APAC Fintech Payments Forum — Best Practice for Cross-Border Interlinkage
The 3rd APAC Fintech Payments Forum, organized by the EPAA, focused on best practices for cross-border linkages in the ASEAN region. The event featured nine speakers from central banks, payment infrastructure providers, fintechs, and regional fintech associations from Indonesia, Malaysia, Singapore, Thailand, and the Philippines.
The infrastructure panel focused on what each jurisdiction has been doing concerning cross-border payments and why cross-border payments have been a driver for GDP growth. The discussion focused on two key drivers to ensure this outcome. Firstly, the size of cross-border flows, which encompasses more money being transacted and transferred. Secondly, the speed of the flows. The faster money can be moved between geographies, the more it can assist GDP growth. The paytech panel explored key success factors to turn the vision of the Memorandum of Understanding on Cooperation in Regional Payment Connectivity (RPC) into reality, collaboration and partnership between traditional stakeholders and emerging fintechs, and lastly lessons policymakers outside ASEAN can learn from the region's progress.
Success factors were a common feature of presentations in both panels and three broad factors sum-up the discussion. Firstly, any cross-border linkage needs to be economically viable for all stakeholders to be successful. Secondly, safety and security of existing linkages and domestic systems cannot be compromised. Lastly, use-case driven domestic coverage is critical to ensure issuing and receiving side adoption. Domestic adoption in the region has been driven by the extensive use of QR codes, a form factor that is not prevalent in Europe and U.S.
The focus of the region has been on creating bilateral linkages between domestic payment networks. While this is a step in the right direction towards addressing the frictions associated with cross-border payments, it will become increasingly difficult to manage individual linkages as the number of linkages increase. Project Nexus by the Bank for International Settlements Innovation Hub is an important development that could address the issues associated with maintaining many bilateral linkages.
