Slow take-up for Thailand's new e-payment system

One of PromptPay's biggest draws was the planned roll-out of direct inter-bank transfers. Many Thais withdraw cash only to deposit it at another bank nearby, which is both inefficient and expensive.
One of PromptPay's biggest draws was the planned roll-out of direct inter-bank transfers. Many Thais withdraw cash only to deposit it at another bank nearby, which is both inefficient and expensive.PHOTO: BLOOMBERG

A recent mix-up over tax refunds has highlighted the Thai government's struggle to ignite interest in its new electronic payment system, which has been bogged down by data privacy concerns since its inception last year.

The system, called PromptPay, involves linking bank accounts to mobile phone or national identity (ID) card numbers, which are used as reference points for money transfers. Someone wanting to receive funds from a third party would not need to use his bank account number, and would theoretically be more inclined to rely on electronic transactions rather than cash. It is part of a larger long-term plan to lower banking costs and increase the efficiency of tax collection.

But the pace of sign-ups has been slow since registration opened last July, despite aggressive promotion by Thai banks.

While the Bank of Thailand (BOT) did not answer The Straits Times' queries by press time, a recent Bangkok Post report said that about 18 million mobile phone or ID card numbers have been registered on PromptPay. This is a modest fraction of all savings accounts, which numbered 78.5 million nationwide as of November last year, according to BOT statistics.

The Thai government, in a bid to accelerate registrations, has used the system to make direct payments to citizens, such as aid to the poor. But it was recently accused of misleading taxpayers who were promised fast tax refunds via PromptPay, only to be left waiting.

One of PromptPay's biggest draws was the planned roll-out of direct customer-to-customer inter-bank transfers. Users would not have to pay a fee for inter-bank transfers of less than 5,000 baht (S$201). Experts cited the existing 25-baht charge as a hindrance to the growth of electronic banking.

"People prefer taking out cash from the ATM of one bank and depositing it at the adjacent branch of another bank," TMB Bank's chief economist Benjarong Suwankiri told The Straits Times.

This is not just inefficient but also expensive, since it costs a bank 60 baht in overheads each time there is a physical withdrawal or deposit of cash, he said.

According to BOT statistics, two-thirds of retail inter-bank fund transfers were made via ATMs and over the counter in 2015.

Still, the launch of consumer-to-consumer transfers via PromptPay was delayed from October last year to an unspecified date in the first quarter of this year.

Since customers already give banks their ID card and mobile phone numberswhen setting up new accounts, most experts say the PromptPay system is technically no less secure than current banking options.  "The bigger problem is (the lack of) trust in data privacy," says Mr Dhiraphol Suwanprateep, a lawyer at Baker McKenzie specialising in information technology.

As the country has yet to enact a data privacy law, users are uncertain as to whether registering for the system would increase their chances of having their personal information shared against their will.

The proportion of inter-bank transfers made by Internet or mobile banking - which grew from 10 per cent in 2010 to 33 per cent in 2015 - could expand much faster once data privacy concerns are addressed, experts said.

For now, many who have signed up for PromptPay are still waiting for opportunities to try it out.

Mr Dhiraphol signed up as soon as it was launched last year. "I still haven't made any transactions with it," he said.

A version of this article appeared in the print edition of The Straits Times on January 16, 2017, with the headline 'Slow take-up for Thailand's new e-payment system'. Print Edition | Subscribe