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Thailand rolls out PromptPay money transfer service

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Thailand rolls out PromptPay money transfer service

Last month, Thailand launched a new mobile payments system allowing customers to transfer money easily and cheaply than those offered by conventional banks. This mobile payments scheme aimed at pushing Thai people into the formal economy.

The money transfer system, PromptPay, enables registered customers to transfer their funds to the other people using only the national ID number and mobile number of the recipient.

"For 10 years, we have made several attempts trying to bring new changes in payment methods from cash-based methods to digital ones. Finally, we have taken the first milestone to a cashless society,” Finance Minister Apisak Tantivorawong told reporters.

The launch, which was initially scheduled for October last year, did not happen because of some technical glitches on the platform. In December, Thailand government authorities began testing the system by sending welfare payments to low-income people.

However, the government has said that PromptPay money transfer service will only be available for a small number of retail customers at the beginning. Transactions below 5,000 Baht are free of charge. A small fee of around 2 baht is charged for money transfer transactions between 5,001 baht to 30,000 baht. A transaction fee of 5 baht is charged for transactions between 30,001 Baht and 100,000 baht. The system will charge a transaction fee of 10 baht for transactions of 100,001 baht or more.

Banks in Thailand charge varying fees for wire transfer transactions. Thailand’s largest lender, Bangkok Bank charges between 25 baht to 35 baht for mobile banking service.

“Since last month, more than 2 million people in Thailand have registered to use PromptPay money transfer service. By the end of this year, this figure is expected to double,” said Mr Predee Daochai, the head of the Thai Bankers Association and president of Kasikornbank.

"This money transfer system will open opportunities for new digital businesses like internet marketing and e-commerce. The system will also help reduce the leaks in the payment process from the private and government sector,” Veerathai Santiprabhob the Bank of Thailand Governor told reporters.

PromptPay money transfer service is one of the several schemes the government is pushing as part of its National E-payment initiative in order boost the country's financial transactions into the formal economy.

In March, many companies in Thailand will be able to start using this system. The Thai government is working with other stakeholders to install machines for capturing electronic data in various stores that can be used to swipe credit and debit cards.

In the future, even a small purchase costing less than 30 baht at a neighbourhood stall could be tracked if the seller and the customer use PromptPay.

However, for commercial banks, the lower transaction fees offered by this money transfer system will cut into revenue. The reason for this is that many commercial banks continue to struggle with increasing nonperforming loans and sluggish lending.

Customers in Thailand will be allowed to open and operate only one PromptPay account for each mobile phone number and national ID number, and competition for market share is likely to heat up. For instance, some commercial banks in Thailand have launched rigorous campaigns offering money transfers of any amount without charging any transfer fee. Some have started to offer benefits like free ATM withdrawals for those with PromptPay accounts.

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