The link will enable more seamless payments for the high volume of remittances between the two neighbors, which reached S$1.3 billion ($960 million) in 2020.
Singapore and Malaysia’s central banks will be embarking on a phased linkage of PayNow and DuitNow, their national real-time payment systems, the Monetary Authority of Singapore (MAS) said in an announcement.
In the first phase, to be launched in the fourth quarter of 2022, customers of participating financial institutions will be able to make real-time transfers using a mobile phone number and make retail payments by scanning a PayNow/DuitNow QR code.
The linkage will subsequently incorporate a wider range of features and participants. Both regulators will also explore the feasibility of integrating innovative features such as distributed ledger technology-based solutions to catalyse greater efficiencies in payments clearing and settlement between participating banks, the announcement said.
Singapore’s remittance corridor with Malaysia is the city-state’s largest remittance corridor. The two countries also saw 12 million travelers crossing the border pre-pandemic.
The PayNow-DuitNow linkage will be an important infrastructure to support cross-border payment needs of individuals and businesses, as well as the growing digital economic activity between both countries, Sponendu Mohanty, MAS chief fintech officer, said.
The linkage also allows MAS and counterpart Bank Negara Malaysia (BNM) to incorporate the use of distributed ledger and smart contract technologies in the wholesale cross-border payments space, he added.
Earlier this month, MAS also announced that it is working to connect PayNow to India’s Unified Payments Interface (UPI) by mid-2022.
Singapore and Thailand have also connected their payments infrastructures to enable cross-border peer-to-peer transactions.