Cambodia Investment Review
The National Bank of Cambodia (NBC) has made significant strides in modernizing its payment and settlement systems, leveraging advancements in financial technology. As a result, the use of digital payment systems in Cambodia has surged, reaching 12 times the country’s GDP in 2023. The NBC has been proactive in seizing opportunities presented by the advancement of financial technology to develop and modernize its payment systems, aiming to create a more efficient, inclusive, and secure financial environment.
NBC’s payment and settlement infrastructure includes several key systems developed over the past decade. The National Clearing System (NCS) launched in 2012, was the initial step in enhancing the country’s payment infrastructure. Following this, the FAST Payment System was introduced in 2016 to provide faster and more reliable transaction processing. In 2020, the Retail Pay System was launched to cater to the growing demand for retail payment solutions.
Seamless Transactions Between Different Financial Institutions
The Cambodian Shared Switch (CSS), implemented in 2022, further integrated the payment systems, allowing for more seamless transactions between different financial institutions. Additionally, the Online Banking System and the Bakong System have played pivotal roles in enhancing financial inclusion by offering accessible and secure digital banking services. The KHQR Code Standard, introduced in 2023, has further streamlined transactions, particularly for mobile payments, making digital transactions more convenient for the public.
The total value of digital payments has shown remarkable growth from 2019 to 2023. The volume of digital transactions increased significantly across various platforms, with the total value of transactions reaching approximately KHR 2,500 trillion by 2023. This growth is attributed to the adoption of systems like Bakong and KHQR, which have simplified and secured digital transactions, providing users with a reliable and efficient means of conducting financial activities.
In 2023 alone, the number of registered e-wallet accounts soared to 19.7 million, with the total value of e-wallet payments rising by 76.4% to KHR 458.9 trillion (USD 111.7 billion). Payment service institutions and banks have been pivotal in driving this growth, highlighting the increasing trust in digital financial services among Cambodian consumers. This increase in e-wallet usage indicates a significant shift in consumer behavior towards more digital forms of payment, driven by the convenience and security these systems offer.
Preference Towards More Accessible & User-Friendly Mobile Platforms
While internet banking transactions saw a slight decrease, mobile banking continued to gain traction. By 2023, the value of mobile banking transactions reached KHR 746.7 trillion, indicating a shift in consumer preference towards more accessible and user-friendly mobile platforms. This trend reflects the broader global move towards mobile-first financial solutions, driven by the widespread use of smartphones and the need for on-the-go banking services.
The adoption of QR code and Bakong payment systems has been particularly notable. In 2023, QR code payments increased by seven times, and Bakong transactions grew by 2.7 times compared to previous years. This surge reflects growing public confidence and the widespread acceptance of these technologies, promoting the use of the Khmer riel in daily transactions. The increased usage of QR codes and Bakong for payments indicates a robust response to the NBC’s efforts to promote digital payment solutions that are not only efficient but also inclusive, catering to a broad spectrum of the population.
NBC’s strategic focus on enhancing the efficiency, safety, and interoperability of its digital payment systems has facilitated large-scale adoption, promoting financial inclusion across Cambodia. The popularity of the KHQR and Bakong systems has been instrumental in encouraging the use of the local currency. By ensuring that these systems are easy to use and widely accepted, NBC has created a strong foundation for the continued growth of digital payments in the country.
Development Of Cross-Border Payment Connectivity
Additionally, NBC has prioritized the development of cross-border payment connectivity, aiming to strengthen economic and financial cooperation with other countries. This initiative is expected to deepen financial integration within the region, promoting the use of local currencies. By fostering cross-border connectivity, NBC is positioning Cambodia as a regional leader in digital finance, facilitating smoother and more efficient international transactions.
The NBC’s efforts to modernize Cambodia’s payment and settlement systems have significantly boosted the digital payment landscape. By enhancing cybersecurity, managing operational risks, and promoting consumer protection, NBC aims to maintain public confidence and ensure financial stability. These initiatives not only support economic growth but also position Cambodia as a leader in digital financial innovation in the region. The NBC’s commitment to continuous improvement and adaptation to technological advancements ensures that Cambodia’s financial infrastructure remains robust, secure, and capable of supporting the country’s economic ambitions.
As NBC continues to develop and implement advanced payment systems, the future of digital payments in Cambodia looks promising, with ongoing efforts to promote financial inclusion and economic stability. The concerted efforts to enhance the efficiency, security, and accessibility of digital payment systems are paving the way for a more inclusive financial environment, where all segments of the population can participate in the digital economy. The NBC’s strategic initiatives are expected to yield long-term benefits, fostering economic growth and financial stability in Cambodia.
