The RPC initiative streamlines regional payments in ASEAN+3 by facilitating local currency transactions, thereby reducing costs and transaction times, as detailed by AMRO Asia.
Simplified Payment Processes
The Regional Payment Connectivity (RPC) initiative facilitates transactions by allowing payments in local currencies, thus streamlining the payment process. This approach eliminates redundant steps, creating a more straightforward and efficient transaction process. As a result, businesses and consumers can conduct transactions with reduced costs, ultimately leading to savings. Furthermore, the simplification of the payment process significantly diminishes the time required for transactions to be completed.
Reduced Costs and Enhanced Efficiency
By minimizing unnecessary steps, the RPC initiative not only accelerates transaction processes but also contributes to cost reduction. The initiative’s design ensures that both consumers and businesses benefit from a more cost-effective payment model, promoting financial inclusivity. This emphasis on reducing transactional barriers offers a competitive edge to economies involved, fostering a more integrated financial network across participating regions.
Expanding regional cooperation
ASEAN members have been leading this initiative, with Indonesia, Malaysia, the Philippines, Singapore, and Thailand signing a memorandum of understanding (MOU) in 2022. The commitment to RPC was reinforced at the 42nd ASEAN Summit in 2023, where regional leaders collectively committed to enhancing regional payment connectivity and promoting local currency transactions, leading to the inclusion of more members to the network. Today, eight ASEAN members are part of RPC, demonstrating the region’s strong push for cross-border payment integration using local currencies.
Key benefits for businesses
The Regional Payment Connectivity (RPC) initiative offers several key benefits for businesses, especially within the ASEAN region:
- Lower Costs: RPC enables payments in local currencies, eliminating the need for costly currency conversions and reducing reliance on intermediaries. This translates to lower transaction fees.
- Faster Transactions: With direct payment mechanisms and instant processing systems, businesses can receive payments more quickly, improving cash flow and efficiency.
- Enhanced Transparency: The system provides more visibility into payment processes, reducing uncertainties and making transactions more reliable.
- Financial Inclusion for MSMEs: Micro, small, and medium enterprises (MSMEs), which may have limited access to traditional cross-border payment systems, can now participate in international trade more easily and cost-effectively.
- Seamless Integration: By connecting national QR payment systems (like Thailand’s PromptPay and Singapore’s PayNow), RPC allows businesses to handle cross-border payments with ease, using familiar tools.
- Promotion of Regional Trade: With streamlined payment processes, businesses are encouraged to expand their markets within the ASEAN region, fostering growth and collaboration.
These advantages are particularly valuable for fostering a dynamic and interconnected regional economy. By enhancing collaboration among local businesses, encouraging innovation, and attracting investment, regions can experience accelerated growth and development. Additionally, improved infrastructure and communication networks facilitate the efficient movement of goods and services, further strengthening economic ties.
The role of QR payments
A key focus of RPC has been the standardization of Quick Response (QR) payments. This contactless payment method is being integrated across participating central banks to standardize national payment systems through a common QR code format, ensuring seamless cross-border transactions. Currently, several QR code systems have already been connected, including Cambodia’s KHQR, Indonesia’s QRIS, Lao PDR’s Lao QR, Malaysia’s DuitNow, the Philippines’s QR Ph, Singapore’s PayNow, Thailand’s PromptPay, and Vietnam’s VietQR. Japan is also reportedly exploring the integration of its QR payment system into RPC, with full implementation by the end of 2025.
With Indonesia, Malaysia, the Philippines, Singapore, and Thailand leading the effort, regional payment connectivity has seen rapid improvement in recent years. By establishing bilateral and multilateral linkages through instant payment systems, consumers and businesses can perform real-time currency conversions via banking apps. As a result, cross-border QR payments have become more seamless.
Source: Enhancing Regional Payment Connectivity Across ASEAN+3 Economies
