A history of payments in Thailand: from cash to digital wallets

The evolution of Thailand's payment system reflects the modernisation and digitisation of its economy, gradually moving from a traditional cash-based society to a diversified digital payment ecosystem. Below are the key stages and analyses of Thailand's payments history:

1. Period of traditional cash dominance (20th century and before)

• Socio-economic context: A predominantly agrarian economy, where small transactions are frequent and cash is the absolute norm.
• specificities::
  • High cash dependency (over 90% of cash transactions in 2010).
  • Low coverage of banking services and weak financial infrastructure in rural areas.

2. Bank Cards and the Emergence of Electronics (1990s-2000s)

• Key milestones::
  • After the 1997 Asian financial crisis: The Bank of Thailand has pushed for financial reforms to introduce ATMs and debit card penetration.
  • BAHTNET system went live in 2003: Real-time large-value clearing system to enhance the efficiency of interbank transfers.
• restrict sth. within set boundaries::
  Credit cards are limited to the urban middle class and POS penetration is inadequate.

3. Mobile payments and the rise of digital wallets (2010s-2020s)

(1) Revolutionary Breakthrough in QR Payment

• Bank of Thailand leads PromptPay in 2017::
  The instant money transfer system based on mobile phone/ID numbers with very low rates (e.g. interbank transfers of only 2 baht) is rapidly breaking the 10 million user mark.
• case (law): PromptPay processes 5 billion transactions in 2021, accounting for 60% of non-cash transactions.

(2) Competition in the Super App ecosystem

• TrueMoney (part of Ant Group): integrates phone bill recharge, bill payment, cross-border remittance (connecting many countries in Southeast Asia).
• GrabPay / Line Pay : Closed-loop payments that rely on taxi/social scenarios.

4. Digital wallets and the fintech explosion (2020s-present)

(1) Epidemic accelerates cashlessness

• Data highlights::
  • Thailand's e-payment transaction volume grows by 75% in 2020 and digital wallet users surpass 43 million (60%+ of the total population).
  • PromptPay became the main channel for government subsidies during the epidemic (e.g., the "half per person" consumer subsidy programme).

(2) The rise of "buy now pay later" (BNPL)

• Atome, andKredivoPlatforms such as Lazada and Shopee have joined forces to launch instalments to attract young consumers.
• Bankable BNPLFor example, "K PLUS SHOP NOW PAY LATER" in Kasikornbank.

(3) CBDC Pilot and Cross-Border Payment Co-operation

• Retail Digital Currency Testing: 2022 Bank of Thailand launches CBDC sandbox to experiment with corporate payroll and government welfare distribution scenarios.
• Regional linkages: Cross-border scanner payment interconnection with Malaysia and Singapore through the ASEAN QR standard.

5. Current patterns and challenges (2023-future)

(1) Competition in a stratified market

(2) Pending challenges

• The last kilometre of financial inclusion:: 30% adults are still not connected to the formal financial system (World Bank data).
• Regulatory balance:: How can the risk of fraud (e.g., fake QR codes) be prevented while encouraging innovation?
• ecological fragmentation: Users need to install multiple apps to cope with different scenarios, and there is an urgent need for integration.

[Trend outlook]

1. Embedded Finance (EF) :: Direct lending and insurance sales within social apps.
2. Biometric Payments:: Face/voiceprint authentication is gradually replacing OTP passwords.
3. Baht Stablecoin Experiment:: Private institutions to explore the use of compliant stablecoins for cross-border e-commerce settlements.

Thailand has leapfrogged the card era to the mobile payments frontier in just 10 years, but the next stage of competitiveness will depend on upgrading from "many and scattered" localised solutions to a globally compatible digital financial infrastructure. (PromptPay technology, for example, has been exported to Cambodia's Bakong system.)