MAS and Bank Negara Malaysia recently inaugurated a real-time payment system connection, uniting Singapore’s PayNow with Malaysia’s DuitNow. This integration enables swift, secure, and economical person-to-person fund transfers and remittances across both nations.
Announced through a joint release by MAS and BNM, the linkage was introduced during the Singapore FinTech Festival by Ravi Menon, MAS’s managing director, alongside counterparts from Indonesia and Malaysia.
The implementation of cross-border payment linkages between countries like Singapore, Indonesia, and Malaysia can potentially have a positive impact on tourism in several ways.
Cross-Border Payment Impacts on Tourism
Convenience for Tourists:
Seamless payment systems facilitate a smoother experience for tourists. They can easily make payments, whether it’s for accommodations, dining, transportation, or shopping, without needing to worry about currency exchange or transaction complexities.
When tourists find it easier to make payments in a foreign country, they might be inclined to spend more. A hassle-free payment experience encourages tourists to explore and engage in various activities, contributing to the local economy.
Attractiveness of Destinations:
Countries that offer efficient cross-border payment systems become more attractive to tourists. They perceive these destinations as tech-savvy and tourist-friendly, potentially drawing in more visitors compared to destinations without such seamless payment options.
Encouraging Regional Travel:
With simplified payment systems between neighboring countries, tourists might be more likely to explore multiple destinations within the region. For instance, someone visiting Singapore might find it more appealing to extend their trip to Malaysia or Indonesia if they can easily manage payments across these places.
Facilitating Small Businesses:
For local businesses that rely on tourism, easier payment methods can attract more customers and help these businesses thrive. They can cater more effectively to international tourists without worrying about complicated payment procedures.
Bank Indonesia (BI) and the Monetary Authority of Singapore (MAS) revealed plans for a local currency settlement framework in a joint statement. This framework, expected to be operational by 2024, aims to facilitate cross-border settlements—including QR payments, trade, and investments—between Indonesia and Singapore using their respective local currencies.
BI and MAS emphasized that this initiative will help reduce exchange rate risks and costs for businesses and users. This follows an earlier memorandum of understanding signed in 2022 to promote bilateral transactions in local currencies, aligning with ASEAN’s efforts to encourage the use of local currencies in intra-bloc transactions.
The central banks of Indonesia, Malaysia, the Philippines, Thailand, and Singapore had previously agreed to enhance cooperation on payment connectivity, with Vietnam’s central bank later joining.
Once the local currency framework is in place, the cross-border QR payment linkage will utilize direct quotations of local currency exchange rates from Appointed Cross Currency Dealer (ACCD) banks.
MAS’s managing director, Mr. Menon, expressed that this framework will complement the ongoing payment linkage, marking a significant milestone in Singapore’s cross-border payment connections with key regional economies.