After its Cross-Border Payment Agreement with Singapore, the Philippines’ central bank plans to sign cross-border payment agreements with Thailand and Malaysia to allow the integration of their real-time and QR payment systems.
This month, the Bangko Sentral ng Pilipinas (BSP) and the Monetary Authority of Singapore (MAS) signed two agreements to integrate the Philippines’ InstaPay and Singapore’s PayNow. It is now currently in discussions with the Bank of Malaysia (BNM) and the Bank of Thailand (BOT).
BSP Assistant Governor Edna Villa said ASEAN states, along with the Philippines, are establishing interoperable cross-border real-time payment systems during a virtual BSP-MAS bilateral payment linkage event and the World Fintech Festival 2021 last Friday.
The Assistant Governor of the BSP then stated that the BSP has been in contact with various ASEAN central banks to ensure a smooth flow of cash between our countries. For this link, they have chosen Singapore as the starting point. During the event forum, BSP Senior Director Raymond Estioko of the Payment System Oversight Department said that the next cooperation agreements would be with Malaysia and Thailand.
According to Estioko, both countries’ cross-border money transactions are large. He also revealed that the BSP has begun bilateral talks with the BNM and the BOT. In the case of Singapore, remittance flows between the Philippines and Singapore are expected to reach $2.15 billion in 2020. Approximately 900,000 travellers were registered between the two nations prior to the pandemic.
The BSP-MAS improved Innovation Function Cooperation Agreement, which was signed on Friday, was first created in 2017 and was primarily for information sharing, while the latest version, which Villa dubbed “Agreement 2.0,” is an enhanced version. The BSP and MAS will be able to link InstaPay and PayNow because of the formal dialogue. “Agreement 2.0 now includes collaboration specifically in payments innovation to facilitate the linkage of the payment systems of the Philippines and Singapore,” said Villa.
Improvements in cross-border payments will assist overseas Filipino workers, enterprises in the tourist, export, import, and e-commerce industries, and firms receiving financial backing from affiliates abroad or global institutional investors, according to SP Governor Benjamin E. Diokno.
“We seek ways to further lessen frictions associated with cross-border payments like high remittance cost, lengthy processing times, and inadequate transparency as to service fees, foreign exchange conversion rates, and processing status among others. Ultimately, enhancing the efficiency of cross-border payments will help ensure that Filipinos, here and abroad, are onboard as we pursue digital transformation,” said Diokno.
OpenGov Asia reported the collaboration of the BSP and MAS in payment infrastructure initiatives is in line with the G20’s efforts to resolve existing frictions in global cross-border payments and helps ASEAN’s objective of achieving regional payments integration by 2025. Both central banks will seek multilateral interoperability of these projects, as part of regional efforts to strengthen ties both within ASEAN and with countries beyond the region.
“The BSP is taking the first step in integrating the Philippine payment system with those of our ASEAN neighbours, beginning with Singapore,” said BSP Governor Benjamin E. Diokno. By effectively connecting the country’s QR and real-time payment systems, it will improve the safety and efficiency of cross-border payments by allowing for a speedier and more seamless international movement of cash, thereby benefiting Filipinos who use cross-border payment services.
Overseas Filipinos, export, import, and tourism enterprises, as well as firms with affiliates or investors abroad, may be among the benefactors. The BSP is convinced that this improved CA will boost the Philippines’ connection with Singapore and bring the ASEAN region one step closer to establishing an integrated and interoperable cross-border payment system.
Ravi Menon, Managing Director of MAS then said, “The enhancements to the MAS-BSP FinTech Cooperation Agreement will help fast-track payments connectivity between Singapore and the Philippines. Critically, the linking of our QR and real-time payment systems also marks a concrete step towards the vision of an ASEAN network of interconnected real-time payment systems.”
