Central bank wants cashless society

The Bank of Thailand has launched a payment systems roadmap for 2010 that focuses mainly on promoting electronic payments to encourage the development of a cashless society.

One of the roadmap's strategic objectives is to encourage the wider use of electronic payments to reduce the cost of cash management as well as freeing people from the need to carry coins and banknotes.

Ultimately, it wants to see people using electronic payments, especially in form of electronic money, in their daily lives.

Bank of Thailand (BOT) Assistant Governor Chim Tantiyasawadikul said that to achieve the goals of its roadmap, the central bank needs to establish many supporting factors, including standards for e-money, laws and regulations, a fee structure and a security system. As well, it needs the help and collaboration of every stakeholder, from commercial banks and the business sector to government organisations and ordinary users.

Currently, the overall value of cash spent in Thailand per year is about Bt1 trillion, and the cost of managing this cash is about Bt3 billion.

"This amount of money is spent for cash management only," Chim said. "If we can encourage people to make payments in cashless form, especially by plastic cards, it should reduce the cost of cash management every year."

According to BOT figures, there were more than 60 million e-money cards in Thailand at the end of June this year. Of these, 27.9 million were debit cards, 19.6 million ATM cards and 13.1 million credit cards.

While it may seem that the use of plastic-card e-money is quite widely adopted, in reality most cards are not used for "daily life" cash payments. Most people use credit cards for these payments instead of using debit cards, while they use ATM cards for cash-withdrawal purposes rather than for making electronic payments.

"On average, there are only 2 to 3 e-payment transactions per person per year in Thailand. In developed countries, the average number of e-payments from 'daily life' spending is more than 10 transactions per person per year," Chim said.

E-payments are classified into three levels: the inter-bank level, corporation-to-corporation level and consumer level. The overall value of the country's e-payments is about Bt60 trillion per year, and of this only Bt5.5 trillion comes from e-payments at the corporation-to-corporation and consumer levels.

"The growth rate of e-payments should be higher than the growth of the country's gross domestic product (GDP)," Chim said. "The beauty of the wider use of e-payments is that it will allow the business sector to reduce operating costs, will reduce the overall cost of printing banknotes and reduce the overall costs of managing the cash."

The director of the Payment System Policy and Oversight Office in the BOT's Payment System Department, Ronnasak Ruengwirayuth, said that in a bid to promote wider use of e-money in "daily life" transactions, the central bank needs the collaboration of many stakeholders, included banks, merchants, operators and ordinary people.

It also needs to establish a national clearing house to oversee and operate e-money transactions, both within and outside of the banking system. Therefore, it is also needs inter-operability standards to facilitate the flow of these transactions, Ronnasak said.