The Bank of Thailand's approval of the commercial launch of five banks' quick response (QR) code payment services is "credit positive" because it will further improve efficiency and delivery of digital payment systems, says Moody's Investors Service.
The move also confirms the strength of the banks' risk management systems for digital payment compared with competitors that did not receive approval at this stage, the international credit rating agency said in its credit outlook report.
Last Tuesday, five banks won approval from the bank of Thailand to commercially launch QR code payment services nationwide upon leaving the regulatory sandbox. The QR code payment system allows customers to use mobile phone applications to scan standardised merchant QR codes for the cashless purchase and payment of products.
The central bank allowed eight financial institutions to test their payment systems in the sandbox before approving Bangkok Bank, Government Savings Bank, Kasikornbank, Krungthai Bank and Siam Commercial Bank.
Although the central bank did not name the three banks that did not test successfully in the sandbox, other media outlets have reported they are Thanachart Bank, Bank of Ayudhya and TMB Bank.
Digital payment systems increase the likelihood of financial technology (fintech) companies working with banks to drive innovation in the banking system, Moody's said.
Given the sensitive financial data involved, fintech companies setting up their own payment systems outside the purview of bank regulators could expose banks and customers to downside risks.
The banks will be able to realise cost savings as the penetration of the new payment system increases among both merchants and consumers, Moody's said.
Before approving the five banks' payment systems, the central bank tested the readiness and robustness of each bank's IT systems, risk management, consumer protection, security, and related operations in branches and call centres, aiming to serve consumers continuously and efficiently.
Initially, the new payment methods will seek to support small payment transactions at food stalls, small and midsize shops, fresh markets and taxis. At the Bank of Thailand's discretion, the payment services will be enhanced to support more fund sources.