StraitsX, a payments infrastructure for digital assets in Southeast Asia (SEA), announced an initiative with Ant International and Grab to revolutionize tourism spending in Singapore. Leveraging blockchain technology and Purpose Bound Money (PBM), this initiative aims to facilitate faster, more secure payments for travelers using Alipay+ apps at GrabPay merchants. The partnership, first outlined in a Memorandum of Understanding (MOU) at the 2023 Singapore Fintech Festival, has now resulted in the deployment of a live cross-border, stablecoin-powered payment system enabled by the Avalanche network.

Key Players

• Avalanche: Blockchain Network
• Grab: Merchant Acquirer and Purpose Bound Money (PBM) co-issuer
• Alipay+: Wallet Network
• StraitsX: Payment Infrastructure, Stablecoin issuer, and PBM design and co-issuer

Roughly 1.3 billion people and 180 million merchants use Alipay. With the rise of e-wallets and growing merchant networks in SEA, there is a growing demand for cross-border transactions to be just as seamless for inbound and outbound tourists. Traditionally, an end-user can’t use their preferred e-wallet for payments in a foreign country due to a lack of interoperability between wallet and merchant networks. 

By harnessing Avalanche's blockchain technology, StraitsX may facilitate faster, more secure, and cost-effective cross-border transactions without relying on traditional intermediaries. 

Purpose Bound Money – Compliance by Design

PBM is a protocol specifying the conditions upon which an underlying digital currency can be used. PBM acts as a bearer instrument, meaning it can be transferred and used securely by the holder without needing a third party to verify the transaction. The PBM is used internally within a closed ecosystem and is not issued or handled by merchants or end users. It is simply used as a reconciliation tool to transfer between blockchain addresses. For users, PBM maintains payments are secure and compliant, allowing them to use their preferred wallets for hassle-free transactions while merchants enjoy lower processing fees.

For this initiative, the PBM system uses StraitsX’s XSGD as the underlying digital currency. The PBM layer contains smart programming rules that permit XSGD can only be transferred to whitelisted wallets, allowing payments to be securely processed for goods and services.

Here’s how it works:

1. When the payment conditions are met, the PBM automatically unwraps the XSGD and deposits it into an internal wallet.
2. Grab then settles the payment to the merchant in fiat currency based on the amount of XSGD in the wallet linked to that specific Grab merchant.
3. Finally, the XSGD in the merchant’s internal wallet is transferred to Grab's StraitsX account for final settlement.

With PBM providing a secure, programmable payment layer, the advantages of integrating blockchain technology in cross-border payments become even more apparent.

StraitsX Layer1 Implementation

StraitsX is leveraging AvaCloud and Avalanche’s Layer 1 (L1)  infrastructure to expand its XSGD stablecoin offering and integrate its payments technology into the Avalanche ecosystem. Operating on an L1, StraitsX will benefit from fast finality, deep liquidity, and high throughput—ideal for large-scale stablecoin transactions. This integration should enable StraitsX to offer faster and more cost-effective transactions to users across the APAC region while maintaining the compliance standards required for financial applications. Additionally, this collaboration lays the groundwork for future initiatives with financial institutions, who can easily spin up private L1s for seamless cross-chain communication and transactions.

Why Avalanche?

Several institutions, including StraitsX, have leveraged the Avalanche network for their digital asset strategies. Avalanche’s EVM compatibility, sub-second transaction finality, low fees, and customizability make it ideal for institutional deployments. Furthermore, with Avalanche L1s, institutions can ensure economic sovereignty of their project, with complete control over transaction costs and fees, unaffected by price volatility of other chains and their tokens, as well as insulation from any sudden price spikes resulting from chain congestion or activity of other players in the ecosystem.

Growing Digital Economy in Southeast Asia

As of September 2024, international users across 12 Alipay+ partners can transact at GrabPay merchants in Singapore. With Southeast Asia’s cross-border e-commerce revenue projected to reach $148 billion by 2027, small and medium enterprises (SMEs) will need more efficient payment methods. 

A shift in consumer preferences, driven by technological advancements, has increased demand for innovative financial solutions like stablecoins, digital currencies, and purpose-bound money. The launch of this cross-border stablecoin-powered payment system comes at a pivotal time, with Singapore tourism reaching 16.5 million visitors in 2024, positioning merchants to capitalize on the anticipated surge in inbound tourist spending.

Source : Avalanche - Nov 5, 2024