Dreams of a cashless society in Thailand could materialise sooner than expected as officials race to develop the national e-payment system, under which money transfers will be just a click away and the cost of doing business will drop.
E-payment will allow people to access money transfer services even if they do not have a bank account, along with other financial purposes such as making e-commerce transactions, curtailing loopholes in the tax system and directing subsidies to the underprivileged.
E-payment overview
The plan for Thailand to rely less on physical cash, and develop into a society geared towards electronic payment, is composed of five modules. The first two of the five phases -- Any ID and expansion of electronic data capture (EDC) -- will be available in the next six months, Finance Minister Apisak Tantivorawong said in February.
Any ID will enable anyone to transfer money and make financial transactions using an ID card, a mobile number or an email address. As it runs in tandem with EDC, more people using the Any ID service means the number of payment terminals will also have to increase.
Mr Apisak wants all companies registered with the Commerce Ministry to be equipped with the EDC system and says another 2 million EDC units are needed for Thailand to gear towards a cashless society. The country currently has only 300,000 EDC units.
The other three phases entail linking e-payment and the Revenue Department's taxation system to make tax collection more efficient, allowing the government to subsidise all low-income earners directly by using only their ID cards, and creating a campaign offering incentives to encourage people to use the e-payment system.
Tongurai Limpiti, the Bank of Thailand's deputy governor overseeing financial institutions stability, says the government is planning to set up a national e-payment system in which money transfers can be made via the recipient's phone number instead of a bank account number.
The idea can come into effect by establishing a central "switcher" and "registrar", with the latter responsible for linking an individual's phone number with a bank account number to facilitate accurate cash transactions, she says.
"There should be one main bank account otherwise it [the money transfer process] will be complicated and confusing." says Mrs Tongurai.
Technically speaking, one mobile phone number can be linked with several bank accounts, but this would be an added burden for the central switching system, so a better move would be to designate one mobile phone number to a single bank account, she says. "If anyone wants to have more than one main bank account number then that person has to link it with a different mobile phone number."
The government also wants to use citizens' national ID cards with the EDC system in order to create an "e-purse" to disburse social security money, which can be linked with the 13 digits on an ID card, she says.
The cashless society might be a novelty for Thailand, but the concept has been in progress for a while in other parts of the globe. South Korea is genuinely transforming itself into a cashless society where non-cash payments accounted for 70% of the total value of consumer payments in 2014, while South Koreans with debit cards make up 58%, according to a CNBC report.
The same report also highlights European countries as frontrunners of becoming cashless societies, in which non-cash payments' share of the total value of consumer payments accounted for 89% in both Sweden and Britain and as high as 93% in Belgium. Debit card users in Belgium, Sweden and Britain are registered at 86%, 96% and 88%, respectively.
Anuchit Anuchitanukul, a member of the panel tasked with installing the e-payment system, says e-payments now constitute 19% of all financial transactions in Thailand. Of the total, credit cards represent 98% and debit cards make up the rest.
The three major mobile operators, Advanced Info Service, Total Access Communication and True Move, made a move to support the cashless society scheme on Dec 1, 2015, by allowing mobile users to directly transfer money across the three mobile networks to a receiver simply by entering the receiver's mobile number.
The maximum amount is limited to 10,000 baht a transaction, capped at 30,000 baht a day.
Central supervision
National ITMX Co is poised to be tasked with developing and managing the registrar system since the company already manages the central switching system for ATM transactions, says Mrs Tongurai.
Under direction from the Bank of Thailand's Payment Systems Committee, National ITMX, abbreviated from Interbank Transaction Management and Exchange, will be the key inter-bank payment infrastructure and central data processing system that exchanges, manages and processes data across member banks and organisations in order to support e-payment and electronics fund transfers, according to the company's statement on its website.
The system supports all kinds of electronic payments and fund transfers from various channels including ATMs, counters, the internet, phone and mobile channels.
Mrs Tongurai says the central bank, National ITMX and commercial banks have held several rounds of discussions on developing the e-payment system as the government wants the system to start operating in the second or third quarter of this year.
Commencement of the national e-payment operation is likely to fall in the third quarter to fit in with the operation's schedule, she says.
E-payment security is expected to be overseen by National ITMX since it is set to manage both the central switcher and registrar systems.
Mrs Tongurai says the technical specifications of the e-payment security have not been finalised, but there should be a one-time password or locked options to prevent unauthorised transfers in cases where someone's mobile phone is stolen. E-payment security is essential because the plan is to use a mobile phone app to facilitate cash transactions from one bank account to another.
The central bank has sent three supervision teams associated with information technology supervision, e-payment business, and technical support to work with National ITMX on developing the e-payment system, she says.
E-payment services are regulated under the Royal Decree on Electronic Payment Systems issued under the Electronic Transactions Act, as well as under a notification of the Finance Ministry issued under Section 5 of Revolutionary Council Decree No. 58, according to Tilleke & Gibbins. A considerable body of regulatory notifications exists under each.
A new bill is expected to replace the older rules and consolidate the regulatory regime under a single act, says the law firm. It would discern between e-payment systems and e-payment services.
The other side of the coin
Although the government aims to promote money transfers and social security disbursement to people in rural areas more efficiently, the national e-payment plan seems to be proceeding too quickly and more time is needed to educate people on the e-payment system, says Prinya Hom-anek, Thailand Information Security Association's vice-president.
People without a clear grasp of money transfers made from the Any ID module based on ID cards and mobile phone numbers can be exploited by swindlers as there are channels to commit fraud through false ID or mobile phone numbers, he says.
Public hearings should also be conducted to garner citizens' views on such major schemes, says Mr Prinya.
"It is difficult to criticise right now because it [the national e-payment] remains a model and there is no protocol in place yet," he adds.
Nakrop Niamnamtham, managing director of nForce Security Systems AP Co Ltd, concurs that the national e-payment plan is a good move because the value of e-commerce has been expanding over the years and the scheme will make the tax system more efficient.
But there should be a considerable amount of time allocated to study the national e-payment plan and learn from successful models in other countries, he says, stressing that skilful human resources overseeing the e-payment system is an essential component to the plan's success.
"The government has to build trust in the planned e-payment system among both users and business operators," says Mr Nakrop. Operations of the planned system should be akin to PayPal, eBay or Alibaba in order to ensure transparency and full efficiency.
As of June 30, 2015, Thailand was among the top 10 countries under threat of point-of-sale (PoS) malware -- malicious software expressly written to steal customer payment data -- through the use of the outdated Windows XP operating system, according to Trend Micro Inc, a Tokyo-based security software firm. The country was ranked seventh for global PoS malware, accounting for 3%.
Trend Micro detected an average of 17,000 malware infections in Thailand in the first half of 2015. In terms of overall cybersecurity risks, Thailand came third in Asean after Vietnam and Indonesia.