Banks in the region are looking beyond simple implementation of real-time payments and adherence to national regulatory requirements; they are focusing increasing investment on payments modernization, with real-time capabilities serving as a foundational cornerstone of broader digital transformation.
However, the picture across APAC is varied. While some countries, such as Singapore, are building out services based on real-time infrastructure that is now five years old, others such as Malaysia have just started on the real-time journey.
Mark Looi, Director – ASEAN
FAST (Fast and Secure Transfers), launched in March 2014, is the foundation for Singapore’s national real-time payments scheme; it ensures a strong regulatory framework to provide a secure and safe payments environment.
The initial launch of FAST enabled immediate payments between different participating banks, before the introduction of PayNow in 2017 brought real-time payments to consumers with peer-to-peer funds transfer based on mobile numbers. In 2018, PayNow Corporate further expanded the reach of real-time payments, with payments between consumers and businesses.
The emergence of SGQR (a standardized QR code that relies on the FAST infrastructure) will add further impetus to real-time payments, as the unified QR code scheme aims to address the fragmented (27 at last count) e-payment schemes in Singapore.
Singapore’s real-time payments infrastructure has reached a more mature stage than other schemes in the region – some of which are very much in their infancy – but this maturity stage can be a hindrance as well as a help. Limited governance and ownership of the infrastructure contributes to a lack of interoperability, inconsistent user experience, and therefore limited adoption of electronic and innovative payments.
Action by the Singapore government, in the form the Direct FAST industry working group, should help to address some of the shortcomings by developing business and technical requirements for non-banks to connect directly to FAST. Open accessibility will open doors to fintechs to adopt scan-and-pay services and bring greater e-wallet convenience to consumers.
In terms of reducing reliance upon cash, the introduction of PayNow – based on mobile phone or identity card numbers – was a major step forward. However, consumer behaviors are more deeply entrenched, and for this reason there are still limits on adoption of digital payments. While I predict that real-time payments will continue to make progress in Singapore in 2019 – especially with SGQR as a driver – greater merchant adoption is needed for the country to take bigger steps forward in its cashless journey. In a country where the regulator (Monetary Authority of Singapore) plays a critical role, Singapore is well placed to take these steps.
Chee Cheng Ong, Director – Solution Consulting
PayNet (Payments Network Malaysia Sdn Bhd) is Malaysia’s national payments network and central infrastructure provider, responsible for successfully launching the country’s Real-Time Retail Payments Platform (RPP) just a few months ago. The first service offered to the public under the platform is DuitNow, an instant credit transfer with a national addressing database that links mobile numbers and national ID numbers to account numbers.
Since the launch of RPP and DuitNow, it has notched up a number of impressive achievements. PayNet has connected 30 participating banks in Malaysia, accounting for over 95 percent of the bank account market share, and compliance with messaging format ISO20022 will set the scene for future payment services including cross-border payments. The development of an addressing service enabled the launch of a central national database (retail account holders, associated mobile numbers national ID) and facilitated immediate peer-to-peer payments via DuitNow.
Transaction volumes are currently growing 50 percent month-on-month, reflecting the success of consumer awareness campaigns and a focus on e-payments to ensure that financial inclusion is addressed by the new national scheme.
In terms of maturity, Malaysia has begun its real-time payments journey, but it benefits from the implementation experience that other countries have gone through, including neighbors in the region, e.g., Singapore, Thailand, Hong Kong. Notably, connection to the PayNet CI Hub requires a standard CI connector and ISO20022 messaging – a model that should help ensure a cohesive ecosystem, enabling the adoption of future updates in a seamless manner. And this should mean that financial institutions can focus on services for end users. Additionally, this reduces the risk of unknown integration issues, which might occur if an organization connects to the central infrastructure via another pathway.
Furthermore, the organizations participating in Malaysia’s RPP receive a cohesive solution that services a community of banking customers. This offers a concentrated focus and economies of scale for providing a superior operating environment, as well as a working group that shares best practices and ideas for innovation going forward.
Geoff Tunbridge, Strategic Solution Consultant Director
While Australia’s New Payments Platform (NPPA) may have been around for longer than Malaysia’s real-time payments scheme, it’s still a relative newbie – having just reached its first birthday. NPP now connects 75 banks, credit unions and building societies via 13 direct participants, enabling NPP payments to reach more than 50 million accounts (in a country with a population around 25 million). This reach has helped transaction growth climb steadily in the first 12 months, with more than AUD $75 billion in transactions made via the platform thus far.
One challenge the new scheme has faced is that Australian payments were already highly digitized before NPP, with contactless card payments surpassing 90 percent and consumers accustomed to making payments from mobile and internet platforms whenever they choose. Against this backdrop, it has been harder for users to discern when payments are being made via New Payments Platform rails.
However, increased brand awareness and new overlay services are likely to drive further transaction growth through 2019, with NPP planning to support additional pathways to using the scheme and increasing engagement with the local fintech market.
The next phase of the rollout will address payroll and tax payments, while the country also makes progress towards the launch of open banking in 2019. NPPA is supporting this initiative with the release of an API framework and sandbox in late 2018. It will also be critical for banks and financial institutions to scale processes and systems to deal with different profiles of customer interaction and risk, especially as usage – and the range of use cases – continues to grow.
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