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Open Infrastructure

Develop and support key domestic financial infrastructures that are efficiently utilized and accessible to service providers at reasonable and fair costs

Policy Stances
  • What we wish to see: Financial and payment infrastructures are up to standard, resilient, secure, interoperable, and open to different service providers at fair prices. Such infrastructures will encourage competition in innovation, promote financial services that can better serve consumers and businesses, as well as speed up the transition to a less-cash society and a transformation towards a digital economy.
  • What we do not wish to see: The financial and payment infrastructures that are inefficient, fragmented, or overly concentrated, that result in systemic financial or operational risks. Pricing structures do not reflect actual underlying costs, stifling competition on innovation and service improvement. Key financial infrastructure providers cannot be regulated as the regulators’ abilities to oversee some infrastructures are undermined, which will in turn affect the system and its users.

Increase Efficiency and Accessibility of the Current Infrastructure

Promote efficient utilization of domestic payment system infrastructure by connecting and opening to different service providers, thus enabling them to compete at reasonable costs to serve needs of the public and different business segments.

Enhance the Governance Framework

Enhance the governance framework of domestic payment system infrastructure for greater utilization and innovation by exploring different approaches that may be suited to Thailand’s context. One approach is to establish a Payment Council, as has been done in other countries such as Australia and Singapore, involving various stakeholders such as commercial banks, NBFIs, consumers, regulators, and experts. They can participate in the design of payment-related policies that will later be proposed to the Payment Systems Committee (PSC), whose responsibility is to set Thailand’s payments-related policies and implement such policies to achieve tangible outcomes. Moreover, a Payment Scheme agency will manage scheme rules related to payment systems and services, e.g. terms on business operation and system development, fee structure, promotion of digital payments, and supporting innovation.

Examples of international approaches in the management and governance of payment system infrastructure
  • United Kingdom
    • Payment Systems Regulator (PSR), an agency to supervise and make policies on the development of payment infrastructure.
    • Merger of large infrastructure providers (Bacs, Faster Payments, and Cheque Imaging Payment Systems) under the name Pay.UK to simplify and lower costs of operations, as well as to devise conditions, standards, terms of use, to ensure banks and NBFIs equal access.
  • Australia
    • Australian Payments Council focuses on involving different stakeholders in the payment-related policymaking process.
    • Merger of large infrastructure service providers (Eftpos, BPAY, NPPA) under the name Australian Payments Plus to develop infrastructure that serves the needs of various types of users and other stakeholders
  • Singapore
    • Payments Council focuses on involving different stakeholders in the payment-related policymaking process. Representatives include those from the central bank, service providers and consumers.
    • An agency to manage the development of the national Payment Scheme to manage PayNow (a real-time payment service) to design terms and conditions of its services, e.g. fees, payment system infrastructure, dispute settlements, public relations, and promotion of use.

Review the Pricing Structure of the Payment Systems

Review the pricing structure of payment services, particularly for cash and cheques to ensure that it is appropriately reflecting underlying costs, reasonable and fair to consumers, service providers, and developers of infrastructure. The BOT will consult with stakeholders and conclude the fee structure within 2022, and later construct a plan to adjust fees, particularly for cash and cheques. This will serve the policy direction towards doubling the rate of decline of the current cash usage within 3 years,4 and to reduce the use of paper cheques to less than half within 5 years.5 During this period, digital payments will have advanced enough to scale up adoption by the businesses and households, which will aid Thailand’s transition to a less-cash society.

During this transition, there must be efficient channels to provide payment services to those who are not yet ready to adopt digital payments. For example, the establishments of white label smart machines and banking agents can help disburse cash in remote areas, which would help ensure efficient management at lower costs, in line with the declining trend in cash usage.

Support Digital Financial Services and Processes

Develop payment and other necessary infrastructures to provide end-to-end digital financial services that are compliant with international standards, interoperable, and support the development of financial innovations and services. This policy is in line with the key digital infrastructure policies of other countries, such as Singapore, India, and the UK.

