Singapore's PayNow and Malaysia's DuitNow to link in Q4 2022

SINGAPORE'S largest remittance corridor connects with Malaysia, and this pipe will soon see quicker payments flow through once the two countries' real-time payment systems link up.

The Monetary Authority of Singapore (MAS) and Bank Negara Malaysia (BNM) on Monday announced plans to start a phased linkage of Singapore's PayNow and Malaysia's DuitNow real-time payment systems.

The first phase will be launched in the fourth quarter next year, allowing customers of participating financial institutions to make real-time fund transfers between both countries using just a mobile number.

Customers will also be able to make retail payments by scanning NETS or DuitNow QR codes displayed at merchants' storefronts.

Industry watchers told The Business Times that individual and corporate customers will stand to gain from cheaper and faster transfers, while banks and other fintech players with strong digital capabilities could potentially offer more services. On a broader scale, this payments linkage could rid the cash hassle when travel borders reopen.

In a joint statement, MAS and BNM said the project will enable more seamless payments for the high volume of remittances between Singapore and Malaysia, which reached S$1.3 billion in 2020.

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It will also cater to travellers between both countries, which saw sizeable pre-pandemic traffic of about 12 million arrivals yearly on average.

Following the first-phase launch, the PayNow-DuitNow linkage will be progressively expanded to incorporate a wider range of features and participants.

Both regulators will also explore the feasibility of integrating innovative features such as distributed ledger technology-based solutions to catalyse greater efficiencies in payments clearing and settlement between participating banks.

Sopnendu Mohanty, MAS chief fintech officer, said: "Singapore's remittance corridor with Malaysia is our largest remittance corridor. The PayNow-DuitNow linkage will be an important infrastructure to support cross-border payment needs of individuals and businesses, as well as the growing digital economic activity between both countries."

Fraziali Ismail, assistant governor of BNM, said: "Not only would this initiative further strengthen the economic ties between Singapore and Malaysia, it would also serve as a key enabler to support post-pandemic economic growth."

The PayNow-DuitNow linkage is yet another step towards achieving a regional network of linked real-time payment systems.

In mid-September, MAS and the Reserve Bank of India announced plans to link PayNow and India's Unified Payments Interface by July 2022, enabling users to make instant, low-cost fund transfers directly from one bank account to another between both countries.

In April, MAS and the Bank of Thailand said they were linking PayNow with Thailand's PromptPay in a move that marked the first instant cross-border payments infrastructure to be established globally.

The linkage aimed to halve remittance costs and enable transfers between the two countries to be completed under five minutes, as opposed to the previous average of one to two working days required by most cross-border remittance solutions.

READ MORE: PayNow-DuitNow linkage may lower cash use when borders open