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Angkor Times
Angkor TimesExperienced
Asked: June 4, 2024In: Make Money

What factors are driving the preference for mobile banking over internet banking in Cambodia?

Mobile Banking Surges as Internet Banking Declines in Cambodia Cambodia is witnessing a significant shift in its banking landscape, with mobile banking rapidly gaining popularity over traditional internet banking. Data from the National Bank of Cambodia (NBC) highlights this trend, ...Read more

Mobile Banking Surges as Internet Banking Declines in Cambodia

Cambodia is witnessing a significant shift in its banking landscape, with mobile banking rapidly gaining popularity over traditional internet banking. Data from the National Bank of Cambodia (NBC) highlights this trend, showing a notable preference among Cambodians for conducting financial transactions via mobile apps rather than internet banking platforms.

Mobile Banking Surges in Cambodia
Mobile Banking Surges in Cambodia

In 2023, the total value of transactions conducted through internet banking fell by 7 percent to 74.5 trillion riel ($18.22 billion) from 80.1 trillion riel ($20 billion) in 2022. In stark contrast, mobile banking transactions surged by 11 percent, reaching 746.7 trillion riel ($164 billion) in 2023, up from 672.4 trillion riel ($183 billion) the previous year.

The NBC’s report underscores this shift, stating, “While payment through internet banking services slightly decreased, the use of mobile banking and card payment steadily accelerated.”

Corporate vs. Retail Preferences

Industry experts attribute this divergence in banking preferences to the distinct needs of corporate and retail clients. Richard HC Liew, CEO of Bridge Bank Plc, explained to the Khmer Times, “For internet banking, these are usually transacted by companies so it depends on the business flow. However, for mobile banking, it is transacted nationwide by the public with almost all individuals in Cambodia doing it.”

Liew’s observations highlight a crucial distinction: corporate clients continue to rely on internet banking for their business transactions, while the average retail customer overwhelmingly prefers the convenience of mobile banking.

The Role of Bakong in Mobile Banking Adoption

Both the NBC and the Association of Banks in Cambodia (ABC) have played a pivotal role in promoting mobile banking, particularly through the Bakong system. “NBC has been at the forefront of this with the ABC in promoting and educating the public in using mobile banking via Bakong, and the results have been very positive and encouraging,” Liew noted. He also emphasized the high mobile penetration rate in Cambodia, which exceeds 100 percent, indicating that many Cambodians own more than one mobile phone.

The widespread use of mobile phones is a significant factor driving the popularity of mobile banking. According to the Digital 2023 Cambodia report, in the first quarter of 2023, Cambodia had 22.16 million active mobile connections compared to just 11.37 million internet users. With a population of just over 17 million, this translates to an impressive 131.5 percent mobile connection rate per person.

Post-Pandemic Digital Transformation

The post-COVID-19 era has seen a substantial increase in internet usage in Cambodia, spurred by the need for online learning and remote work. However, while laptops are preferred for educational purposes, mobile phones dominate for everyday transactions such as food delivery, online shopping, and utility bill payments. Cambodians favor mobile payments through QR codes, further cementing the role of mobile banking in daily life.

NBC’s report highlights the growing confidence in mobile payment systems: “Payment amount through the QR code and Bakong system jumped by 7 times and 2.7 times, respectively, in 2023, reflecting the growing confidence and adoption among the public while also contributing to promote the use of the Khmer riel.”

Interoperability and Financial Inclusion

The interoperability of the Bakong system has been a game-changer for digital payments in Cambodia. Users can make payments to any merchant or bank from their home bank, enhancing the system’s efficiency and safety. This feature has driven widespread adoption and promoted financial inclusion across the country.

“Interoperability, efficiency, and safety of digital payment systems have attracted large adoption among the public to promote financial inclusion,” the NBC stated. “KHQR and the Bakong system have gained popularity and contributed to promoting the use of Khmer riel.”

Conclusion

The shift towards mobile banking in Cambodia is unmistakable, driven by high mobile penetration, the convenience of mobile transactions, and the successful promotion of systems like Bakong. While corporate clients may still rely on internet banking, the general public’s preference for mobile banking is clear, setting the stage for continued growth in this sector. As mobile banking becomes increasingly integral to daily life, Cambodia’s financial landscape is poised for further digital transformation.

