Thailand pushes digital payments, rejects US dollar in move towards cashless society

The Bank of Thailand and central banks in four more southeast Asian countries are creating a cross-border payment zone using QR codes so that southeast Asians can make international payments digitally without having to convert and reconvert to US dollars.

The bank hopes to bolster the use of digital payments to halve the amount of cash in circulation in Thailand by 2026, with the eventual goal of turning Thailand into a cashless society.

On Monday at the G20 Summit in Bali, the central bank entered a memorandum of understanding with the central banks of Malaysia, Singapore, Indonesia, and the Philippines to use QR codes for international payments between the five countries, without the need to use the US dollar.

The bank is also fine-tuning the PromptPay system used to make digital payments easier within Thailand.

In a policy statement, the bank argues that the widespread adoption of electronic payments will increase economic activity. By promoting QR code payments within Thailand and Southeast Asia, the bank aims for 42% of all payments in Thailand to be digital by 2024 with each person making 800 digital payments per year.

However, the bank’s agenda to move toward a cashless society is not favoured by most Thais. A study conducted earlier this year found that nearly all Thai people deemed cash as essential to daily life.

Despite cashless QR code payments taking off during the pandemic, 50% of Thais said they would continue using cash for day-to-day payments, the study found.

This week, the Bank of Thailand outlined its policy objectives in a document entitled, “A new landscape in the Thai financial sector for Digital Economy and Sustainable Growth.”

The bank sees digital payments as essential to the economic development in Thailand because they “encourage innovation and great flexibility within Thailand’s financial industry and improve risk management capabilities.”

The bank will spend the coming years pushing the use of digital payment systems for everyday transactions. Currently, PromptPay handles 42 million transactions per day.

To elevate the use of PromptPay even further, the bank is developing the system so that users will be able to send documents alongside payments to encourage the use of the service for business transactions.