Asia Pacific is home to most of the world’s population and a significant amount of economic activity. The region is also one of the most diverse, comprised of numerous cultures, languages, governments, and economies.
Although this diversity adds to the character of the region, it has also made it challenging to achieve any sort of regional political or economic cooperation.
One of the few is the Association of South East Asian Nations, or ASEAN, which was established in 1967 with a focus on accelerating economic growth, social progress, and cultural development across the bloc’s member countries. The sub-regional group has grown quickly in the years since.
From 2005 to 2018, total merchandise trade across ASEAN grew from US$1.2 trillion to US$2.8 trillion, of which 23% was related to intra-ASEAN trade. E-commerce grew even faster from US$11 billion in 2017 to US$24 billion in 2018.
As trade has increased, many stakeholders in the region hoped that more sophisticated, and cost-effective, payment systems would keep pace.
However, the region has struggled to have any cohesive specific regional real-time payment integration. E-commerce gateways and card schemes like Visa V +2.3% and Mastercard MA +3% are spread across the region to enable cross-border commerce, but merchant and consumer fees can add up to 8%+ depending on the corridors and networks; a significant tax on cross-border transactions. Similarly, bank remittances via SWIFT are similarly costly and can incur $50+ in fees.
Payments as the underlying infrastructure
Following in the footsteps of the European Union, it was expected that ASEAN would pick up the reins and help drive a Single European Payments Area (SEPA)-style payment network that would facilitate and streamline cross-border payments. As originally envisioned, this ‘Asian Payments Network’ would begin in the ASEAN countries and eventually grow to include many nations across the Asia-Pacific region.
Source : Forbes