The Covid-19 pandemic has accelerated the expansion of digital payments, driving financial transformation in Southeast Asia. The region must work to take full advantage of accessible digital payment options as the consequences of this shift proceed to be seen.
However, the Association of Southeast Asian Nations (ASEAN) should go a step further. The region’s 10 existing member states, in addition to recent member East Timor, stand to achieve significantly from the establishment of an ASEAN-wide, powerful digital payments system.
The seventh edition of the e-Conomy SEA report, published in October 2022 by Google, Temasek and Bain & Company, revealed that greater than 60 million people in six Southeast Asian countries (Singapore, Thailand, Indonesia, Philippines, Vietnam, and Malaysia) used digital services for the primary time in 2020-2022.
The study shows that greater than 75% of individuals in these six Southeast Asian countries have access to the Internet, and most of them have shopped online no less than once.
The study shows that e-commerce on this area is barely set to grow. It predicts that online spending will grow 162 percent to $179.8 billion by 2025, with digital payments accounting for 91 percent of all transactions. These statistics display the region’s enormous potential for e-commerce and digital payments.
The use of blockchain technology in financial instruments resembling cryptocurrencies and central bank digital currencies (CBDCs) has already sparked much discussion within the region. Indonesia, Malaysia, the Philippines, Singapore and Thailand are among the many ASEAN countries which might be preparing to sign an overall agreement to create an interoperable cross-border payments system.
With this method, residents of any country will have the opportunity to pay for goods and services in any of those countries immediately and in real time using QR codes and mobile banking applications.
At that point, Malaysia and Cambodia collaborated to introduce a mobile cross-border remittance service through Bakong, a blockchain-based payment system situated in Cambodia. Due to the rise in online banking activity, Indonesia’s central bank also declared in May that it will introduce a central bank digital currency.
All of those payment methods and digital currencies aim to scale back costs while increasing regional and domestic money flows, in addition to cross-border economic activity. Therefore, the discussion on an ASEAN-wide digital payment system based on blockchain technology is kind of appropriate right now.
Source: TheDiplomat.com
