Increasingly borderless workers have been driving demand for affordable, swift fund transfers. How is the region coping with the growing trend?
South-east Asia’s remittance landscape has evolved into a testing ground for financial inclusion technologies, driven by 11.6m migrant workers with cross-border transfer needs for remittance and other purposes.
The region’s digital remittance market and its projected growth reflect how interoperable systems and mobile-first solutions are addressing historical pain points: fees exceeding 12% in corridors such as Thailand-Laos, and transfer delays of three to five days.
So, what are some of the ways and rates at which countries in the region have been tackling this sector of cross border trade using favorable policies, public funding, private-public partnerships, and fintech innovation and adoption?
Addressing systemic fragmentation and financial exclusion
The region’s payment infrastructure has long suffered from siloed national systems, with 74% of rural Cambodian small- and medium-sized enterprises (SMEs) lacking access to formal financial channels despite very high smartphone penetration rates.
Migrant workers, constituting 3.3% of Southeast Asia’s labor force, face a paradox: while 55.1% of US$200 remittances now cost under 3% through mobile money platforms, informal channels still dominate 26% of corridors due to complex KYC requirements and limited rural agent networks.
The 2024 launch of Project Nexus — connecting India’s UPI with Malaysia’s DuitNow and Singapore’s PayNow — illustrates regional efforts to bypass these barriers, reducing transfer times from days to seconds and fees to 1.17% for Philippines-bound transactions.
Leveraging interoperability for inclusive growth
ASEAN’s QR code standardization initiative, spanning 15 countries by 2025, has enabled some 550% growth in tourist transactions between Malaysia and Thailand while cutting SME settlement costs by 50% through blockchain platforms like Cambodia’s Bakong. This technical cohesion masks underlying disparities: Vietnam’s NAPAS system processes US$26m daily, yet cash still constitutes 45% of Indonesia’s rural transactions.
Regulatory alignment, particularly Malaysia’s Merchant Acquisition License framework and Singapore’s 2020 cross-border transfer rules, has spurred 17.91% annual market growth by balancing innovation with ISO 27001/PCI-DSS compliance. The results are measurable: 227m new mobile wallet users since 2021, with 66% of Filipino migrants now using app-based transfers for emergency medical funding.
Amid the gradual regional technological improvements facilitating better cross border remittances, one country that has fostered a highly competitive remittance market through active cross-border trade policies; widespread adoption of mobile banking and mobile-based payment solutions; and continued funding and subsidy of digital banking and fintech technology; is Singapore. With many foreign residents there relying on regular or urgent remittances, users in the region are increasingly prioritizing services that meet global security standards and offer low fees.
Said a spokesperson from Korean fintech firm SentBe, which had set up a presence in Singapore since 2018: “With the rising need for more efficient and reliable cross-border remittances, not only for Koreans living in Singapore but also for foreign migrant workers” technological innovations, simplified processes, and low financial infrastructure barriers are needed to facilitate seamless international remittances.
