New mobile payment system launched in Thailand as part of National E-payment initiative
According to news reports, an interbank mobile payments system, called PromptPay, was launched in Thailand on 27 January. PromptPay is one of several initiatives under the Thai government’s National E-payment initiative, which began to take shape in December 2015.
National E-payment aims to create a cashless society, integrate the informal economy into the banking system and obtain data from evaluating current social welfare policies and introducing greater transparency. At the event on 27 January, the Deputy Prime Minister, tthe Finance Minister, the Permanent Secretary of Ministry of Finance, the Governor of Bank of Thailand, and Chairman of Thai Bankers Association, jointly announced the progress of the National e-Payment Strategy Plan Project.
PromptPay allows registered customers to transfer funds using a mobile phone with only the mobile number or Citizen ID number of the recipient. It can also be used to receive payments from government agencies, for example, social security benefit, retirement payment and tax refund.
No fees are charged for interbank and inter-region funds transfers if the amount is less than 5,000 Baht (100 Baht~USD 2.85) per transaction. The fee for transactions between 5,001 baht to 30,000 Baht (USD 143 to USD 856) is 2 baht, while for transactions of between 30,001 Baht and 100,000 Baht (USD 2853), 5 Baht is charged. The fee is capped at 10 Baht, applicable for transfers of 100,001 baht or more. These transaction fees are significantly lower those charged by the banks. For instance, Bangkok bank charges between 12 and 75 Baht for fund transfers conducted using other channels.
Bloomberg quoted the Thai Bankers’ Association Chairman, Predee Daochai as saying that fees for money transfers and payments account for about 2.5% of Thai banking industry revenue, and half of this would be affected by PromptPay. However, long-term cost-savings through reduction in cash transactions and associated transportation and revenue expenses is expected to make up for the loss in fees.
The PromptPay launch was scheduled for October 2016. It was delayed due to a "technical glitch"and need for further testing to ensure security. A few incidents also undermined public trust in the online money transfer system. The government and the Thai Bankers Association have been working to allay allay security concerns.
Bangkok Post reported that the government-to-consumer service (G2C) was launched in December 2016, as scheduled and the government has started making welfare payments to qualified low-income earners who signed up for PromptPay. The Revenue Department is also using PromptPay's G2C channel to distribute personal tax income refunds.
At the moment, the system is available only for retail customers. Around 20 million accounts out of a total of 40 million accounts had registered for PromptPay services, as of late January. The number is expected to rise to 30 million by the end of 2017, with the addition of business-to-business (B2B) clients. The B2B service is expected to be rolled out on March 1. The pre-registration for corporate clients has been launched.
In addition, there are plans to install around 550,000 electronic data capture (EDC) machines, commonly known as card swipe machines, within March 2018. According to Finance Minister, Apisak Tantiworavong, the capital market will be the next target, but relevant parties will need 12-18 months to upgrade systems.
According to central bank statistics, as of September 2016, there were 14.1 million internent banking users and 19.4 million mobile banking users. There were 20.7 million internet banking and 56 million mobile banking transactions in September , with transaction values of 2725 billion Baht (USD 77 billion) and 499 billion Baht (USD 14 billion) respectively.