Payments innovation and regional connectivity from Thailand and across ASEAN

In 2023, digital payments accounted for 50% of transactions across the Association of Southeast Asian Nations (ASEAN), and this is projected to reach $416.60 billion by 2028. This growth comes amid increased talks of localisation and regional integration when it comes to cross-border trade – especially for countries in the Global South, who can no longer depend on developed economies as reliable trading partners.

In order to unpack how digital payments infrastructure is reshaping regional connectivity and financial integration in ASEAN, Doğa Usanmaz, Reporter at Trade Finance Global (TFG), spoke with Pariwat Kanithasen, Independent Consultant and former Deputy Director at the Bank of Thailand.

Doğa Usanmaz (DU): What are the key factors driving the growth of digital payments across ASEAN?

Pariwat Kanithasen (PK): ASEAN has really become a hotspot for digital payments, and a big part of that comes down to the widespread adoption of fast payment systems like PromptPay in Thailand. They’ve been genuine game changers.

Most of these systems were initiated by central banks, but what’s critical is that they were designed with interoperability as a core principle from the start. Without that public sector push, we would most likely have ended up with fragmented, closed-loop systems, run by individual players. It’s analogous to our familiar phone charger: without regulatory intervention, there would be proprietary plugs and no universal USB charger. 

I believe that interoperability has created a common standard; once you’re in the system, you can transact with anyone. That’s what really drives scale.

When you combine interoperability with:

• Low or even zero fees, 
• Convenience in transfers, such as using phone numbers instead of strings of bank account numbers, and 
• A wide range of use cases, including person-to-person, business-to-business, and person-to-government, 

One starts to see network effects kick in very quickly.

DU: The total volume of cross-border payments in Asia is expected to almost double from 12.8 billion in 2024 to 23.8 billion in 2032. What is the current state of regional connectivity of payments across ASEAN? 

PK: ASEAN actually shines here compared to many other regions. The world’s first bilateral linkage, done between Thailand’s PromptPay and Singapore’s PayNow, went live in 2021. Since 2021, countries across South-East Asia have established around 20 bilateral payment linkages, covering both remittances for migrant workers and QR payments for tourists.

However, I have to point out that bilateral linkages are not scalable in the long run. That’s why the focus is now shifting toward multilateral solutions like Project Nexus, which is essentially trying to create a ‘plug-and-play’ model for cross-border payments, standardising the way in which instant payment services (IPSs) connect with one another.

DU: Can digital payments facilitate increasing cross-border trade within the region?

PK: On trade, digital payments can absolutely be an enabler. This has been true for small and medium-sized enterprises (SMEs) in some cases, but we’re not fully there yet. One practical constraint today is transaction limits (like $1,000 for person-to-person), which makes them less useful for high-value trade-related payments. 

To really unleash the value of digital payments for trade, there needs to be progress on foreign exchange (FX) regulations and stronger safeguards against fraud. Otherwise, regulators will understandably remain cautious about raising those limits

DU: What are the key regulatory and operational obstacles to seamless payment integration in the region? 

PK: Three challenges come to mind: 

• On the technical side, there is still fragmentation. Different adoption levels of ISO 20022 standards and non-aligned QR frameworks serve as an obstacle. 
• On the business side, FX settlement and pricing remain pain points. 
• And on the legal side, differences in laws and regulations on payments across jurisdictions need to be overcome. 

This is where central banks play a critical role, not just as regulators, but as conveners. They’re really the only players that can bring everyone to the same table and drive alignment across jurisdictions. Without that, progress will remain incremental, without transforming regional integration at scale.

DU: Does increased reliance on digital payment platforms come with particular challenges for emerging markets? 

PK: Yes, and they’re quite real.

The first is operational resilience. As systems scale, outages can have a wide systemic impact.  Providers and operators need to ensure that outages are minimised, and this is difficult for those with legacy systems. As emerging economies rapidly digitise, their payment infrastructures become vulnerable, facing increased risk of disruption due to their reliance on often underdeveloped underlying infrastructure.

The second, more serious concern is fraud and scams. Fast payments are great, but they also enable fast fraud. It’s essential to put preventative safeguards and responsive measures in place, and to ensure that they evolve just as quickly as the systems themselves.

When it comes to digital payments, it’s not just about building speed and convenience, but also about establishing trust and resilience. And, sometimes, you have to make payments less convenient by having extra steps built in to make them safer.

DU: What are the next steps to developing a unified cross-border payment network for ASEAN? How is Thailand positioned as a leader in payments innovation across ASEAN?

PK: We’re moving toward a more layered ecosystem, rather than a single, unified system.

You’ll likely see multilateral platforms like Nexus developing alongside existing bilateral linkages and domestic systems. Therefore, it’s not about replacing one with another, but about making them interoperable.

I believe that Thailand is in a strong position here. PromptPay and Thai QR have been early movers, and Thailand has consistently been at the forefront of cross-border initiatives. But going forward, the key is collaboration. 

Being in a leadership position in payments in ASEAN isn’t about going first. It’s much more about bringing others along and helping shape shared standards.

DU: How can payments technology improve global inclusion for emerging markets? (e.g. supporting the use of local currencies)

PK: Payment connectivity improves inclusion by enabling more direct links between markets. What I mean is that when payment systems are connected, transactions no longer need to pass through multiple jurisdictions, which reduces FX costs and improves speed and transparency.

The benefit I’d like to point out is that this supports the use of local currencies. Instead of routing transactions through a third currency, parties can transact directly with each other, which strengthens local currency usage and makes cross-border payments more accessible, especially for SMEs.

I also want to note that there are challenges, especially for currency pairs with limited liquidity, which makes direct quotation pricing less efficient. But I believe having a payment infrastructure in place creates a virtuous cycle. As usage increases, liquidity improves, pricing becomes more competitive, and adoption accelerates.

So, payments technology is not just about efficiency. It can fundamentally shift how cross-border transactions are conducted to be more inclusive for emerging markets.  In a way, more connected payments facilitate better trade, which, at the end of the day, will eventually translate into regional growth: especially for emerging markets.