The central banks of Singapore and Thailand have signed an agreement to integrate their national digital payment networks. It has the possibility to boost the role of digital rapidly in Thailand, while providing Singaporean consumers with improved utility.
With the deal sealed only in July 2017, there is still a lot of work to be done on this integration, and it is currently unclear exactly what the end result will be.
At the Singapore Fintech Festival, Ravi Menon, managing director of the Monetary Authority of Singapore (MAS), indicated that the plan was to link up Singapore’s PayNow and Thailand’s PromptPay, which are both P2P fund transfer platforms in their respective markets.
This will eventually allow people from both countries to send money to one another, domestically and internationally, using only their mobile phone numbers. The collaboration will bring great advantages, easing payments between the countries and likely encouraging bilateral trade, investment, and tourism.
Singapore, while it has a more developed digital payment infrastructure compared to its peers in the region, lacks the scale that its bigger neighbours possess, which holds back domestic players such as PayNow.
The tie-up will give PayNow greater reach, utility, and potentially volume if it encourages cross-border payments using the service to and from Thailand.
Thailand, where 96.3% of payments by volume in 2017 were still made via cash according to GlobalData’s Payment Instrument Analytics, desperately needs to increase the use of digital payments. Such a reduction would drive revenue for electronic payments players and reduce the costs associated with a cash-heavy economy.
However, the country struggles with digital channels, lacking sufficient network benefits to make it worthwhile for consumers and SMEs. By potentially expanding the payment network to a host of digitally-savvy Singaporeans at a stroke, the deal has the potential to significantly boost PromptPay use.
Since the digital payment platform link-up will involve cross-border payments, the issues of money laundering and cross-border payment fraud will need to be addressed carefully. But there is every incentive for the regulators and operators to get it right. A smooth integration and future operation should then convince other markets in the region to join the payment platform alliance.
Perhaps a regional ASEAN mobile P2P network could form in the medium or long term, which would have interesting implications for remittance and potentially even for consumer-to-business payments in the region.