The discussions of an unprecedented regional alliance were a result of officials stepping up efforts to reduce the use of cash. Although the discussions were thought to still be at a preliminary stage, as the Monetary Authority of Singapore (MAS) and the Bank of Thailand (BOT) were said to be ‘exploring’ the possibility of a link between the two networks, according to a statement by the Director of payment systems policy at the BOT in October.
However, more recently at Singapore’s Fintech Festival on November 14th, the Managing Director of the MAS, confirmed that Singapore’s PayNow system will soon be linked to Thailand’s PromptPay, allowing individuals to transfer money to each other using a mobile number. The announcement is part of a larger initiative to further Singapore’s ‘Smart Nation Agenda’.
Cash remains the primary payment method of choice in Thailand, with over 70% of Thais stating that they most often use cash for payments in a survey conducted by PayPal in 2017. PromptPay could be about to change this though, The BOT oversaw its January roll out and it now has 24 million registrations via national identity cards, equivalent to about a third of the Thai population. Thailand’s priority is to encourage the wider adoption of modes of payment such as credit cards and mobile-based wallets, thereby shifting away from traditional cash payments.
Singapore fairs much better in the same PayPal survey, with only around 45% of Singaporeans declaring cash to be their most popular payment method, although they hope to further reduce this number with the release of PayNow. PayNow, introduced by the city-state’s banking association in July, has over 500,000 registrations, according to a MAS release on August 29th.
Southeast Asia’s banks are gearing up for a competitive onslaught amid aggressive expansion plans by China’s giant financial technology firms, such as Ant Financial, which has adopted a fierce international expansion strategy through investment, alliances and acquisitions abroad. In 2016 Ant Financial invested in Thailand’s Ascend Money, which also operates in Indonesia, the Philippines, Vietnam, Myanmar and Cambodia. The Thai firm offers e-payment services and micro-loans targeted at customers who are under-served by big financial services players. The deal will enable Ant Financial to expand into the broader Southeast Asian market. In addition to this, in April 2017 Alipay acquired Singaporean E-payments firm HelloPay, which will be re-branded as Alipay Singapore.
In light of this, Singapore and Thailand’s decision to combine their digital payment platforms could prove to be a wise strategic move. According to the Director of payment systems policy at the BOT “Thai banks have an incentive to bolster digital payments to ensure they can compete with potential challengers from abroad, including the likes of Alipay and WeChat, which currently serve only Chinese tourists in Thailand”. As the saying goes, ‘there’s safety in numbers’ and by combining their resources, both PayNow and PromptPay stand a better chance at withstanding the might of the likes of Alipay.
With there being presently no apparent threat to the continuous rise of Chinese E-payment giants, should this alliance prove successful, we could see more local companies partnering with neighbouring payment services and platforms in an effort to quell the likes of WeChat and Alipay.