Thais are not cashless, yet

With a number of state-of-the-art payment methods on display at a FinTech event last week, there are questions over whether cash will soon be relegated to history amid the proliferation of alternative ways of payment.

As things stand now, banknotes are not likely to disappear anytime soon. Although many Thais increasingly use electronic payment methods, including e-wallets, mobile banking or QR codes, a large number of regular customers still prefer using cash for their daily transactions.

These die-hard customers view cash is trustworthy. Moreover, as the inflation rate remains relatively stable, it does not hurt to keep banknotes in their wallets.

The Bank of Thailand reported that 93% of daily transactions in Thailand were in cash in 2017, compared to 79% in the Eurozone and 13% in Sweden.

Thailand’s ratio of banknotes in circulation to GDP remained at 9% in the past five years. This means that the number of banknotes in circulation in Thailand has steadily increased, albeit at a slower pace when compared to the country’s economic expansion and inflation. This is despite the fact that the use of electronic payments in daily transactions has surged rapidly in the past few years, especially among teenagers and those recently beginning their careers.

Bangkok FinTech

Electronic payment is propelled by the digitalization of systems, which financial institutions are vigorously developing to enable them to cash in on new technologies.

During Bangkok Fintech Fair 2019, held at the Bank of Thailand Learning Center last week, commercial banks showcased their financial technologies driven by artificial intelligence.

For example, Bank of Ayudhya, Kasikorn Bank and Bangkok Bank introduced their facial recognition systems to verify their customers’ identities, while Siam Commercial Bank demonstrated its identity verification system through the scanning of a palm vein.

Customers will soon be able to complete virtually all financial deals online.

Based on a report released earlier this year, the central bank estimated that, if Thai people use 1% more e-Payments for retail purchases, demand for cash will decline by 0.05 -0.1%.

So far, e-Payment usage has, however, only begun to replace cash in Thailand. Despite growing use of e-Payment systems, demand for cash still grows and seigniorage has not yet declined.

Hence, e-Payments are still having smaller impact on cash, when compared to economic activity and opportunity costs.


Although Thailand is in the early stages of creating a cashless society, financial institutions have begun remodeling their business in line with an expected contraction in the use of cash.

Last year, more than 300 branches, of all Thai banks, have closed because of the changing behavior of customers who prefer conducting financial transactions on their mobile phones, rather than visiting a bank branch.

Also, the number of ATMs and related electronic devices in Thailand contracted for the first time last year to 57,554 units, a drop of 0.98% against a 5.17% growth in 2017, according to the Kasikorn Research Center.

It was the first contraction since ATMs debuted in Thailand over three decades ago. The trend is consistent with a substantial increase in online transactions.

To cope with changes, the Thai Bankers’ Association has encouraged their commercial bank members to share their ATM services to cut costs.

Such agreements are not easy, however, because each bank has a different quantity of ATMs in service and their previous investment in ATMs vary. The sharing of ATM facilities may benefit smaller banks more than larger banks, which have extensive networks of ATM booths.


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