Malaysia and Thailand Launch QR Payment Linkage

On June 18, 2021, Malaysia and Thailand launched a cross-border quick response (QR) payment linkage to enable businesses and consumers from both countries to receive instant QR code payments.

The project was initiated in June 2020 and will be completed in three phases. This marks the completion of the first phase in linking the real-time payments between Malaysia’s DuitNow and Thailand’s PromptPay.

Under this first phase, users in Thailand can now scan DuitNow QR codes to make payments to merchants in Malaysia, which includes cross-border e-commerce transactions. Under phase two of the project, users in Malaysia will be able to scan PromptPay QR codes to make payments to merchants in Thailand; this is set to start in Q4 of 2021.

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Through the DuitNow and PromptPay link, Malaysia-based CIMB Group and CIMB Thai have been appointed as the settlement banks and have offered instant QR code payment services to their customers.

Enhancing ASEAN’s cross-border linkages

ASEAN aims to create seamless cross-border payments between member states under the ASEAN Payments Policy Framework (APPF), by harmonizing and modernizing payment infrastructures. This will enable ASEAN to ensure that regulatory frameworks can safeguard the service users’ interest, while also promoting innovation and investments in information and technology (ICT) in the region.

Despite the lack of uniform regulations and economic disparities between ASEAN states, market forces driven by consumer and business demands will propel the bloc towards realizing a multi-country real-time network.

The bloc is trying to emulate the European Union’s (EU) Single European Payments Area (SEPA)-style payments network. The system was introduced for credit transfers in 2008 before being fully implemented in the Euro area by 2014. The pace of SEPA’s development was assisted by the fact that participating countries were already members of the EU and used the same currency — the Euro.

The DuitNow-PromptPay linkage is now part of the growing payment network being established in ASEAN.

In April 2021, Thailand and Singapore launched the world’s first linkage of real-time payment systems in collaboration with the Monetary Authority of Singapore (MAS) and the Bank of Thailand (BOT). Under this agreement, users of the two payment systems — PayNow in Singapore and PromptPay in Thailand — can send money daily from Singapore to Thailand, or vice versa, of up to S$1,000 (US$744) or THB25,000 (US$783), through their mobile phones.

ASEAN’s digital payment potential

The enhancement of a multi-country real-time network will provide the bloc’s large population of the unbanked and underbanked, which approximately totals 290 million, access to digital payment providers.

Further, digital payments can also provide new financing models for this demographic, such as through microloans and financing for micro-enterprises, many of which have now gone online since the start of the pandemic.

According to a 2020 report by Bain & Co, Temasek, and Google, Southeast Asia’s digital economy is expected to reach a gross merchandise value (GMV) of US$300 billion by 2025, and digital payments will play a vital role in this growing sector. Most notably, giant ride-hailing apps Gojek and Grab offer a variety of services from logistics to transport to delivery, which is all accessible through their digital payment platforms.

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