We’re only at the end of the first quarter, but 2018 is shaping up to be a very important year for the payments industry. While it doesn’t have the mass-media appeal of the launch of GAFA Pay wallets, real-time payment infrastructure is quietly changing the way in which both the consumers and businesses pay and are paid in a rapidly growing number of countries.
As 2018 began, we had already seen a step-change in the availability of real-time account-to-account payments. At the end of last year, the New Payments Platform (NPP) in Australia, The Clearing House (TCH) real-time payments infrastructure in the US, and the pan-European SEPA Credit Transfer Instant scheme all went live within a month of one another. The coming year will see another wave of launches, with Malaysia, Hong Kong, Spain, Slovenia, and Belgium among a list of countries that plan to go live with real-time payments infrastructure.
There has therefore been a great deal of focus and activity within the industry on how best to leverage these investments to create new products and services. Much of the early innovation was focused on the retail customer, but there are arguably larger opportunities for banks among the corporate segment, at least from a fee-generating perspective.
However, it is the potential for these domestic schemes to be combined to deliver pan-regional multicurrency real-time payments that could perhaps be the most transformative outcome from this period of change.
As part of its planning around the launch of its new domestic infrastructure in Malaysia, PayNet (the national financial market infrastructure provider) is in active discussion with its counterparts in Thailand and Singapore to link their payments networks, creating what will be the world's first cross-border, multicurrency real-time payments network (the SEPA Inst scheme is only available for Euro-denominated transactions).
The first elements of this could be live as early as the end of 2019, following the signing of a memorandum of understanding in November 2017 between several major regional payment systems operators that are members of the Asian Payment Network (APN). These are Payments Network Malaysia (PayNet), ITMX Thailand, National Payment Corporation of Vietnam (NAPAS), Network for Electronic Transfers (NETS) in Singapore, and Rintis of Indonesia.
Overcoming the challenges around foreign exchange, liquidity management, and the mechanics of settlement will be complex, but it is clear that there is significant will to make this succeed. If so, it is unlikely to be the end of the story, with even bigger benefits to potentially unlock from a wider pan-regional partnership across Asia. The rest of the world should watch these developments with interest.
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