The 43rd ASEAN Summit in Jakarta resulted in an agreement to accelerate cross-border payments in ASEAN. In other words, countries in ASEAN have agreed to utilize local currency (Local Currency Transactions/LCT) when transacting in the region, as well as regional payment connectivity (Regional Payment Connectivity/RPC).
Each central bank committed to using local currency across ASEAN countries as official payment, starting from the agreement, and will convert it based on the exchange rate applicable in each country.
Agreement on using cross-border payment concepts is important in strengthening financial resilience. This includes encouraging the use of local currency to support cross-border trade and investment in the ASEAN region.
In the long term, cross-border payment cooperation in the region can keep the countries' currency exchange rates in ASEAN more stable and not depend on the US Dollar. This way, regional cooperation between countries will become more integrated and sustainable, strengthening the regional economy globally.
Methods in Cross-Border Payments
The ASEAN countries have committed to expanding the concept of cross-border transactions in the region. Previously, only five countries in Southeast Asia agreed to cross-border payment methods, namely Indonesia, Malaysia, Singapore, the Philippines, and Thailand. These five countries agreed to implement a cross-border payment scheme that will include a digital payment system in regional countries using the Indonesian Standard QR Code (QRIS).
For those unfamiliar with it, QRIS is a digital payment technology that uses QR codes. QRIS, as a cross-border payment method, aims to enable the central bank to standardize digital payment activities through various electronic financial applications, e-wallets, and mobile banking.
QRIS combines various types of QR from Payment System Service Providers (PJSP) for more practical and centralized transactions. Consumers don't need to use a variety of different payment applications. Thus, digital transactions with QR Codes become easier, faster, and more secure.
Meanwhile, recently, Vietnam officially joined cross-border payment cooperation in the ASEAN region through the Regional Payment Connectivity agreement. This collaboration will implement payment methods using QRIS, Fast Payment, and the Real Time Gross Settlement (RTGS) payment system.
In addition to these six countries, Brunei Darussalam, Laos, and Cambodia will soon join in cross-border payment system cooperation. These three countries are currently still in the stage of building and strengthening their domestic payment systems.