SWIFT targets ASEAN payments integration by 2017

ASEAN regional payments integration would drive competitiveness and deliver economic growth and productivity improvements . . .

WORK has been under way over the past three years to make an ASEAN Payments Integration facility a reality, hopefully by 2017.
The Brussels-based Society for Worldwide Interbank Financial Telecommunication (SWIFT) has been working with the financial community in ASEAN, including central bankers, commercial banks and other agencies, to develop a roadmap for payment integration.
SWIFT published its Roadmap for ASEAN Payment Integration, outlining its recommendations, in October during the 2015 SWIFT Summit in Singapore.
Today, about 1,000 banks in ASEAN are users of the SWIFT network, and this means they all have the necessary infrastructure and connectivity to each other in place. This would significantly minimise cost and time in creating an integrated system, with existing infrastructure able to provide the basis for relatively fast establishment of an ASEAN payment scheme.
As of now, however, a single payment area such as exists in Europe is a pipe dream. SWIFT acknowledges that, today, ASEAN financial integration remains a vague and distant goal.
At issue is how the region can deal with different financial regulatory regimes and a regional system comprising multiple currencies. SWIFT says that overarching economic goals are perhaps insufficient to satisfy the requirements of financial services sector participants wanting to actively participate in regional integration.
Despite the potential difficulties, ASEAN central banks are talking about the possibilities that could develop through a working committee on payment and settlement systems. But nothing will happen without political will.
SWIFT says the private sector should be involved, and that deadlines should be set for a working group to present solutions for the future of the ASEAN payments ecosystem.
It says ASEAN payment integration depends on the management of stakeholders coming to an agreement about payment standards and organising a scheme for credit transfer built on a closed user group for intra-ASEAN transactions, governed by an ASEAN rulebook.
SWIFT proposes a potential timeline to “accommodate the various needs of the development” of a credit transfer scheme.
It suggests that a working group be established by December 2015, and that by March 2016, this group should publish a draft rulebook covering standards and rules to establish a Council for ASEAN Payments.
Then, over the next three months, this Council should complete work setting out standard definitions for an ASEAN Credit Transfer Scheme.
The aim of the rulebook, it says, would be initially to provide clarity on the scope of a credit transfer scheme. Over time, and as the environment becomes more interconnected in ASEAN, the Council may work toward developing payments solutions and standards for a direct debit scheme, card schemes and e-money, expanding the scope of the rulebook.
By the end of 2016, it should aim to finalise an ASEAN Rulebook and Implementation Guide and, if all that is done, the scheme can begin transacting from January 2017.
SWIFT acknowledges that this is “a somewhat aggressive” timeline, but argues that the payment infrastructure is already established in the region — and that it can be leveraged with a minimum amount of re-work.
The SWIFT proposal merely builds on ASEAN’s plan to enable standardised cross-border payments as part of ongoing modernisation of its financial market infrastructure.
SWIFT believes ASEAN regional payments integration is necessary to support the financial objectives of the AEC. It will drive the region’s competitiveness and deliver economic growth and productivity improvements.
The ultimate goal is to make trade easier and therefore to help accelerate macro-economic growth in the ASEAN region.