The integration issues concerning regional payment connectivity in the ASEAN region are resolved using a combination of technological solutions and streamlining of processes.
This is the findings of a recent AMRO report, citing that the integration of payment systems requires harmonisation of technologies, regulations, and governance standards.
However, AMRO notes that most payment systems have been designed and optimised to cater to domestic use cases, whereas cross-border integrations are considered only after the system is operational domestically.
AMRO says changing these standards for the purpose of integration could have significant implications for the domestic use of the payment system. This is why authorities have refrained from introducing large scale changes to their payment systems to facilitate integration.
Based on inputs received from authorities, the integrations require the authorities to work closely and find solutions which are mutually agreeable while respecting the laws and regulations of each other’s jurisdictions. These include the use of technological solutions, process streamlining, and agreements on standards for the integration.
Technological solutions can be innovatively used to bridge data and compliance related issues. These solutions include data masking (to address privacy concerns), standardisation of data and messaging formats, automating compliance checks, and real-time monitoring of suspicious transactions.
Process streamlining ensures that the regulatory standards on either jurisdiction are met while improving efficiency, reducing costs and increasing transparency.
Sttandards related to service delivery include agreements on processing and settlement timelines, error and exception handling, and dispute resolution. In this regard, the standards for the payment integrations need to be defined in consultation with the stakeholders.
AMRO says these may include adhering to international technical standards, establishing minimum data requirements, and agreeing on various service level descriptions such as aliases, data formats, payment limits, timeouts and rules for dispute resolution.
Technological innovation has played a pivotal role in boosting regional payment connectivity, as technological advancements in cross-border transaction system have improved operational efficiency, while enhancing security, transparency, and trust across diverse financial networks.
