The digital economy extensively refers to the creation and consumption of digital products and services, as well as digital platforms and business activities enabled by digital technologies. This can range from simple tasks like sending emails to more complex ones like big data analytics. The digital economy has captured the attention of policymakers around the world in recent years, which is not surprising given that the adoption of digital technologies has the potential to empower individuals, transform industries, and boost economies’ competitiveness.
In addressing the digital economy in the country, Singapore will next link its national real-time payment system to Malaysia’s equivalent E-payment infrastructure, just weeks after announcing similar plans with India. The most recent collaboration will allow residents of the two neighbouring countries to transfer funds using their mobile phone numbers.
Singapore’s remittance corridor with Malaysia is our largest remittance corridor; hence, both payment systems linkage will be an important infrastructure to support cross-border payment needs of individuals and businesses, as well as the growing digital economic activity between both countries.
– MAS’ chief fintech officer
The Monetary Authority of Singapore (MAS) and Bank Negara Malaysia (BNM) announced in a joint statement that efforts to link their payment systems would be phased, with the first phase beginning in the fourth quarter of 2022. Consumers in both countries would be able to pay for their purchases by scanning Singapore’s Network for Electronic Transfers or Malaysia’s E-payment QR codes displayed at merchants’ stores, in addition to transferring funds using a mobile number.
The integration, as per the two central banks, will allow for more seamless payments between the two countries, where remittances totalled SG$1.3 billion ($959.85 million) last year. There was also a lot of traffic between the two neighbouring countries, which had 12 million arrivals a year before the pandemic.
Following the initial launch, MAS and BNM intend to expand the connectivity to include additional features and partnerships. Both central banks intend to investigate the possibility of introducing features such as blockchain-based services to improve efficiencies in payments clearing and settlement between participating banks.
Moreover, it has also mentioned that connecting the two payment systems was consistent with the G20’s efforts to promote “faster, cheaper, more inclusive, and transparent” cross-border payments. It would also move ASEAN closer to its goal of establishing a network of linked real-time payment systems.
MAS’ chief fintech officer said, “the linkage will also offer MAS and BNM a valuable opportunity to incorporate the use of distributed ledger and smart contract technologies in the wholesale cross-border payments space.”
Whereas, BNM’s assistant governor added: “By bringing the efficiencies observed in domestic payments to cross-border payments, the linkage will be a game-changer resulting in faster, cheaper, and more accessible payment services for the people of both countries. Not only would this initiative further strengthen the economic ties between Singapore and Malaysia, but it would also serve as a key enabler to support post-pandemic economic growth.”
OpenGov Asia in an article reported that the central banks of India and Singapore also plan to link their digital payments systems to enable instant, low-cost fund transfers. The two sides will connect India’s Unified Payments Interface (UPI) and Singapore’s payment system in a major push to disrupt the cross-border transactions between the two nations that amount to over US$1 billion each year.
The move is targeted for operationalisation by July 2022, both nation’s central banks said earlier this week. Users on either of the systems will be able to make transactions with one another without having to sign up to the second platform. When implemented, fund transfers can be made from India to Singapore using mobile phone numbers, and from Singapore to India using UPI virtual payment addresses (VPA). The experience of making a transfer to a UPI VPA will be similar to that of a domestic transfer to a payment system VPA, noted the Monetary Authority of Singapore in a press statement.
According to a report, Singapore’s new digital economy will generate nearly $700.80 million (USD 500 million) in transactions due to the pandemic’s shift in consumer demand to online. Online transaction volumes and revenues for some businesses increased by up to three times their normal rate.
