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E-payment sector aims to ‘complement not compete’ with payment application Bakong

Cambodia’s Payment Service Institutions (PSIs) are looking to distinguish themselves as the central bank expand its own digital payment application now claimed to register over 200,000 users. In response, some market players are already undergoing diversification in the rapidly moving Financial Technology (FinTech) industry.

The mobile application, launched last year, is Cambodia’s first integrated payment system and was designed to allow customers to perform several functions, such as using an e-wallet and making mobile payments, online transactions, and financial applications.

National Bank of Cambodia (NBC) Director-General Chea Serey spoke with US finance news network CNBC about her signature initiative saying the project is assisting Cambodia’s unbanked. Earlier this week the NBC signed an agreement allowing cross-border payment and remittance between Cambodia and Malaysia.

Chanda Pen, a FinTech expert told Cambodia Investment Review that at a fundamental level, Bakong – is enabling customers to perform cross-platform payments and transfers with other financial institutions on the Bakong network, creating needed interoperability. Adding, users of Bakong are customers of the financial institutions, therefore, e-Know Your Customer (KYC) and onboarding of customers are the responsibilities of the financial institutions thereby providing a regulated KYC environment.

Looking towards the future, Chanda said that many of the e-payment companies will need to look into diversifying their financial product offerings in order to distinguish themselves in this market.

Tomas Pokorny, Chief Executive Officer of Pi Pay told Cambodia Investment Review that the Bakong payment system infrastructure enables interoperability between various financial institutions.

“The application creates an all-inclusive ecosystem which works well for PSIs like Pi Pay as it connects us to other financial institutions, therefore giving us access to more sources of funds – which means more users and business can easily use Pi Pay as funds can be seamlessly transferred from any bank accounts to Pi Pay wallet and vice versa,” he said.

“Of course, there are some overlaps, and Bakong certainly does help the ‘commoditization’ of payment services in general, but it depends on how you look at it. For those PSIs who are willing to strategically pivot, Bakong is a tool to bolster growth,” he added.

However, Pokorny explained that Pi Pay has always positioned itself as a lifestyle brand, not just a payment brand.

“We have started our journey with retail payments, in which we are one of the leading players in that segment, and we have always aimed to diversify our portfolio of lifestyle-related payment services & features. Currently, Pi Pay is growing its Business-to-Business portfolio by helping other PSIs and financial institutions with their Fintech solutions,” he added.

Khuon Frandara, Chief Strategy Officer at TrueMoney told Cambodia Investment Review that Bakong is not competing but complementing in a sense that it brings mutual benefits to all players on a common and interoperable platform via peer-to-peer and wallet-based transaction, in real-time and round the clock.   

“The application operates through your mobile phone. So, with approximately 21 million mobile phone subscriptions in Cambodia, TrueMoney Cambodia has a competitive edge to convert users leveraging the benefits from Bakong’s backbone money transfer. And, with our largest agent network, users including in the unbanked areas, would certainly find TrueMoney as their cash out center as well as a means to transfer money back to their account in another Bank,” Dara said.

“We, PSIs, see this as an opportunity while the unbanked population still needs our network to perform their daily transactions. We are committed to improve and diversify our services to the Cambodians and Bakong is one key milestone that is pushing us to continue to innovate,” she added.

According to the NBC, the ‘Bakong’ application has been downloaded over 200,000 and executed around $3 million worth of transactions.

Serey has emphasized that the interbank blockchain-based or distributed ledger technology payment system, is not a CBDC and is wholly fiat-backed. However, many in the industry believe it has been designed as the platform for a future digital Khmer riel within the next 10 years.

It is estimated that the Kingdom’s digital payment market was worth around $3.5 billion last year.

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