Cheap money transfer system to boost cashless transactions in Thailand

Thailand launched a cheap electronic interbank transfer system for depositors in January, in a much awaited milestone since it unveiled a digital payment masterplan two years ago.

Called PromptPay, it allows someone to transfer sums of less than 5,000 baht (S$xxx) to accounts of other banks for free, as opposed to the 25 baht fee usually levied by banks.

Some 19 million bank accounts were linked to the PromptPay service as at Jan 16, a modest fraction of the 78.8 million savings accounts nationwide that month (Jan 2017). Experts say one of the factors hampering take-up is lack of a privacy law, raising fears that signing up for the PromptPay system might make one more susceptible to having one’s personal information stolen.

PromptPay was part of a larger plan, involving inducing consumers and taxpayers to go electronic, to reduce transaction costs and increase the transparency of tax and government related payments.

Previously, interbank transfer fees had created a virtual ringfence around depositors, forcing cost-conscious consumers to physically transfer cash between different automated teller machines. This also limited the appeal of an increasing variety of e-wallet options.

Commuters on Bangkok’s skytrains currently use a stored value “Rabbit” card, which can also be used to buy items from over 3,000 retail outlets.

Thailand’s three mobile phone service providers also offer their own version of e-wallets, alongside social messaging applications like Line and WeChat.

For example, True Money is an electronic payment system linked to mobile service provider True Move.. Last October (2016), True Money also launched a remittance service that would allow Myanmar migrant workers in Thailand to make real-time transfers of their earnings home.

But while the value and proportion of e-money transactions processed by banks and non-bank service providers have been steadily growing, they totalled just 91 billion baht last year – or less than  1 per cent of the value of payment transactions processed – according to Bank of Thailand data.

The rollout of PromptPay’s peer-to-peer transfer system is expected change the dynamics of Thailand’s e-payment landscape, says Mr Punnamas Vichitkulwongsa, who heads the Thailand e-Payment Association and who is also the chief executive of True Money.

“There would be more excitement in the market,” he told.

“PromptPay creates a level playing field for (non-bank e-wallet providers)…Banks will be more aggressive and step up their offerings to end users,” he said.