ASEANPay – What’s the story?

1. Presented by Enoch Ch’ng Date 8 October 2004 ASEANPay – What’s the story?

2. Presentation Outline • Whose big idea? • Look who is talking • Ambitious, ambitious • Hurdle #1 • Not that unexpected • Where do we go from here? • Still peddling snake oil?

3. Key Service Providers Remittance Houses Correspondent Banking Costs 20 times more than domestic transfers Estimated Remittances by foreign workers, excluding trade Estimated Volume/Value per month Singapore Cross-border Payment

4. Singapore Trade Statistics • In 2003, Singapore’s largest trade partner was Malaysia, followed by US • In 2003, Singapore was 13th largest trade partner of US* * Source: International Trade Administration, US Department of Commerce

5. What’s in it for Central Bank? • Secure and efficient regional electronics transactions, payments and settlement. • Facilitate regulation, supervision & monitoring of cross-border payments. • Level playing field. Benefit smaller banks with no cross-border capability.

6. Look, Who is Talking? • Promote Trade, Business & e-commerce • Removing cost barriers to regional expansion • Intra-ASEAN trade encouraged due to lower costs • Reduced payment cycle: better cash & risk management • Foster ASEAN Spirit • Close cooperation among ASEAN countries promoted • Gateway to International Payment • Preferred ASEAN Payment/Clearing Hub. • Act as gateway for linkages between International payment gateways and ASEAN Payment/Clearing Hub.

7. Ambitious, ambitious • Secure, efficient and cost effective • Avoid re-inventing the wheel • Leverage on existing ACH infrastructure • Use of national &/or international standards for submission & receipt of payments to ASEANPay • Stakeholders reliant • Product responsibility lies with Financial Institutions (FIs) • Foreign exchange conversion carried out by originating / remitting FIs

8. Viable But Rejected eACH Cambodia eACH Brunei eACH Vietnam eACH Indonesia eACH Laos eACH Thailand Regional Payment Gateway eACH Malaysia eACH Singapore eACH Philippines eACH Myanmar

9. Complex But Preferred eACH Brunei eACH Cambodia eACH Vietnam eACH Indonesia eACH Laos eACH Thailand eACH Singapore eACH Malaysia eACH Philippines eACH Myanmar

10. 1 6 5 Regional Payment Gateway Country B Country A Seller Buyer 3 eACH A eACH B Regional Payment Gateway 2 4 Settlement Agent Settlement Agent Buyer’s Bank Seller’s Bank

11. Not That Unexpected • Central Banks and ACH operators were keen. • Difficult to get banks’ buy-in. • Uneven country readiness • Currency exchange control for some countries • Money always matters. • Coverage and convenience of Remittance Houses • Transaction volume low, cost per transaction high • Low costs in SWIFT messaging • Borders still matters.

12. Where do we go from here? • Revalidate requirements • Assessment of countries’ readiness • Formulation of Business and Technical Model • Pilot Development in 2005?

13. Still Selling Snake Oil? • Establish efficient, cost-effective & secure ASEAN cross-border payment infrastructure • Improve efficiency for cross border payments. Currently, predominantly correspondent banking. High costs, long payment cycle • Operate by Trusted Financial Institutions (Central banks, In-country National ACH) • Address consumers' need for faster, cheaper & secure payment service supported by a trusted financial community • Provide a complementary payment service to FIs

14. Thank You