Wednesday, 21 August 2013 01:29

Solid foundation and opportunity for mobile payment in Thailand

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The best solution for m-payment in Thailand is a a combination of mobile phone and debit cards The best solution for m-payment in Thailand is a a combination of mobile phone and debit cards ©Yozzo
Thailand has a highly developed financial sector. Bank branches are widespread. Debit cards are experiencing rapid growth, and credit cards are beginning to penetrate the low-income market. Point-of-sale devices have increased dramatically and ATM’s are currently the primary means of conducting financial transactions.

Thailand is described by the World Bank as an upper middle-income country. Various factors, including government policy objectives, have resulted in more than 90% of the population having a bank account. The remaining 10% - unbanked people, tend to be unregistered workers from Lao PRD or Myanmar, farmers, or elderly people in rural villages.

"The level of financial sophistication in terms of financial infrastructure and POS and ATM penetration means that the best solution for mobile money in Thailand will be a combination of mobile phones, debit, credit, and prepaid cards".


The ratio of ATM machines per capita in Thailand is higher than in most countries. According to the Bank for International Settlements (BIS) the average ratio for BIS members was 324 ATM machines per 1 million persons.

In Thailand, the ratio as in 2011 stood at 745 ATM machines per 1 million persons.

In 2011, more than 66% of Thailand’s ATMs were in Bangkok and the central region, where most financial institutions, business centers, and tourist attractions are located. Interestingly, the number of ATMs in Thailand’s other three regions, which are far from the capital city, account for only 44% of the total although 66% of the population lives there.

41 million debit cards were in circulation as of January 2013, but purchase spending averaged only 209 baht per card/month. In practice, this means only 1% are using debit cards for purchases. Bank of Thailand (BOT) is coordinating with the Tax Revenue Department to determine if tax reductions might motivate business owners and debit card holders to use debit cards to pay for goods and services.

Most debit card owners are not aware that they can use the card to purchase goods. The most popular ATM service is cash withdrawal, accounting for approximately 80% of all transactions. ATM cash withdrawal is free.


Payment Statistics

(31.39 THB = U$1)

  • Number of Thai commercial banks: 16 with 6,183 branches
  • Number of foreign commercial banks: 15 with 18 branches
  • Number of specialized financial institutions branches: 2,240 branches
  • Number of post office branches: 1,295 branches
  • Number of ATMs: 47,759 terminals
  • Number of EFTPOS machines: 264,264 terminals
  • Number of credit cards: 17,473,108 cards
  • Number of debit cards: 41,607,157cards
  • Number of ATM cards: 14,925,400 cards
  • Monthly average value of credit card payments: 4,011 baht per domestically issued credit cards
  • Monthly average value of cash withdrawals via ATM card: 7,711 baht per ATM card
  • Monthly average value of debit card payments: 181 baht per domestically issued debit cards
  • Monthly average value of cash withdrawals via debit card: 9,531 baht per debit card
  • Currency in circulation per capita: 16,168 baht per capita ATM and Debit Cards

Source: Bank of Thailand, NSO Thailand

Mobile, mobile and mobile

Thailand's mobile operators are already devising payment services to capitalize on the growing opportunity.

Advanced mPay, the payment unit of Advanced Info Service (AIS), Thailand’s largest mobile operator, is adding a NFC Mass transit payment solution with Bangkok Mass Transit System Plc this year, letting customers use near field communication (NFC) enabled smartphones to pay for the Bangkok Skytrain fares. There are currently 10 NFC-enabled smartphone models available in Thailand today.

Advanced mPay has also joined with MasterCard to roll out a debit card service in September 2013, letting customers purchase via MasterCard. mPay began operation seven years ago, initially the uptake was very slow but today mpay claims to have around 700 merchant partners. The company expects the number of active mobile payment users to double to 400,000 this year out of 900,000 total accounts. Transaction value is seen doubling to 60 billion baht.

DTAC, Thailand’s second largest mobile operator says they are upgrading its technology to provide mobile financial services and payments this year. The company will leverage the practices and expertise of DTAC's shareholder, Norwegian Telenor.

True Money Co, a unit under the True Corporation umbrella, anticipates 300,000 download of their e-Wallet application this year, with revenue rising by 15% to 1.9 billion baht and is said to be spending 100 million baht this year on R&D, mainly for mobile transaction applications.

True Money's e-Wallet app lets users top up mobile airtime, make digital bill payments and financial transactions. Customers must have an e-Wallet account with True or a bank account in partnership with True.

The operators Mobile payment services in Thailand are proprietary and can only handle users of the same mobile service provider which limits the uptake among end-users.


Appetite for shopping and mobile usage 

Thai’s appetite for online shopping has shifted from the PC to the smartphone with more than half of Thai consumers using their mobile phones to shop, according to results from a MasterCard online survey.

