Eight Asean countries agreed on Asean Payment Connectivity, which aims to cut transaction fees for migrants, tourists and businesses, during the meeting of Asean Finance Ministers and Central Bank Governors in Chiang Rai Wednesday.
Bank of Thailand (BOT) Governor Veerathai Santiprabhob and Perry Warjiyo, governor of Bank Indonesia (BI) signed the memorandum of understanding on Cooperation in the Area of Payment Systems and Financial Innovation.
Veerathai and Bank of Laos governor Sonexay Sitphaxay also signed an MoU on Cooperation in the Areas of Financial Innovation and Payments Systems.
The MoU targets enhanced collaboration on financial innovations and payment services to promote more efficient and secured domestic and cross-border transactions as well as to promote the use of local currencies.
The two central banks are working together to develop interoperable QR Code for payments and real-time remittance to facilitate cross-border retail payment services between Laos and Thailand.
“Our financial institutions have been collaborating to offer cross-border QR payments to enable easy and convenient payments for Lao and Thai tourists, as well as for SMEs [small and medium-sized enterprises] in both countries to receive payments in an efficient, convenient way. Progress was also achieved in the area of corporate funds transfers between the two countries using blockchain technology,” said a BOT statement.
Thanachart Bank (TBANK) has already joined the initiative for cross-border QR payment. TBANK has partnered with BCEL (Banque Pour Le Commerce Exterieur Lao Public), the largest commercial bank with the biggest market share in electronic banking in Laos, to launch QR payments for Lao tourists visiting Thailand.
“The two banks will officially launch QR payment services for Thai tourists visiting Laos,” said Anuwat Luengtaweekul, executive vice president of TBANK.
The Thai central bank also agreed to cooperate with central banks in Cambodia, Malaysia Myanmar, Philippines and Singapore on financial connectivity.
Banks and non-bank operators in Asean have joined the bandwagon.
“Today, we have witnessed collaboration among banks, non-banks and card companies to develop cross-border payment services using modern technologies, ranging from interoperable QR Code, Blockchain technology, Application Programming Interface [API], and card networks. These new services can serve the needs of different customer segments; improve efficiency of the regional financial system; facilitate business transactions and international trade; reduce the cost of service providers and customers; and enhance financial inclusion for a broad range of Asean population,” said Veerathai.
“The cooperation will cut the cost of exchange-rate risk and streamline financial transactions,” said BOT assistant governor Siritida Panomwon na Ayudhya.
Currently, migrants who send money back to their hometowns face high service fee for remittances. For example, people in Thailand transferring US$500 (Bt16,000) out of the country are charged a $36.40 service fee while the fees in Singapore and Malaysia are $16 and $15.50 respectively, she added.
Among Asean financial institutions, CIMB Group is already providing a cross-border money transfer service. CIMB has introduced the so-called SpeedSend for some years and plans to aggressively expand this market segment this year.
The group’s money transfer service uses API technology. It is an international remittance service offered at affordable fees and attractive rates, the group said. Not only does SpeedSend connect the 10 Asean countries, it also connects Asean with 31 other countries worldwide. This has been achieved through the adoption of API technology and establishment of partnerships and strategic alliances with financial institutions and other money transfer operators.
Currently, the majority of transactions originating at CIMB Thai are money transfers to Philippines.
“Customers will enjoy speedy delivery with our vast network and can collect the money in just minutes. Our large network base and same-day delivery for cash-to-cash service will enable your family and friends to collect money within 10 minutes, with service fee starting at Bt150 per transaction ” said Paisan Thumpothong, executive vice president at CIMB Thai Bank.
U Kyaw Kyaw Maung, governor of Myanmar Central Bank, said migrant Myanmar workers – estimated to number 3 million in Thailand – would benefit from the remittance service provided by Krung Thai Bank and Myanmar-based Shwe Bank.
Ravi Menon, managing director of the Monetary Authority of Singapore, said that Thailand and Singapore will next year link Thai PromptPay and Singapore’s PayNow, which are payment systems that tie bank accounts with mobile phones, allowing customers to use mobile application for financial transactions.