Shift to e-payment urged to cut costs

Speaking at a Bank of Thailand conference on the trends and developments of digital payments, Boontuck said that in his personal view, e-payments would become more attractive if the fees were seen as reasonable by customers. As it is now, the cost of digital banking is lower than for physical banking, but its fees are higher. Under the TBA’s five-year strategy ending in 2019, the association is focusing on transactional efficiency in order to reduce the use of cash. 

Boontuck told the conference that there were 49 billion transactions a year in Thailand, of which 32 billion were consumer-to-business, 13.7 billion business-to-business, and the rest consumer-to-consumer. In Thailand, 97 per cent of transactions are done with cash, compared with an average of 94 per cent in other emerging markets. In developed markets, the proportion is 62 per cent.

In transaction value terms, cheques account for 57 per cent in Thailand, against 17 per cent in emerging markets and 20 per cent in developed markets.

Thailand sees 20 cashless transactions per head per year, while emerging markets have 40 and developed markets 283.

The TBA wants to see the per-head cashless-transaction figure raised to 50-60 by 2020, while the value of electronic payments rises from 30 per cent of the total currently to 60-70 per cent within five years.

If these goals are met, the banking industry and the country as a whole could save Bt100 billion a year in transaction costs. The banks will be the big winners, as the annual cost of handling cash and cheques is reduced by about Bt36 billion. 

Vunnaporn Devahastin, senior adviser to the Office of the Public Sector Development Commission, told the conference that it would encourage more government-to-consumer e-payments through the state-owned banks. Tongurai Limpiti, deputy governor for financial institution stability at the BOT, said that under the central bank’s Financial Sector Master Plan (Phase III), e-payment services should be available anywhere at any time and via any device.

Punnamas Vichitkulwongsa, president of the Thai E-Payment Association, said telecom operators should increase their role as the agents to help unbanked customers access payment services. BOT Governor Prasarn Triratvorakul said on the sidelines of the seminar that it was possible that the fees charged for inter-region transactions would be terminated because the cost of this service to the banking industry has gradually declined and e-payment had become more prevalent.