MAS exploring links for cheaper, faster cross-border payments

SINGAPORE is looking to connect with more payment systems to speed up cross-border payments.

As it is, the PromptPay-PayNow connectivity that links domestic payments between Thailand and Singapore will go live "very soon", said Ravi Menon, managing director of the Monetary Authority of Singapore (MAS).

Speaking at the launch of the MAS' report on foundational digital infrastructures for an "inclusive digital economy", Mr Menon on Monday cited an upcoming tie-up between Singapore's real-time payment system PayNow and Thailand's equivalent, PromptPay.

This tie-up will allow users to send money instantly across the two countries with their mobile phone numbers.

In December, Mr Menon had said that from mid-2021, users of PayNow and PromptPay will be able to send money instantly and securely from Singapore to Thailand and vice-versa at "competitive rates".

In his latest speech on Monday, Mr Menon added: "We must explore multilateral cross-border payments in a more scaleable way."

He referred as well India's Rupay and Singapore's Nets, which were connected last year to make merchant payments interoperable.

That said, he acknowledged that linking payment systems bilaterally is complex and expensive due to different technical and data standards, as well as legal regimes.

Countries must thus explore how to do this at scale, he said. Given this, the Bank for International Settlements' (BIS) Innovation Hub Centre in Singapore is exploring how payment systems can be linked to enable faster and cheaper cross-border payments.

BIS - an international financial institution owned by various central banks including the MAS - has various hubs around the world that study technology trends affecting central banking, and develop public goods in the technology space to improve the global financial system. The Singapore hub was launched in November 2019.

There is "strong synergy" between the BIS innovation hub's work on a cross-border payments bridge and MAS' work on foundational digital infrastructures, Mr Menon said.

The two entities are working together to improve cross-border payments by connecting payment systems to digital identities across borders, he said.

The "digital identity" is one of four core "pillars" highlighted in the MAS report launched on Monday. A digital identity uses various attributes and identity documents to define an individual, business or public institution. It can help confirm an end-user's ability, such as from a legal perspective, or whether they can access a service or perform a particular task.

Service providers such as banks and universities can then add attributes to each identity, such as in the form of income statements and education certificates, to enrich the digital identity.

The other three "pillars" that MAS deemed foundational to support a country's digital infrastructure include consent, interoperability and data exchange.

The authority is also working with financial institutions across the world on "digital infrastructure initiatives", Mr Menon added, without naming specific initiatives.

"We are also engaging financial regulators and central banks globally on their digital infrastructure initiatives to explore similar synergies and opportunities to move forward as a global digital community," he said.

"Just as governments collaborate on economic integration to advance prosperity, the time has come for them to do so with digital integration to seize new economic opportunities."

This requires establishing foundational digital infrastructures and connecting them. Enterprises can then build innovative digital services and solutions to seamlessly serve global markets, helping to empower and uplift millions of people, he said.

Late last week, a senior MAS official of the Monetary Authority of Singapore wrote in a LinkedIn post that Singapore may "soon hear about the commercial launch of a multi-currency payment system for digital currencies". This comes amid strong rising interest in central bank digital currencies, or CBDCs.

A post from MAS on Thursday on opennodes.com - a website supported by the Infocomm Media Development Authority that hosts topics on blockchain development - pointed to a new project after Project Ubin, known as Project Dunbar.

In it, it said MAS is partnering the BIS Innovation Hub and the central banking community on Project Dunbar.

It plans to contribute what it has learnt and the resources from Project Ubin, a five-year project that looked at models for cross-border payments using blockchain and CBDCs.

Project Dunbar is now aimed at designing, developing and testing new m-CBDC models for cross-border settlement.