After Singapore, the central bank of the Philippines is set to arrange cross-border payment agreements with Thailand and Malaysia to facilitate the linkage of both countries’ real-time and QR payment systems.
The Bangko Sentral ng Pilipinas (BSP) has signed two agreements with the Monetary Authority of Singapore (MAS) this month to link Philippines’ InstaPay and Singapore’s PayNow. It is now currently in talks with Bank Negara Malaysia (BNM) and Bank of Thailand (BOT).
During Friday’s, Nov. 12, virtual BSP-MAS bilateral payment linkage event and the World Fintech Festival 2021, BSP Assistant Governor Edna Villa said ASEAN members including the Philipines are establishing interoperable cross-border real time payment systems.
“The BSP has been in dialogue with several ASEAN central banks to make the seamless flow of funds between our countries a reality. We have chosen Singapore as our starting point for this linkage,” said Villa.
BSP Senior Director Raymond Estioko of BSP's Payment System Oversight Department said during the event forum that the next cooperation agreements will be with Malaysia and Thailand.
Estioko said the volume of cross-border payment transactions is significant in both countries. He also confirmed that BSP has started bilateral dialogues with BNM and BOT.
In the case of Singapore, remittance flows total about $2.15 billion in 2020 between the Philippines and Singapore. Before the pandemic, approximately 900,000 travelers were registered between the two countries.
The BSP-MAS enhanced Innovation Function Cooperation Agreement, signed on Friday, was first forged in 2017 and was mostly for information sharing, while the latest version is an enhanced one which Villa called “Agreement 2.0”. The formal dialogue will enable the BSP and MAS to link InstaPay and PayNow.
“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.
BSP Governor Benjamin E. Diokno said on Thursday, Nov. 11, that improvements in cross-border payments will benefit the following: overseas Filipino workers; businesses in the tourism, export, import and e-commerce industries; and firms receiving financial support from affiliates abroad or from global institutional investors.
“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.