International alliance introduces new universal payments ID

• PayID is designed to facilitate interoperability between traditional finance and fintechs
• Asia is an early adopter of the universal payment identifier
• The first PayID-enabled transaction is expected by the end of 2020

Open Payments Coalition (the coalition), an international alliance of technology, finance and non-profit companies recently launched PayID, a new universal payment ID standard to simplify access for both consumers and businesses to send and receive funds globally across different payment networks and multiple currencies.

The coalition was formed by more than 40 global founding members including Blockchain.com, BitPay, Brave, Flutterwave, Mercy Corps Ripple, Standard Chartered Ventures, a number of Asia-based digital wallet and money transfer providers such as Indonesia’s GoPay, Philippines’ coins.ph, Singapore’s Liquid Group, Thailand’s DeeMoney and others.

PayID is designed to facilitate interoperability between traditional finance and fintechs and bring them under one standard. According to the coalition, its partners reach more than 120 million consumers worldwide and aim to break down proprietary silos and standards that currently exist in payments, accelerate the adoption of digital payments and change the way money is sent around the world.

Unique identifiers of parties, whether individuals or businesses, involved in financial and payment transaction have existed for a while and include international standards, such as Business Identifier Code (BIC), International Bank Account Number (IBAN) and Legal Entity Identifier (LEI), as well as those for domestic payment systems that are linked to mobile phone numbers, email addresses or some other forms of national virtual addresses.

Most of these however are restricted to either specific payment networks often linked to the formal banking system and inaccessible to the unbanked or domestic systems that cannot be used overseas. There is yet to be a commonly adopted standard that provides any individuals and businesses access across different networks and jurisdictions.

Kelvin Lee, head of Southeast Asia at Ripple, one of the primary backers of the standard, said that existing payment identifiers leverage systems designed for other uses and are not fit for purpose for cross-border transactions.

“Existing IDs used for payments were born out of other usage. A phone number is for people to call. And a national identity is what the government gives its citizens. Email addresses or QR codes are for other uses but adapted for payments that are restricted to the domestic level. People may not be comfortable to have such information exposed and tracked,” he explained.

PayID allows individuals and businesses to access different payment networks anywhere with an easy-to-use and customisable address as compared to one that is generic and not intuitive to use, such as a bank account, routing or credit card number.

Lee believes that Asia holds promise as an early adopter of PayID, saying, “Asia has been an early adopter of payment innovations as compared to the rest of the world. A lot of these have started here, such as QR codes and EMV chips.”

He added, “There is a huge migrant and expatriate worker population in this region and it represents a big potential market for cross-border payments and transfers. And PayID will be a huge catalyst to remove most of the friction that affects cross-border transactions today.”

PayID is also designed for individuals and businesses to send or receive money through any payment networks and providers, whether via banks, payment processors, digital wallets and remittance providers.

Lisa Kienzle, head of international growth at Coins.ph, believes that PayID makes financial transactions simpler and more accessible. “It is a significant step in driving interoperability in the financial ecosystem and simplifying the process of sending and receiving money through multiple online platforms worldwide,” she said.

According to the coalition, PayID is built on open-source blockchain and cryptographic technology, and will be relatively inexpensive and simple to integrate with any institutions’ existing IT infrastructure with the necessary security and privacy safeguards.

Hassan Ahmed, head of strategy at GoPay, cited the potential of blockchain technology to offer improved services to users as a factor for the company’s participation in the programme. “We remain committed to working in partnership with all stakeholders, including local regulators to utilise technology to increase financial inclusion throughout Southeast Asia,” he remarked.

PayID will also provide end-to-end Travel Rule compliance solutions for meeting FinCEN (Financial Crimes Enforcement Network) and FATF (Financial Action Task Force) requirements. Despite the disruption caused by COVID-19, Lee expects to see the first PayID-enabled transaction by the end of 2020.