Di Dai, Public Engagement, World Economic Forum Tel.:+41 22 869 1405; Email: di.dai@weforum.org
· With deep smartphone penetration, ASEAN is ripe for a digital payments revolution
· Multistakeholder action is needed to build the necessary infrastructure and ecosystem
· Governments have a key role to play, both as regulator and as user
· For more information on the meeting: wef.ch/asean17
Phnom Penh, Cambodia, 12 May 2017 – With its impressive rates of smartphone and broadband penetration, ASEAN is ripe for a digital payments revolution that can replace cash as the predominant mode of payment, although much work lies ahead for creating the requisite infrastructure and ecosystem.
At a session entitled Dethroning Cash as King at the World Economic Forum on ASEAN, business leaders agreed the task would require a multistakeholder approach and encompass steps at every level of the value chain, including customer education, creation of enabling e-commerce laws, policies and regulation, development, customization and deployment of technology.
Cash promotes the “grey” economy, while digitizing payments has a direct and measurable impact on GDP growth, Timothy Murphy, General Counsel and Chief Franchise Officer at Mastercard, told participants. “Formal identity of consumers is a critical component,” he said, adding that governments around the world, notably India, are taking steps to provide all citizens with a secure, verified and unique online identity. As important are secure transaction channels, education of users about benefits, and access to the internet – gaps that must be filled in ASEAN and which need closer policy focus.
“The high cost of remittance is one of the great tragedies in the world,” Nick Nash, Group President of Sea Group, said, adding that digital payments could one day make cross-border money transfer easy and inexpensive. “The missing ingredient is deregulation,” he added, explaining that it is often difficult for ASEAN-based companies to get licences to operate in fellow-ASEAN countries, and making a case for allowing local and regional champions to emerge.
"ASEAN is the cheapest place to be rich and the most expensive place to be poor,” he said, implying that small businesses bear a disproportionate burden of compliance with expensive procedures and regulations, and adding that this must change.
Small businesses, in particular, can gain from e-payments, said Rahul Singhal, General Manager, South-East Asia, PayPal Pte Ltd. He pointed out that ASEAN has 3.5 million freelancers – people who work from home with a computer and a high-speed internet connection – who can take their services global and scale up rapidly with e-payments. However, he cautioned against protectionism and anti-globalization tendencies, saying that an e-payments ecosystem requires an acceptance of global data centres and the extraterritorial nature of the cloud.
Governments have to strike a careful balance on what and how much to regulate, the panellists agreed. Murphy pointed out that governments are by far the largest economic actors in most countries, so if they move systematically to collect revenue and make payments digitally, it can spur a dramatic move towards a cashless economy.
Creating infrastructure and an ecosystem requires calibrated, concerted action by a range of stakeholders including government, private businesses, small retailers, buyers and other users. One key element has to be security, and technology must be openly shared and made available so that people do not waste resources reinventing the wheel, said In Channy, President and Group Managing Director of ACLEDA Bank Plc, one of Cambodia’s largest commercial banks. He called for partnerships between large/wholesale lenders and millions of small borrowers, such as micro-finance customers, to promote the use of digital payments, as well as collaboration with the private sector to help regulators build capacity.
Nash emphasized that regulation must aim to achieve the best outcome for the largest number of people, pointing out that in ASEAN entrenched interests are often able to lobby to ensure that their interests are not undercut.
More than 700 business, government and civil society leaders from 40 countries are participating in the 26th World Economic Forum on ASEAN in Phnom Penh, Cambodia, from 10 to 12 May 2017. The theme of the meeting is Youth, Technology and Growth: Securing ASEAN's Digital and Demographic Dividends.
Notes to Editors
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