PayNow and Thailand's PromptPay to link up next year in trailblazing move

FROM mid-2021, users of Singapore's PayNow and Thailand's equivalent PromptPay will be able to send money instantly and securely across the two countries with their mobile phone numbers at "competitive rates", said Ravi Menon, managing director of the Monetary Authority of Singapore (MAS).

This linkage between two countries' national faster payment systems will be the first of its kind in the world, noted Mr Menon on the second day of the Singapore Fintech Festival x Singapore Week of Innovation and TeCHnology.

Kickstarted by MAS and the Bank of Thailand three years ago, the service will begin with a small group of banks on both sides. Participation will be scaled up to include more banks and non-bank providers over time, said Mr Menon. MAS is also keen to partner other central banks in the region to expand the linkage across Southeast Asia, he added.

This is part of MAS's efforts to make cross-border remittances cheaper and faster, in order to extend the benefits of a digital economy to a wider range of users, noted Mr Menon.

Singapore's central bank is also seeking to make cross-border payments and settlements - "one of the biggest painpoints for SMEs (small and medium-sized enterprises)" - quicker and more affordable.

MAS had embarked on Project Ubin five years ago to explore the use of blockchain, with the final phase of experimentation completed in July this year where a blockchain-based prototype for multi-currency settlement was successfully tested.

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Now, industry players are moving from experimentation towards commercialisation, said Mr Menon.

DBS, JPMorgan and Temasek are leading the development of a digital multi-currency payments network aimed at enhancing commercial cross-border clearing and settlements globally, with pilot trials to commence next year.

"The goal of cheaper cross-border payments that settle round the clock, and in real time is drawing closer SMEs would benefit greatly when this becomes a reality," he said.

Getting SMEs plugged into common digital platforms will enhance their digital inclusion, enabling them to become more efficient and expand business opportunities, said Mr Menon.

A network known as Business san Borders (BSB) was developed by MAS and the Infocomm Media Development Authority to help SMEs access a much larger ecosystem of buyers and sellers globally.

Starting its live beta during SFF x Switch, BSB uses artificial intelligence (AI) to introduce to SMEs essential financing and business solutions from service providers across the network, he said.

Aside from creating an inclusive society, the other major theme that Menon touched on during his half-hour presentation was ensuring a sustainable planet.

One way in which Singapore aims to support Asia's transition towards greater sustainability is through an Asian carbon credit market, said Mr Menon. "Given Asia's continued dependence on fossil fuels, an Asian carbon credit market must be part of the strategy to achieve both development and sustainability in Asia," he noted.

MAS is keen to work with like-minded countries and businesses to testbed recommendations from a taskforce for scaling voluntary carbon markets sponsored by the Institute of International Finance, as well as to start laying the foundations for a viable carbon credits market in Asia, he said.

He also announced that the central bank is embarking on Project Greenprint, a technology platform aimed at promoting a green financial ecosystem. It aims to strengthen three key elements in the ecosystem, namely mobilising capital, monitoring commitment and measuring impact.

MAS will earmark 20 per cent of the financial sector technology and innovation budget or 37 million US dollars out of US$185 million to support green fintech projects. The funding can be used to support proofs of concept, innovation labs industry-wide utilities and technology platforms, focused on green fintech, he said.

Project Greenprint provides a platform for SMEs and fintechs to connect to financial institutions and investors to assess a wider pool of capital and green solutions. It aims to deploy technology at different stages of the supply chain to better monitor commitment to the relevant green standards and requirements, said Mr Menon.

It will also explore the use of AI and other technologies such as rating services and even crowdsourcing to quantify the ESG (environmental, social and governance) impact of potential investments.

MAS will establish a consortium of financial institutions, fintechs and industry players with expertise in green fintech to drive the project, identifying specific use cases where technology can play a role, he said.

"This (Covid-19) crisis presents us an opportunity to create a more inclusive society, and a more sustainable planet, said Mr Menon said in his concluding remarks. "Finance, technology and FinTech can be powerful enablers in this endeavour."