Electronic payments rise 25 percent

In some ways it’s hardly news, or certainly not unexpected. The Bank of Thailand recently released figures suggesting the move towards e-payments, be it by way of Internet direct account-to-account transfers or via ATM’s and the plastic ‘fantastic’ (credit and debit cards) had surpassed the almost ‘old-world’ method of settling similar accounts by cheque.

The amounts are quite staggering in terms of what clearly points to rapidly increasing consumer confidence in the electronic payments system. In the period between July and September 2012, more than 75 trillion baht was handled by way of electronic payments. This, said the Bank of Thailand, represented a 25 percent year-on-year increase in the number of e-payments.

Although many businesses still conduct much of their financial business by way of cheque, this form of transaction is now almost redundant among average consumers and smaller businesses. In the same period that e-payments achieved the 25 percent year-on-year growth, cheque transactions grew a mere 0.6 percent.

As more and more businesses in Thailand embrace e-technology and with it the knowledge that e-payments provide a safe and verifiable tracking for financial activities, it’s quite possible, indeed probable, the cheque transaction numbers will begin to contract year-on-year.

In the non-business consumer sector, banks have been campaigning strongly towards creating a Western-style credit card society. As any foreigner from a developed nation knows only too well, credit cards are almost a financial staple for a majority of households.

Local banks are now gearing towards creating a similar culture among consumers. The Bank of Thailand noted the number of credit cards grew 8.5 percent year-on-year to 26 million. That figure is again likely to grow quite substantially through 2013.

At present most Thai consumers use debit cards to withdraw cash from ATM’s in order to pay their bills and make purchases, be it of foodstuffs and household goods or for entertainment. In other words, consumers are, in the main, using money they have already earned or saved to conduct their financial affairs. The quarterly figures showed card value usage accounted for 74 percent of total transactions.

Banks are it seems looking to modify that consumer behaviour by offering easy credit card terms and aiming to significantly impact that high debit card percentage. This is because, even accounting for bad debtors, the profits from credit card usage are substantial.

At present consumers debit card and ATM card usage was almost identical: the latter accounting for 80 percent of withdrawals while the former stood at 73 percent. Analysts suggest this similarity is due to lack of consumer knowledge and confidence about the ways they can operate with their plastic cards vis-à-vis cash.