The movement toward a cashless society is gaining momentum around the world as governments, financial institutions, and technology providers invest in digital payments and modern financial infrastructure. Thailand is emerging as one of the latest countries to accelerate this transition through a combination of national e-payment initiatives, expanding mobile payments adoption, growing digital wallets usage, and increased support for financial inclusion. As consumers embrace smartphones and digital commerce, the country’s efforts to reduce reliance on cash and paper-based transactions could reshape how individuals and businesses conduct everyday financial activities.
The age of the cashless society is upon us. No longer are we bound by the constraints of paper money and metal coins. Thanks to advances in technology, we can now make payments with the tap of a card or the click of a button. This newfound freedom comes with its share of advantages and disadvantages. On the one hand, we no longer need to carry around wads of cash or worry about losing our wallets. On the other hand, there is a greater risk of fraudulent charges and identity theft. In addition, some people feel that the move to a cashless society is an infringement on their privacy.
Add Thailand to the list of countries making strides toward a cashless society, although they are in the early stages of what is typically a methodical process for most economies. The convergence of governmental policies and digital payment technologies will accelerate the country’s reduction of cash and paper transactions.
This year will be the tipping point for Thailand’s mobile payment and digital wallet system, which could become a viable everyday payment tool over the next few years, say industry veterans. This will be fueled by the proliferation of smartphones, the growing adoption of a digital lifestyle, a solid telecommunication infrastructure and a greater variety of service providers as well as the government’s policy to promote national electronic payment (e-payment).
In late December, the cabinet approved the Finance Ministry’s national e-payment master plan to promote electronic payment across the board with a view to creating a cashless society. The e-payment master plan is expected to save the country 75 billion baht. Of the total, 30 billion baht would come from reducing the use of cash and cheques, and the remaining 45 billion from the decline in traditional paper-based billing and statements.
The government’s Any ID scheme — which will enable anyone to transfer money and make financial transactions using their ID card, mobile number or email address — and the expansion of electronic data capture will be completed by this June. E-payment is aimed at allowing people to access money transfer services even if they do not have a bank account, serving e-commerce, plugging loopholes in the tax system and directing subsidies to the underprivileged.
Currently, the world’s most advanced example of a true cashless society is Sweden which has overwhelmingly accepted the everyday use of plastic and smartphone apps. Additionally, the Swedish banking system revolves around only a handful of major banks who favor cashless transactions, aided by the practice that many of the country’s banks do not accept or dispense cash.
“Encouraging consumers to use social commerce technologies will spur the use of mobile payment,” says Pawoot Pongwittayapanu, chief executive of efrastructure Inc, the parent company of Pay Solutions There are around 500,000 online merchants in Thailand, 10,515 of which are online stores on Facebook and 11,213 on Instagram. As of Aug 31, 2015 there were 37 million Facebook users and 7.8 million Instagram users in Thailand.
Thailand’s progress toward a cashless society illustrates how government policy, technology innovation, and consumer behavior can work together to accelerate the adoption of digital payments. As mobile payments and digital wallets become more deeply integrated into daily life, the benefits of greater convenience, efficiency, and financial inclusion are likely to expand across the economy. While challenges remain in ensuring accessibility and security, the continued growth of digital payment ecosystems suggests that cash will play a diminishing role as countries pursue more connected and digitally enabled financial futures.
Overview by Raymond Pucci, Associate Director, Research Service at Mercator Advisory Group
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