Digital payments to meet future challenges
Along with the emergence of new models of business and the continuous development of the global economy, trade between one country and another is also becoming increasingly complex and dynamic. In the field of free trade, new agreements, political changes, the expansion of the e-marketplace and the changes in the supply chain due to the Covid-19 epidemic, international trade has to adapt.
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2. Use criteria to strengthen payment security
3. Security through inter usable digital identity
The change in the method of exchange of prices is also having an immediate effect on the method of taking advantage of commercial opportunities. So financial institutions can enable future buyers and sellers to transact not only in an easy and reliable way, but also through a worldwide supply chain.
At the international level, it is becoming more important than ever to change the payment system to meet the new needs created in various fields of business.
To prepare for the future, financial institutions need to change their payment methods to ensure security, identity verification and transactions.
Coordinating various needs
At the international level, the payment system is facing several complications. Because handling payments between different countries requires going through multiple legal processes, both buyers and sellers have to comply with local regulations.
For example, when sending a payment to Thailand, you must include a tax ID in the payment instruction, and add details of what you are paying for in India.
Failure to meet these conditions will result in a delay in the transaction. In order to reduce the current barriers to payment delivery at the international level, the governments of different countries need to take initiatives to increase the opportunities for mutual use by simplifying different payment systems. A successful example of bringing the regional payment system in Europe under a single regulatory structure and a single currency is the Single Euro Payments Area, abbreviated as “SEPA”.
There is no such institution in Asia. Recently, however, there have been regional trade agreements, such as the Regional Comprehensive Economic Partnership (RCEP). The agreement aims to coordinate the supply chain across the region at the local level. Another such agreement is the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP).
About 30% of global GDP and one third of the world’s population come under the RCEP agreement. This means that the agreement is bigger than the trade agreements between the EU, the US-Mexico-Canada and the CPTP.
The way inter-Asian trade is growing, such an agreement was needed. Because the supply chain is constantly changing over time. The electronic industry is also a great example of this. The industry’s supply chain extends from China to ASEAN countries such as Malaysia, Singapore, the Philippines, Thailand and Vietnam. Products are imported and exported to meet different needs through this chain. As a result, regional cooperation between different countries is being ensured, as well as businesses are able to transact globally. And the private sector is playing a key role in increasing the opportunities for mutual use of a global system.
Use criteria to strengthen payment security
With the creation of various ways of transferring money, various issues of money transfer such as standards and opportunities for mutual use of the system, participation, security will become urgent. The Global Network Standards will create a system that allows money to be transacted from one end to the other across the entire network.
Security through inter usable digital identity
Local regulations require some information, such as the identity of the parties involved in the payment and the purpose of the payment. These include the KYC (Know Your Customer) policy. KYC’s standards vary worldwide. However, anonymous transactions cannot be accepted, everyone agrees on this.
Many developed countries are now reaping many economic benefits by integrating different types of payments into a national digital infrastructure. However, the biggest problem with account-to-account payments between different countries is that no globally recognized specific system has yet been developed.
There are still complexities in the various systems used worldwide. These complications can be avoided by ensuring automation in the various processes of transactions in financial institutions. As a result of digital identity, identity can be verified automatically. As a result, various financial institutions will be able to rely on their transaction details and reports. This will make it possible to process payments with efficiency and security.
New type of price exchange
In addition to shifting the supply chain, innovative solutions will be created to address the challenges of international payments using the central bank’s digital currency. However, the current state of international transactions suggests that setting up a payment system that can be used worldwide is a complex task.
However, with the advent of new technologies, innovation will also accelerate. Organizations doing business in different industries need to develop their models. At the same time, they need to be involved in services such as data processing, clearing and settlement, data, artificial intelligence, security and risk management skills.
Through the new type of value settlement model, financial institutions need to develop their capabilities in line with what their customers need.
At the end of the epidemic, if the pace of the world economy is normal, many potential opportunities will be created. Various companies doing business internationally are also now adapting to their supply chains and adapting the customer experience through digital transformation.
