Digital Payments Drive Down Demand for Cash in Thailand
The Bank of Thailand reports that the rise of cashless transactions has slowed the growth of banknotes in circulation to a single-digit rate, reducing the need for new currency
- The growth of banknotes in circulation in Thailand has slowed significantly from a double-digit average to between three and six per cent, indicating a sustained decline in the demand for physical cash.
- This decline is driven by a widespread shift to digital payments, particularly the PromptPay service, which has seen daily transactions surge from 14 million to 50 million for small, everyday purchases.
- As a result, the Bank of Thailand has reduced the number of banknotes printed annually and is phasing out paper currency in favor of more durable polymer notes.
The Bank of Thailand (BOT) has observed a significant and sustained decline in the use of physical cash, with the growth of banknotes in circulation slowing to a single-digit rate of between three and six per cent, down from a previous double-digit average.
According to Budsakorn Teerapunyachai, Assistant Governor of the BOT’s Payment Systems Policy and Financial Consumer Protection Group, this trend reflects a widespread shift towards e-payments.
She noted that activities traditionally reliant on cash have decreased, citing a significant drop in ATM withdrawals and a change in how people use the national PromptPay service.
Initially used for large-scale transfers, PromptPay is now commonly used for small, day-to-day purchases like food and drinks.
This shift has seen the number of daily PromptPay transactions surge from around 14 million in its early days to 50 million today, directly impacting the demand for physical banknotes.
The transition to a less-cash society has also led to a reduction in the number of banknotes printed annually, which has fallen from a peak of two billion to between 1.3 and 1.5 billion.
The decrease is also due to the introduction of more durable polymer banknotes, which last much longer than their paper counterparts. For example, a 20 baht polymer note has a lifespan of up to eight years, four times that of the paper version, significantly reducing the need for replacements.
Budsakorn added that the polymer banknotes will gradually replace their paper equivalents. As old paper notes become worn and are withdrawn from circulation for destruction, they will be replaced by new polymer ones.
The BOT has already ceased printing paper banknotes. As a result, paper currency will become increasingly rare in the near future, much like the paper 20 baht note, which is now difficult to find.
Budsakorn clarified that Thailand is not becoming a "cashless society" but a "less-cash society," as a segment of the population still relies heavily on physical currency.
She added that while digital payment systems are a more cost-effective and transparent alternative, cash will not disappear from circulation entirely.
She also reassured the public that banknote counterfeiting is not a growing concern. Thailand’s counterfeiting rate is exceptionally low, at 0.4 notes per one million, which is minimal compared to some other countries.
