However, for a smooth transition to a regional, cross-border payments network, any new payment systems need to be compatible with existing industry standards and be extensible to allow for future upgrades and integrations. A properly thought-out approach will allow financial institutions, national switches, merchants, eWallet providers and payment companies to provide the fastest and most cost-effective mode for all domestic and cross-border payment types across B2C and B2B enterprises.
Leveraging standards such as ISO 20022 can go a long way to ensuring that this is the case and that systems are ready for cross-border opportunities from day one. Ecosystem participants must also ensure that any system meets individual country compliance requirements and fits with any future regional regulatory plans. Excessive regulation traditionally has a tendency to stifle innovation, so compliance – including ISO 20022 – needs to be achieved without slowing the modernization process.
Central infrastructure use case: Malaysia’s adoption of ISO 20022
Payments Network Malaysia (PayNet), the country’s national payments network and central infrastructure provider, has been based on ISO 20022 from the outset. The ISO 20022 messaging standard plays an instrumental role in driving innovation and adoption, and hence transaction volumes, on its RPP (Real-time Retail Payments Platform) platform. Accelerating time to revenue in this way has been critical for banks on the new system, as it allows Malaysia’s card and non-card transactions for all member banks to be switched through the PayNet central switch.
PayNet’s RPP has progressively introduced new innovative payment services, including Malaysia’s national DuitNow QR payments and cross-border QR payments. This has the potential to further transform the real-time payments landscape in Malaysia, establishing a foundation for the next phase, which will include request-to-pay, eMandates and real-time debit.
Connectivity is the key
Open APIs are also critical to ensuring that technology does not become a barrier to adoption of cross-border real-time payments. As more non-banks connect into real-time payments platforms around the world, having a straightforward set of standardized interfaces makes it much easier for merchants, billers, fintechs or other intermediaries to access and leverage the value of the platform.
Central infrastructures also need to ensure that onboarding onto any real-time payments infrastructure is as straightforward as possible; customers need to connect to the network quickly to enable it to become a more permanent, indispensable fixture when it comes to cross-border transfers. For example, Malaysia managed to implement its RPP platform in just nine months, a fast pace considering that such implementations can take years. If rapid connectivity is made possible, it becomes a driver for further innovation.
As central infrastructures are often powered by external solution partners, these partners can be instrumental in providing support for the banks as they shift to the new infrastructure. Malaysia’s RPP infrastructure again provides a strong use case; it is based on a harmonized ecosystem and architecture with a standard and consistent connectivity from the participants to the central hub, making it easier for the banks that are connecting into the RPP, as well as helping with ongoing compliance.
This also holds true in the development of the true pan-regional network in Southeast Asia. Technology providers will be a critical element of the equation to help central infrastructures across the region accelerate the design and implementation of cross-border connectivity.
Download the white paper “Envisioning a pan-regional, real-time payments ecosystem in Southeast Asia” from Kapronasia and ACI Worldwide
ACI Low Value Real-Time Payments 
