"Cashless" System for Thailand

[Gaybutton]

Banking fees to reflect cost of service in move to reduce the use of cash

by Sucheera Pinijparakarn and Achara Deboonme

THE NATION
December 8, 2015

Banks' fees are poised for a change to better reflect actual costs and pave the way for a cashless society.

"The structure is distorted. The fees for paper-based transactions are very cheap, compared to the associated cost. Banks are now cross-subsidising them with fees collected from electronic transactions," Veerathai Santiprabhob, governor of the Bank of Thailand, said in a recent interview.

While the cheque fee is only Bt15, the actual cost is far more. Customers can withdraw money from an ATM without any fee, but banks carry a huge cost for cash management at ATMs, he said.

Anuchit Anuchitanukul, adviser to the Finance Ministry's National e-Payment project, has said that Bt7 trillion is withdrawn from ATMs each year. Banks spend over Bt10 billion on armoured vans and other expenses to fill up ATMs.

The project aims to reduce cash usage. This will require the creation of more points of sale across the country, as now there are fewer than 100,000, versus the minimum of 2 million as recommended by the Bank of Thailand's study.

To maintain their retail customer base, banks are expected to compete in reaching out to merchants to establish their own points of sale. Small merchants will also require mobile points of sale or mPos to support their small customers.

Under the project, companies registered with the Commerce Ministry cannot deny e-payments.

Banks are now offering electronic payment services through different systems. The cross-system operations result in higher charges for consumers.

While the project will help reduce cash transactions, authorities are considering the next step - a central settlement house to oversee cross-bank transactions through ATM cards, the Internet and debit cards.

"The central system will be a superhighway. It will be the single gateway for all banks and state agencies," he said.

Further facilitating the move to a cashless society will be the Any ID e-payment module - a collaboration of the Finance Ministry and the central bank. It will allow anyone to transfer money by using his ID card, mobile number or email address.

Veerathai said the central e-payment settlement agency and the Any ID module should be completed by the third or fourth quarter of next year.

With a single e-payment system, banks will experience a drop in operating fees and this would lead to a drop in fees that end-users have to pay.

Banks have enjoyed an increase in fee income from Bt127 billion in 2012 to Bt155.8 billion last year.

Fee income minus operating costs has also risen from Bt101.51 billion to Bt124.77 billion, according to the central bank.

Contributors to fee income

Credit cards now contribute 18 per cent of the fee income, followed by ATMs and other e-banking services at 17 per cent. In the first nine months of this year, gross fee income reached Bt126 billion and net fee income Bt102 billion, indicating that banks spent as much as Bt24 billion on operations.

The infrastructure gateway is expected to reduce associated costs.

Under the current system, senders are charged for transferring money. Under the new scheme, both senders and recipients will shoulder a fee. This is expected to lead to competition among banks to retain customers.

The scheme looks possible to implement successfully, thanks to the proliferation of smartphones, which are estimated to account for over half of phones in use in the country.

Cheap prices have boosted their popularity as well as faster mobile data services. Soon, smartphone use would be 100 per cent.

"Years ago when the video player was launched, I would laugh if someone said all houses would have one. Likewise, when it comes to smartphones, it is not beyond the realm of possibility for all Thais to own a smartphone one day," Anuchit said.

Consumers are expected to support the changes, since they are the ultimate beneficiaries.

Story and graphic: http://www.nationmultimedia.com/busines ... 74466.html

[Alex]

That's an interesting read, I've often thought that it must cost a fortune to maintain Thailand's vast ATM network (actually, several vast networks run by different banks). Now we know how much exactly.

[Gaybutton]

That's an interesting read

If they are going to implement a system that is not only better, but less expensive, I'm all for it.

[ilz]

That's an interesting read

If they are going to implement a system that is not only better, but less expensive, I'm all for it.

That would be very surprising coming from our dear banksters. Especially as the fee now for a withdrawal is as low as 0 when you use an ATM of your bank and in the area of the branch you have your account with.

[Alex]

Yes, but that fee of 0 is unjustified, considering the actual cost. Others have to pay more for other services to subsidize these free ATM withdrawals. There should be a moderate fee for each and every ATM withdrawal, but in return, other services that are currently overpriced should get cheaper.

[christianpfc]

All Thai banks should collaborate and form one ATM network, like in Germany (well there are some networks, but groups of banks operate together). I have seen up to 7 or 8 ATM of different banks next to each other (Queen Sirikit Center, MRT Hua Lampong).

When talking about cashless money transfers, always keep in mind that your government (or governmental agencies) just wants to collect data or control you!

[Captain Kirk]

Not sure I'd be happy with a cashless system. That would entail making some kind of electronic payment in every establishment you make purchases from. Wonder how long it would be before your bank account would be emptied.

[Gaybutton]

That would entail making some kind of electronic payment in every establishment you make purchases from. Wonder how long it would be before your bank account would be emptied.

I don't have any problem at all with the idea. I'm in favor of it. I see no reason why anyone's bank account would be emptied any faster or slower than it would under the current system unless you think you're account is going to be looted somehow.

I also think what will actually happen is simply giving you the option to pay either electronically or with cash, your choice. Isn't that close to the way it already works? In many stores you have the option of paying cash, paying with my debit card, or paying with a credit card. I believe the only difference will be a lot more places will offer the same option. I also hope it prevents any businesses from charging 3% extra when paying with a credit card - and many businesses do that - and prevents minimum purchase requirements in order to pay electronically. I can see it now - using a debit card to buy a 5 baht bottle of water . . .

Many of us already pay most bills via online banking. That's electronic payment, isn't it? I wish I could pay all my bills that way, but I still have to go to a pay point, such as 7-Eleven to pay my water and electric bills. I used to have to go to a bank or to the company itself when paying bills. Now I can pay most bills at home, right from my computer. Even being able to pay at a 7-Eleven is a lot more convenient than having to wait for my number to be called in a bank to pay a bill.

What's the point of condemning a system that has yet to be put in place and before we even know any details or how it is supposed to work?

[Captain Kirk]

unless you think you're account is going to be looted somehow.

I've had mine done twice GB. Once from Thailand after a holiday there and once likewise from Egypt. I avoid using cards abroad now as much as I can.

[Gaybutton]

I've had mine done twice GB. Once from Thailand after a holiday there and once likewise from Egypt.

In that case I understand your skepticism. Of course if I turn out to be correct about continuing to pay cash as an option, nothing has to change for you in Thailand. I can't imagine Thais refusing to accept cash under any circumstances.

After all, can you imagine having to use a credit card or some sort of electronic method to tip the boys? Who knows, maybe a hundred years or so in the future that will be exactly the way to tip the boys. Accepting money electronically might eventually be one of their mobile phone apps . . .

Years ago it happened to me too. When I returned to the USA after a trip to Thailand a letter from my credit card's issuing bank was waiting for me, wanting to know if I had bought US $2500 worth of cosmetics in Korea. Fortunately for both me and the bank, I had contacted the bank before my trip, told them I will be in Thailand, the departure and return dates, and that I will be traveling to no other countries or using the card anywhere other than in Thailand. The bank not only restored the money to my account, but told me that since I had contacted them in advance they also were able to charge back the money to whoever it was in Korea who had accepted fraudulent credit information. I had never lost the card and the only time I had used it at all was paying for a dinner in a restaurant.

This is a good moment to remind everyone, before traveling abroad make sure to contact your bank and provide them with your travel information. Even if there is no fraudulent use of your card, if the bank knows where you're going to be, that will help prevent them from locking your card and you having to go through the hassle of contacting your issuing bank to get them to unlock it.