Articles by Janaki Krishnan

Technology

Instant payments are changing money flows across the world

What is the main agenda motivating the instant payment landscape? Within the whole regulatory landscape across APAC and for MENA, these countries are trying to build their own payments systems, very much inspired by what India has done with UPI. They are essentially creating a financial ecosystem which is not dependent on foreign investment. That has fundamentally led to the fuelling of instant payments. What we are seeing is a trend across all these countries, and the regulators are really concerned about how money movements are happening, whether it is for consumer payments, peer-to-peer transmission or B2B payments. There is a lot of investment, and conversations about how you get financial sovereignty of the nation, and try and build payment flows on top of that. Now India has shown how this can be built at scale. Each country has its own nuances, but the challenge is how do you build a system, which is not dependent on a card scheme and start moving money. Can you give examples? I will use Singapore as a starting point where we are seeing peer-to-peer payments using a system called PayNow really take off. The cost of payments is extremely high in Singapore for merchants to accept cards and so what PayNow has done is democratised digital payments by allowing merchants to accept payments at really low costs. Then when you go to countries like Egypt, at the other end of the spectrum, where people are completely unbanked, we are seeing something called InstaPay that has taken off. So that is one trend we see across the world, where regulators are realising that they need their own financial infrastructure to move money, specifically domestic money and instant payments is really rising across the world. What are the other emerging trends in payments ? If you look at our old card systems, they are all based on tap and pay. India and China have taught QR codes to the world. It is a new form factor of payments, and it is emerging as a second trend. Those are two trends that we are seeing — whether it is West Asia or APAC. The third piece is that regulators are working on cross-border flows, where there are a lot of inefficiencies both in terms of settlements and also cost for the customer. We are seeing regulators now trying to take decisive action on whether they can connect instant payment platforms and move money faster and in a more efficient way. To some extent, Singapore has been the pioneer in this. They have connected PayNow to UPI and PromptPay in Thailand. But the problem with that is they are also realising bilaterals are not an easy way to solve the problem. They are looking at a larger settlement house. There is Project Nexus, where they are trying to connect all the instant payment systems together. So if you look at the trends – they are instant payments, QR Codes and simplification of cross-border flows. Would you say that instant payments would be effective in reducing frictions in cross-border payments? Instant payments really provide the right platform for us to solve some of the inefficiencies that exist in cross-border flows, especially around settlement and cost. But the real challenge in this is about ensuring authenticity. If I as a customer in Singapore is sending money to somebody in India, I should be sure of to whom I am sending money. And interoperability is not just about platform and technology, but interoperability in terms of KYC. I should know that I am sending money to somebody who is authorised. Interoperability in terms of KYC, technology and protocols, those are in my view the key things for regulators to work on.