Ant International, Grab, and StraitsX (part of Fazz) have on Thursday announced a collaboration to look into the potential for Purpose Bound Money (PBM) to be applied to cross border payments.
The trio said in a statement that PBM is a protocol that specifies the conditions upon which an underlying digital currency can be used and first introduced by Monetary Authority of Singapore (MAS) as part of Project Orchid, which has the potential to lower the cost of payment processing, and the capability for money to be directed towards a specific purpose.
According to the statement, this collaboration aims to enable GrabPay merchants to easily integrate with Ant International’s Alipay+ solutions, accepting payments from a large tourist base.
If successful, this advancement in cross border payment capabilities will expand PBM use cases with the aim of launching in Singapore in 2024.
They noted that generally, smaller merchants in Singapore have only been able to provide a more limited range of payment methods to international travelers.
They said this constraint is often driven by both the lengthy process and the substantial cost involved in integrating new digital payment methods, which may extend over several months or even years.
By leveraging PBM and a distributed ledger infrastructure, they said small to micro merchants can more easily serve overseas customers, without the need for new system upgrades nor manual end-of-day reconciliation between accounting systems, thus reducing the hassle of cross border payments integration.
For local and cross-border consumers, the trio said the functionalities and interactions of PBM with existing foreign and domestic payment infrastructures also mean that payment experiences remain largely familiar and seamless, without a need for new applications or consumer wallets to be downloaded when making payments.
As part of the collaboration, GrabPay merchants will be able to accept payments made via the Alipay+ solution, which includes 1.5 billion consumer accounts.
The use of PBM can also potentially lower payment processing costs for GrabPay and Alipay+ powered e-wallets.
It is noted that the smart contract ability of PBM provides merchants and customers with an added layer of security as controls ensure that usage of the underlying XSGD is only restricted to payments for goods and services from only verified wallet users to whitelisted (GrabPay) merchants.
Other conditions include transaction limits to deter fraudulent activities.
This is enabled by the usage of XSGD which makes real-time settlement of foreign and domestic payments possible, allowing both parties to send and receive payments in their respective local currencies instantly.
To-date, several industry pilots have been launched as part of MAS Project Orchid initiative to trial the viability of PBM for similar commercial purposes, such as learning accounts, programmable rewards, and eCommerce escrow arrangement. Industry participants for these pilots also include Grab and Fazz.
MAS had previously consulted with industry leaders on the development of the technical infrastructure standard and potential use cases for a programmable digital Singapore dollar.
It is also noted that this latest pilot on PBM cross border payments delves into the notion of XSGD as a digital form of the Singapore dollar that can be programmed with logic-based conditions, and interoperable to be utilized across a variety of e-wallets, payment systems and rails, both foreign and domestic, allowing consumers to efficiently purchase goods and services through their preferred platforms, while reducing the barrier of entry to blockchain-enabled payment solutions.
The results from this campaign will be used to further inform all industry participants on the design and selection of infrastructures for PBM, backed by stable coins to become a widely accepted mode of payment both domestically and internationally.
Headquartered in Singapore, Ant International supports merchants worldwide to realize their growth aspirations through a comprehensive range of tech-driven digital payment and financial services solutions.
Grab is a leading superapp in Southeast Asia, operating across the deliveries, mobility and digital financial services sectors.
The firm is serving over 500 cities in eight Southeast Asian countries – Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
StraitsX is a payments infrastructure for the digital assets space in Southeast Asia developed by Singapore-based FinTech Xfers, which is a Major Payment Institution licensed by the
Monetary Authority of Singapore for e-money issuance.
StraitsX issues the Singapore Dollar-backed stable coin, XSGD, offering personal and business accounts to deposit, hold, withdraw, and swap stable coins, as well as connect their accounts to digital asset platforms.