Cambodia offers payment innovation opportunities

The country’s blend of high mobile use and low banking penetration creates a highly attractive mobile payments market that brings great opportunities for payments innovators. An Open Institute survey found that 96% of Cambodians own a mobile phone, with over 10 million of the devices in use. As only 5% of the population has a bank account, mobile provides the perfect opening for fintechs to reach the unbanked, using digital platforms to offer accessible, affordable and convenient financial services.

Implementing innovative solutions is relatively easy in Cambodia thanks to a lack of strong regulation. National Bank of Cambodia director general Chea Serey discussed plans to regulate the industry with the Southeast Asia Globe in 2017. “Previously, payment service providers were [regulated] under the umbrella of the banks, as third-party processors, because we didn’t know how to regulate them back then,” she said. “But now, as the industry has grown, we are finding that this setup does limit their ability to introduce new products and services and to innovate. So over the next year, service payment providers will be able to operate on a standalone basis, but they will have to have their own minimum capital requirement and comply with reporting regulations.”

As a result, Cambodia’s mobile payments market has grown rapidly over the past five years to become a hub of innovation.

ABA bank, for example, provides standard payment services such as bill payments and money transfers, and its E-Cash mobile app enables money transfer recipients to withdraw money from an ABA ATM using just their phone number and the code generated by the sender. In 2017 the bank also signed a partnership agreement with Pi Pay, Cambodia’s leading cashless payment app, to allow customers of both companies to transfer money seamlessly between Pi Pay mobile wallets and ABA accounts using ABA and Pi Pay mobile apps. Pi Pay relies mostly on Pay & Go terminals for customers to top up their wallets and offers attractive discounts at partner merchants when customers use the Pi Pay phone app. The bank’s efforts recently saw it being named ‘Best Bank in Cambodia’ for the fourth consecutive year by Global Finance magazine.

Partnerships between leading fintechs and banks look set to continue the momentum as the market reaches new heights. In August 2018 Mastercard announced its partnership with Wing, the earliest provider of mobile payment solutions in Cambodia, to enhance existing QR-based mobile payment services in the country. The agreement builds on Mastercard’s existing partnership with Wing, announced in January 2018, to launch a virtual payments card in the market. Mastercard QR will enable consumers to simply scan the QR code and process the payment from their mobile phones.

Another leading innovator in the Cambodian payments market, Pay&Go (PayGo) provides mobile wallets that can be topped up with cash at kiosks and a credit card linked to the PayGo account. Issued by ABA bank, PayGo customers have access to a virtual Mastercard that can be used to make online credit card payments anywhere in the world.

Other leading payments innovators in Cambodia include TrueMoney, which offers payroll services and international transfers to select markets. Known for its strong brand and marketing in neighboring countries, TrueMoney entered Cambodia in 2017 and already has more than 5,000 locations throughout the country.

In 2016 Cambodian conglomerate Ly Hour Group launched its Ly Hour Pay Pro subsidiary, adding payment services to its list of interests which includes real estate, microfinance, jewelry and currency exchange. With strong brand recognition behind it and synergies from parallel business likes, the organization is working to add more agent locations to its existing Cambodia-wide currency exchange network.

Mobile operators are also moving into the payments space. Metfone’s E-Money mobile money transfer service builds on the strength of the phone company, which has with one of Cambodia’s highest subscriber rates. Smart, another major mobile operator in Phnom Penh, offers mobile payments via its SmartLuy platform, including a Gold account that enables users to transfer up to $1,000 from their SmartLuy wallet.

Wallets are widely accepted for money transfer in Cambodia, because of the large number of agents supporting them. For example, Wing, the most deeply entrenched wallet provider in the country, boasts 100% district coverage nationwide through its Wing Cash Xpress agents. Other wallet players, such as Tune, DaraPay and SmartLuy are catching up.

Nonetheless, Cambodia remains a very cash-based society and retail has been a tougher nut for wallet providers to crack. That could all be about to change as recent launches such as Wing’s WingPay wallet, which is available for use at over 20,000 merchant partners in the country, point to retail as the next growth area for wallets.

“So far, wallets have been less successful from a retail payments perspective as merchant acquisition efforts have been somewhat lackluster,” said Efma’s Michael Lor. “This opens up enormous potential to drive retail payments via wallets. As a result, Cambodia will likely bypass the ‘credit-card payments’ era and move straight into mobile wallets.”