The Bank of Thailand (BOT) plans to upgrade the payment systems standard during the fourth quarter of 2022 to strengthen financial services, minimise digital banking issues, and support efficient and sustainable transitions of the financial sector to a digital economy.
The New Financial Sector Landscape
Following the health crisis, global society has quickly transitioned into the digital era. This new stage of development necessitates adjusting to new lifestyles. Digital trends have impacted the global financial system, and the financial sector needs the most adjustment. To fully support this transition, Thailand has issued a policy direction entitled “Repositioning Thailand’s Financial Sector for a Sustainable Digital Economy”. It outlines the intention to maintain a proper balance between promoting the financial sector’s resilience, managing risk, and supporting innovation development. The ultimate goal is to enable the financial system to adapt promptly to fast-paced trends and changes.
Under the new landscape, e-Payment is acknowledged as a key engine that drives the financial transformation into a digital economy. Prior successes in promoting the adoption of e-Payment services have mainly contributed to more connected and adaptable economic transactions, technological advancements, and domestic and international payment services that are efficient in terms of ease, speed, security, and affordable cost. The next phase of the development will further modernise payment systems and efficiently connect businesses, service providers, governments, and the general public through e-Payment services and infrastructures that foster competition and innovation and promote accessibility. Such developments will provide the general public with more comprehensive services and applications. Concurrently, payment infrastructures will be integrated into the business sector to accommodate a fully-integrated digital business under an equitable, adaptable, and effective governance.
Three Key Principles of the Payment System
The development of the new payment system will be executed under three key principles: openness, inclusivity, and resiliency. These principles promote the vision that digital payments would be the preference among user groups. It would also enhance competitiveness, improve the quality of life, and transition Thailand into a cashless society.
Openness
It focuses on leveraging shared payment infrastructure and information to increase efficiency and promote competition. Plans under this strategy include: a) to develop a unified infrastructure for digital payments and trade information called “PromptBiz”; b) to enhance the usage of central and international standards in the payment systems, such as the ISO 20022 and API standards; c) to restructure the governance and pricing structure of payment systems to support the swift development of the country’s payment system; d) to devise a payment database under the Regulatory Data Transformation project and integrate it with data frameworks of the government, thereby providing benefits due to broader data usages; and e) to facilitate access to key payment infrastructures by modifying outdated rules and regulations.
Inclusivity
The goal is to promote accessibility and digital financial literacy and make digital payments the preferred choice of Thai people. People of all walks of life would have broad access to digital payment services. Collaboration with public and private sectors and payment service providers will also be enhanced to expand digital payments to specific target groups. Practical applications include the expansion of digital services in mobile applications of the public sector or providing digital payment channels for passengers of public transportation.
Resiliency
It aims to adopt flexible regulatory supervision adaptable to changes and risks in the digital age. Implementation plans include: a) to improve regulatory criteria and conditions using regulatory impact assessment framework, making them flexible to developments of and changes to payment systems; b) to issue new payment regulations promoting new technologies and risks; c) to enhance supervisory tools to keep pace with environmental changes; d) to cooperate with local and foreign regulators, service providers, banking associations, and related agencies to create shared knowledge and address concerns promptly; and e) to develop human resource competencies to support the new digital landscape.
Its Three-Year Target (2022-2024)
The issuance of this policy direction is to guide all relevant sectors in the development of the new payment system. It aims to expand the adoption of digital payments by 2.5 times to 800 times per person yearly while trying to reduce the use of cash and cheques. Such achievement would require the joint force and support of all stakeholders for the Thai financial sector to transition into a digital economy successfully and sustainably.
Cross-Border Transactions
Thailand’s central bank plans to expand digital payment services to ASEAN and Asia. It intends to include remittances to India, Indonesia, and Malaysia and add QR payment services to Hong Kong and India. These countries and those that are in the said region have positive exposures to Thailand in terms of investment, trade, and tourism. Digital payment connectivity across borders would facilitate the growth of transactions, especially as more nations gradually recover following the easing of the COVID-19 pandemic.
Its Implication to Businesses
An improved, stable, and cross-border payments system allows firms around the world to make and receive payments in multiple certified international currencies. The central bank’s attempt to enhance the payment system standard will result in more stable digital payment services, reducing the potential risk of glitches and unwanted setbacks. This will help businesses by integrating open, inclusive, and resilient payment systems into their functions and processes.
Conclusion
Over the past two decades, the payment systems of Thailand have laid the foundations for the progressive transition to e-payments in terms of infrastructure, regulations, and laws. By issuing the policy direction of the development of payment systems under the new landscape, the Thai government’s goal of a sustainable transition to a digital economy means businesses benefit from its vision of improving the quality of life, enhancing financial competitiveness, and transforming into a “less-cash” society. A company registration firm can help you establish your business and grow it exponentially without you having to worry about glitchy, limited, and conventional payment systems standards.
