response) code and fast-payment based cross-border payments.

The goal of the regional payment connectivity is to make inter-country payments more seamless, convenient, and affordable, allowing individuals and businesses to conduct transactions across the ASEAN region with ease.

This partnership aims to further support post COVID pandemic economic activities across the ASEAN region, including the promotion of tourism and other service industries.

The expansion of the regional payment connectivity to include SBV is expected to benefit small and medium enterprises (SMEs), which are crucial to the region’s economic growth.

Through cross-border payments, ASEAN member states will be able to increase trade and remittances within the region, helping widen financial inclusion and significantly contribute to the overall advancement of the ASEAN economic community.

“Going forward, the regional payment connectivity can also be expanded to neighboring economies and other countries beyond ASEAN,” the central banks said in a joint statement.

Under its Digital Payments Transformation Roadmap, the BSP aims to shift 50 percent of total retail transactions to electronic channels and increase the number of Filipino adults with bank accounts to 70 percent before the end of this year.

As more Filipinos embraced digitalization during the height of the COVID-19 pandemic, the share of digital payments to total retail transactions further increased to 42.1 percent in 2022 from 30.3 percent in 2021. 

Likewise, the number of banked Filipino adults almost doubled to 56 percent in 2021 from 29 percent in 2019.