Among the reasons given for using the mobile for shopping, most said it was more convenient (57%) and also cited the growing availability of apps that make it easier to do (46%). The purchase of Music downloads (45%) Fashion-related items (43%) and apps (31%) topped the list.


Mobile usage and adoption

  • Population: 67,1 million
  • 83 million mobile subscribers (Q1 2013)
  • The new 3G service is expected to reach 30 million subscribers end of 2013.
  • GfK projects 18-20 million mobiles will be sold in Thailand this year, 45% of them smartphones
  • Among urban consumers, smartphone penetration increased from 17% in 2012 to 36% at the end of the 1Q2013, while tablet penetration rose from 2% to 7% in the same period.
  • Thai Mobile web users average 6.6 hours per day with 44% of mobile web users preferring their mobile devices for internet usage verses traditional methods.
  • 72% of Thailand’s mobile users are below the age of 24

Source: Ericsson ConsumerLab, NSO Thailand, Yozzo, GFK, MasterCard.


Regulatory Framework

The Bank of Thailand is supportive and sees the move toward e-payment systems as a key contributor to economic growth.

Cash is often seen as free to banking customers, particularly when the pricing structure offered by their banks offers free withdrawals and or deposits. However, the high costs of cash management to banks, government, and businesses mean that these stakeholders have a strong incentive to encourage the use of alternatives to cash.

Reducing the use of cash should reduce the overall cost of doing business for all stakeholders, as noted by the Bank of Thailand in its “Payments Systems Roadmap”

The Bank of Thailand, which has outlined the objectives, strategies, and activities that government and regulators will implement over a 5-year period, recommends removal of laws and regulations that impede e-payments and the building of public trust in a cashless society. 


Bank of Thailand’s “Payment Systems Roadmap”

To enhance efficiency, the key challenges, is to reduce payment systems costs by promoting and developing electronic payments channels, like debit cards and e-Money, to substitute for cash payments.

The measures also include improving electronic payment systems infrastructures to support domestic electronic payment services. Moreover, the promotion of financial inclusion and payment services access will continuously proceed so that all groups of the population can access inclusive and safe services, especially the services via mobile phone. This channel is considered to be a convenient and highly efficient way that all consumers, both in urban and rural areas, can easily access.

The Roadmap includes a plan to promote and nurse the development of electronic payment services that covers service providers and various groups of users, including households and organizations (public sectors and private sectors). Examples of electronic payment services that will be promoted are card payment, debit cards and e-Money, mobile and internet payments.

The promotion of payment access aims to facilitate the public from various groups to have easy access to payment services through various channels thoroughly and efficiently. The payment channel with high potential access that should be put into considered, is mobile payment as it offers a wide coverage to all. groups of users, especially users at the grassroots level. BOT is currently studying needs and readiness of all stakeholders, service providers and users, in order to design the suitable plan for Thailand in promoting and developing mobile payment services.


Payment systems development 2013 – 2015


Internet and Mobile

The combination of high mobile penetration, a young segment and the government’s IT policy provides a very solid foundation and opportunity for mobile payment systems. The advancement of information technology and consumer behavior that is more receptive of technology will affect forms of payment services such as the prevalence and lowered prices of high-speed Internet service and mobile devices, especially smart phones and tablet PCs that have been developed to offer different applications to support various activities. In addition, the availability of 3G services for mobile phones has resulted in greater convenience in making payments. These factors offer greater opportunities for businesses and consumers to utilize electronic payments, especially among the younger generation who are well acquainted with technology.

AEC 2015

The expansion of economic integration that brings about opportunities and new competitions, such as trade liberalization and formation of the ASEAN Economic Community in 2015, implies that formulation of policies for international payment systems linkages will be crucial in allowing trade and investment proceeding with efficiency, stability and security. After the AEC is in place in 2015, ASEAN will become a market of 600 million people. Therefore, this is an important mission that needs cooperation from the public and private sectors.

Cost Reduction

Uncertainties in the economic environment have led businesses to place greater importance on cost reduction and efficiency enhancement in order to maintain competitiveness. This should play a supporting factor for the business sector and service providers to utilize more electronic payments. This is because electronic payments can help reduce costs and risks in their operations, especially those relating to using cash and checks, which incur high costs for both service providers and users.


Bottom line

The combination of high mobile penetration and development, a young segment, AEC 2015, Bank of Thailand’s Roadmap, debit cards usage and the government’s IT policy provides a very solid foundation and opportunity for mobile payment systems.

Allan T. Rasmussen

Telecom specialist with a 25+ year track record in Telecom, Broadcasting and IT. Specialties: MVNO, MVNE, Media & Broadcasting, Mobile Devices, Emerging markets, ASEAN, Thailand, Laos

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