Key digital infrastructures to enable end-to-end digital transactions
  • Digital ID: An infrastructure that serves as a gateway to the digital world, through identity verification and authentication, and to perform digital transactions with ease and security.
  • Digital Platform & Payment: Business transactions involving digital payments help to create digital footprints, which can be further used for other financial transactions and access other financial services.
  • Data Infrastructure: Mechanisms or infrastructure that enable the public and the business sector to utilize their data collected by different financial service providers, enabling them to then choose or switch service providers at reasonable costs. Data sharing and big data utilization will also support financial innovations to their full potential.

Develop End-to-End Digital Processes for Businesses

Develop ‘Smart Financial and Payment Infrastructure for Business’ in collaboration with the relevant public and private entities, to enable end-to-end digital business; link data on business transactions, payments, and tax through an automated straight-through process. This aims to reduce costs, improve efficiency, and create digital footprints to improve access to funding at reasonable costs. In addition, a high-value payment system will be developed to accommodate business and capital market transactions.

Develop Retail Central Bank Digital Currency

Develop and launch a pilot test for Retail Central Bank Digital Currency (Retail CBDC), a digital form of central bank money. Retail CBDC is an infrastructure that aims to provide open access to more service providers, allowing them to innovate through the implementation of new technologies. The objective of Retail CBDC is to transition Thailand to a digital economy with a safe, efficient, and low-cost option to utilize digital currencies. The pilot test is expected to be launched around the end of 2022.

Objective and Positioning of Payment Methods
  • Cash/paper cheques: Inclusive and widely accessible payments to accommodate those who are not ready to use, or do not have access to digital payments.
  • Digital payment: Enhanced efficiency and ease in payments for the public or businesses with bank accounts or e-money wallets.
  • Retail CBDC: Open infrastructure that supports the development of cutting-edge innovations in the financial sector and transform Thailand to a digital economy with a safe, efficient and low-cost option to utilize digital currencies.

Develop Standards and Support Interoperability

Support the development of other necessary digital infrastructures, standards and interoperability of key infrastructures in collaboration with the relevant agencies including:

  1. Digital ID infrastructure that is interoperable across different platforms and open to various service providers, enabling them to verify their customers’ identities using reliable data sources at reasonable costs. This will in turn allow customers to verify their identity to use financial services conveniently and securely. The initiative includes verification and authentication of corporate digital IDs through the National Digital ID (NDID) infrastructure, in collaboration with the Department of Business Development and Electronic Transactions Development Agency (ETDA). Use case testing for corporate entities (such as for opening bank accounts) is set to begin in 2022.

  2. Digital signature infrastructure that is low-cost, user friendly, and universal to various product designs, for example ready-to-use platforms and digital financial contracts used in digital lending and digital debt-restructuring.

Promote Digital Literacy

Promote digital literacy and encourage public and private sectors to prioritize using digital payments over cash and cheques by collaborating among public agencies, industries and financial sector. A working group on promoting digital literacy and payments is an example of an integrated effort to create understanding and promote the use of digital payments as a national-level agenda, to ensure concerted and consistent communications and efforts that result in tangible outcomes.

This issue will be further discussed in the Payments System Directional Paper, which will be published in March 2022.

Develop Credit Guarantee Mechanisms

Develop credit guarantee mechanisms to meet various funding needs, by collaborating with other public agencies to establish a General Credit Guarantee Facility (GCGF). The GCGF aims to provide better access to funding sources for businesses, especially SMEs. The design will accommodate different stages in their business cycle, those facing liquidity problems as affected by a financial crisis, and those seeking infrastructure financing. Key characteristics of the GCGF are the following:

  1. It can guarantee loans issued by financial institutions and NBFIs.
  2. In addition to loans, the facility covers various types of funding that are more suitable for start-ups, medium-sized enterprises who are ready to enter the capital market, and large corporates that seek to form joint ventures or issue debts or equities.
  3. It can provide support for investments in line with the country’s long term strategic directions and economic development plans. The enhancement of credit guarantee mechanisms, especially in assessing credit risk of a debtor or the guaranteed project, can ensure that risks are effectively managed, and the guaranteed fees are risk-based consistent with the debtor or the project.

  1. Based on the current compound annual growth rate of ATM and over-the-counter cash withdrawals from the 2018–2021 period: ATM cash withdrawals: -6.50% / Over-the-counter cash withdrawals: -11.18%
  2. Usage of paper cheques in 2026 should be below half of that in 2021.