Marshall Islands debuts Lomalo; OCBC upgrades wallet lineup

As part of its tentative push toward digitization, the Marshall Islands has introduced a national digital wallet system for its Universal Basic Income (UBI) initiative, with payments made using stablecoins.

Dubbed the Lomalo wallet, the new system relies on the USDM1, a dollar-pegged stablecoin for UBI fund distribution to citizens. Finance Minister David Paul disclosed that the primary reason for adopting digital wallets for the UBI program is inclusivity, ensuring broad access across multiple demographics.

Recipients of the USDM1 stablecoin via the Lomalo wallet can transfer the funds to other wallet users. However, it remains unclear whether users can transfer funds to other digital wallets, as only individuals enrolled in the UBI initiative are eligible to set up accounts on the platform.

Paul said eligible recipients of the UBI program have the option to receive their funds through the digital wallet, direct deposits, or via physical checks.

The government announced its UBI program in September, targeting regular cash payments to eligible citizens to alleviate the cost-of-living pressures.

While the International Monetary Fund (IMF) has approved the UBI for the fiscal year, the organization remains wary of several risks. For starters, the IMF has expressed dire concerns over the “untested nature” of stablecoin infrastructure for UBI programs, warning of systemic risks to the country’s financial system.

Furthermore, it warned against plans to issue a digital sovereign bond, noting “significant risks relative to returns.” The IMF urged the government to explore a central bank digital currency (CBDC) as an alternative to stablecoin payments, citing the potential of cryptoization of its local economy.

Several Pacific Island nations have launched similar payment systems, racking up successes over the years. Palau launched its stablecoin for government employees on the XRP Ledger, while the Solomon Islands rolled out Bokolo Cash for P2P transactions.

Worldwide digitization

In Southeast Asia, countries are making a concerted effort to digitize their local economies, leveraging artificial intelligence (AI) and blockchain to drive the transformation. Vietnam has made significant strides since the beginning of the year, implementing stringent legislation and several government initiatives.

Malaysia, Thailand, Indonesia, and the rest of the Asia-Pacific are closing down the first-mover advantage of North America and Europe. The region has set the pace in global workplace digital transformation, with digital asset adoption levels surging to record highs among nations.

Asian bank boosts digital wallet options

The pay-to-wallet feature is tipped to have far-reaching effects on the state of cross-border payments for Southeast Asia. Executives say the feature significantly reduces the fees associated with cross-border transfers to instant settlements and near-zero transfers.

Expatriates working in Singapore are expected to become the biggest beneficiaries of the OCBC integrations, given their reliance on expensive over-the-counter (OTC) services and cash agents. Using the OCBC app, recipients can send funds to their home countries, thereby sidestepping the requirement of owning a traditional bank account or visiting a physical location to claim the funds.

The pay-to-wallet capabilities are leaning on Visa Direct, supporting nearly 11 billion endpoints, 3.5 billion accounts, and over four billion cards.

These latest integrations follow last year’s integration of two Chinese-based digital wallets, WeChat Pay and Alipay. Currently, OCBC’s digital wallet integrations encompass a total user base of nearly 2.8 billion individuals across Asia, making it the region’s most connected banking app.

Barely a year after the integration of WeChat Pay and Alipay, OCBC recorded $60 million in cross-border transfers using its mobile app.

“By connecting OCBC accounts to eight of Southeast Asia’s most popular wallets, we are removing friction from cross-border payments and making remittances faster, cheaper, and more inclusive,” said Sunny Quek, OCBC Head of Global Consumer Financial Services.

Digital payments on the rise

Across Asia, digital payment volumes have surged amid a broad decline in cash usage. While private enterprises are leading the charge in changing consumer preferences, government policies are fueling the new adoption rates.

To trigger adoption levels, Thai authorities have floated a digital asset payment sandbox for tourism, allowing tourists to swap their digital assets for fiat easily. Meanwhile, India’s UPI has resulted in digital payments accounting for 99.8% of the country’s transaction volume, while Vietnam’s cashless payments have increased by 40% in the first half of the year.

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