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Connecting nations, connecting payments in ASEAN
The ASEAN spirit, emphasizing unity as "ASEAN one community, one destiny" must be reinforced to ensure the proper realization of collaboration within payment systems.
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Digital transaction: Bank Indonesia employees explain the Quick Code Response Indonesian Standard (QRIS) digital payment system to a small and medium entrepreneur during the National QRIS Week in Tegal, Central Java, on Aug. 20, 2023. (Antara/Oky Lukmansyah)
Technological advancements have revolutionized various facets of human life, fundamentally altering the landscape of transactions and payment mechanisms. In this era of digitalization, a seamless and interconnected payment system assumes a pivotal role in expediting trade and nurturing economic expansion, especially throughout ASEAN.
Embracing 10 diverse member nations, each characterized by distinct technological and regulatory nuances, ASEAN stands at the threshold of a momentous opportunity, poised to amplify collaboration and drive economic prosperity within the region through advancing payment-system connectivity.
With a population of nearly 670 million people, Southeast Asia boasts considerable potential. Notably, there has been rapid growth in internet penetration. Internet users across six Southeast Asian countries witnessed an increase of 40 million users (10 percent) in 2021, with an anticipated additional rise of 20 million users (5 percent) in 2022.
The substantial number of internet users contributes to a significant market share for the digital economy, projected to reach US$194 billion in 2022. This figure is projected to further escalate to $330 billion by 2025.
While cash payments remain predominant in ASEAN, accounting for 60 percent in 2019, predictions from the Institute for Development of Economics and Finance (INDEF) indicate a decline to 49 percent for cash transactions. Forecasts with the highest growth potential, standing at 24 and 6 percent respectively by 2025, pertain to digital cards and wallets.
The shift from cash dependency toward digital payments is poised to accelerate; thus, supporting and harnessing this potential is crucial for regional progress.
At the core of driving payment connectivity lies the imperative to address the hurdles posed by technological and regulatory disparities across individual countries. Distinct infrastructures and payment systems, both in terms of technology and regulations, are found across these nations.
