Vietnam joins the Regional Payment Connectivity (RPC) initiative - Opportunities and challenges for the cross-border payment industry

On August 25th in Bali, Indonesia, the State Bank of Vietnam participated in the Regional Payment Connectivity (RPC) initiative. Is this an opportunity for Vietnam's cross-border payment industry to grow stronger, let's find out more about this issue with FinFan.

Vietnam joins the Regional Payment Connectivity (RPC) initiative 

This connection idea was developed based on an expansion of the Memorandum of Understanding on Cooperation in Regional Payment Connectivity (MOU RPC) that was initiated by the central banks of Indonesia, Malaysia, Philippines, Singapore, and Thailand at the sidelines of the G20 Leaders’ Summit on 14 November 2022 in Bali.

The purpose of the establishment of Regional Payment Connectivity is to strengthen and strengthen payment cooperation and connectivity through the development of faster, cheaper, more transparent, and more inclusive cross-border payments.

In particular, the activities of this organization can extend to many different payment methods such as QR-code and fast-payment-based cross-border payments.

The organization's goal is to promote business activities after the pandemic, especially the tourism industry and some industries that are greatly affected by COVID-19.

*Deputy Governor Pham Thanh Ha, who represented SBV at the signing ceremony, stated “SBV is pleased to be a new signatory of the MOU on Cooperation in Regional Payment Connectivity and looks forward to the close coordination among all the parties to promote faster, cheaper, more transparent and more inclusive cross-border payments. The MOU shows our solidarity and marks a good starting point for cooperation to strengthen regional economic integration and advance payment connectivity toward making ASEAN a global leader in payments connectivity.”*

Sourced by the Monetary Authority of Singapore

Opportunities for the cross-border payment industry

This signing to participate in Regional Payment Connectivity not only represents a long-term step in integration and mutual development for Vietnam's ASEAN but also promotes the development of Vietnam's financial and tourism sectors.

• Financial aspect

Despite being an economic, cultural and social organization of countries in Southeast Asia, each country member in this region still uses separate currencies (unlike the EU). Therefore, currency conversion between countries is still done through intermediary steps and incurs certain fees.

Participating in the above initiative will help the currency circulation between countries in ASEAN take place more convenient, faster and less expensive.

Furthermore, participation in the project will contribute to Vietnam's fight against cross-border fraudulent money exchange merchants, who can collect money and either not return the currency converted in the host nation or exchange it at a higher rate than typical.

Another problem comes from cross-border online shopping, participating in the project will help online trade between countries in ASEAN take place more easily and conveniently, without the prospect that buyers have to wait a very long time to receive the goods due to stuck at payment and currency conversion between countries.

• Tourism and other service industries aspect

Vietnam's tourism is always a thriving industry and ranks second in contributing to the country's GDP. However, in recent years, the tremendous pressure from the COVID-19 pandemic along with the subsequent double economic crisis has persisted to the present.

The number of international visitors (especially from ASEAN countries with an average of nearly 2 million arrivals in 2019) to Vietnam has decreased significantly and greatly affected the country's GDP.

The weakening tourism also leads to the fact that other service industries also reduce their revenue significantly, especially the hospitality industry.

Participating in the project with the goal of cutting costs and making payments faster will help customers have more confidence and can pay back for travel, relaxation, etc.

Challenges for the cross-border payment industry

Participating in the above project can increase competition among countries in the region in stimulating tourism as well as economic development.

Specifically, participating countries will enjoy the same benefits in optimizing cross-border international payments. At this point, if Vietnam's technical level or service quality is not up to standard, we may be left behind in the game of global industrialization.

Therefore, the challenge of digital transformation in payment along with upgrading service quality to be on par with and have a competitive advantage with other countries in the region is huge.

In conclusion, Vietnam's participation in the Regional Payment Connectivity project, along with five other key ASEAN countries such as Thailand, the Philippines, Malaysia, Singapore, and Indonesia, is both an opportunity and a challenge.

We can rely on the desire to learn recent technological advancements, as well as the beautiful natural landscapes that God has bestowed on Vietnam, to improve technology and service quality and increase competitiveness in the market with not only other ASEAN countries but also the rest of the world.