ASEAN expands regional payment connectivity

MANILA, Philippines — The Association of Southeast Asian Nations (ASEAN) has onboarded Brunei Darussalam Central Bank (BDCB) and Bank of the Lao PDR (BOL) in ramping up cross-border payments in the region, bringing the number of total central banks participating in the regional payment connectivity initiative to eight.

The BDCB joined the regional payment connectivity initiative (RPC) on Feb. 29, while the BOL officially joined during the 11th ASEAN Finance Ministers’ and Central Bank Governors’ Meeting in Lao PDR on April 3.

The signing of the supplemental pages of the memorandum of understanding (MOU) on cooperation in RPC was done after the two central banks previously expressed their interest in joining the initiative.

The RPC was spearheaded by the Bangko Sentral ng Pilipinas (BSP), Bank Indonesia, Bank Negara Malaysia, the Monetary Authority of Singapore and Bank of Thailand in late 2022. They were later joined by the State Bank of Vietnam in August 2023.

“The RPC initiative is expected to be extended to other ASEAN countries and beyond,” the central banks said in a joint statement released on Wednesday evening.

Hajah Rokiah binti Haji Badar, the managing director of BDCB, said the scope and areas of cooperation in the MOU would be beneficial in boosting cross-border payment connectivity in the region.

It would also facilitate further trade, investments and economic activities within the region and foster closer collaboration with fellow central banks, she said.

BOL governor Bounleua Sinxayvoravong said the signing of the MOU is a significant step in enhancing future ASEAN regional cooperation.

He said faster and cheaper financial transactions coupled with a secure and seamless payment system infrastructure would support the expansion and sustainability of the economies.

The RPC is a regional initiative established to strengthen and enhance collaboration on payment connectivity through the development of 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 regional effort also allows participants to reap the benefits of cross-border economic activities, including providing small and medium-sized enterprises access to the international market, easing of trade, and facilitating worker remittance transactions,” the central banks said.

BSP Deputy Governor Mamerto Tangonan earlier said the central banks participating in the initiative aims to operationalize multilateral cross-border fund transfers by July 2026.

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 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.