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Angkor Times
Angkor TimesExperienced
Asked: May 31, 2024In: Make Money

Can Bakong link enhance Cambodia-India business?

How Cambodia and India’s Payment Integration Through Bakong Potentially Benefits Trade and Business Activities in Cambodia In a significant move to enhance economic cooperation and streamline financial transactions, Cambodia and India have agreed to link their payment systems through Cambodia’s ...Read more

How Cambodia and India’s Payment Integration Through Bakong Potentially Benefits Trade and Business Activities in Cambodia

In a significant move to enhance economic cooperation and streamline financial transactions, Cambodia and India have agreed to link their payment systems through Cambodia’s Bakong digital payment platform. This integration, set to be operational by June, promises to bolster trade and business activities between the two nations. This blog post delves into the potential benefits of this payment integration, highlighting its impact on trade, business efficiency, financial inclusion, and the overall economic landscape of Cambodia.

Bakong Payment intergratoin with India Payment Gateway
Bakong Payment intergratoin with India Payment Gateway

Nikkei Asia reported that NBC’s Governor Chea Serey announced the initiative, planned for June 2024, during an event in Japan last week.

“Cross-border payments between Cambodia and India using Bakong are set to begin as early as June,” she said.

NBC’s Governor Chea Serey

The Bakong Digital Payment System

Bakong, launched by the National Bank of Cambodia in October 2020, is a blockchain-based central bank digital currency (CBDC) and mobile payment system. It aims to modernize Cambodia’s payment infrastructure, reduce dependency on cash, and enhance financial inclusion. Bakong enables users to make peer-to-peer transfers, pay for goods and services, and even conduct cross-border transactions seamlessly.

The Integration with India’s Payment Systems

India’s payment landscape is characterized by robust digital infrastructure, with systems like the Unified Payments Interface (UPI) and RuPay gaining widespread acceptance. The integration of Bakong with India’s payment systems signifies a strategic alignment aimed at facilitating easier and more efficient cross-border transactions. This linkage is expected to simplify trade, reduce transaction costs, and foster closer economic ties between the two countries.

Benefits to Trade and Business Activities in Cambodia

1. Streamlined Cross-Border Transactions

The integration of Bakong with India’s payment systems will significantly streamline cross-border transactions. Businesses in Cambodia and India will be able to conduct transactions in real-time, reducing the lag associated with traditional banking processes. This efficiency can lead to faster payment cycles, improved cash flow, and enhanced business operations.

2. Reduced Transaction Costs

Traditional cross-border transactions often incur high fees due to intermediary banks and currency conversion charges. The direct linkage between Bakong and India’s payment systems will minimize these costs, making it more affordable for businesses to trade internationally. Lower transaction costs can lead to increased profitability and competitiveness for Cambodian businesses.

3. Enhanced Trade Volume

By simplifying and reducing the cost of cross-border transactions, the payment integration is likely to boost trade volume between Cambodia and India. Businesses will find it easier to engage in import and export activities, leading to increased economic activity and growth. This can also attract more Indian investors and traders to Cambodia, further stimulating the local economy.

4. Improved Financial Inclusion

Bakong has already made significant strides in enhancing financial inclusion in Cambodia. Integrating it with India’s payment systems will expand its reach and impact. More people, especially those in rural areas, will gain access to seamless international transactions, fostering economic participation and growth at the grassroots level.

5. Enhanced Business Relationships

The ease of conducting transactions will strengthen business relationships between Cambodian and Indian enterprises. Companies will be more inclined to establish long-term partnerships, knowing that financial transactions can be handled efficiently and securely. This can lead to joint ventures, collaborations, and knowledge exchange, benefiting both economies.

Expert Insights

According to the National Bank of Cambodia’s Deputy Governor, Neav Chanthana, “The integration of Bakong with India’s payment systems marks a significant step towards financial modernization and economic cooperation. It not only facilitates seamless transactions but also builds a bridge for future technological and economic collaborations between Cambodia and India.”

Potential Challenges and Mitigation Strategies

While the integration of payment systems presents numerous benefits, it also comes with challenges that need to be addressed to ensure successful implementation and operation.

1. Cybersecurity Risks

The digital nature of the integrated payment systems exposes them to cybersecurity threats. To mitigate this risk, both countries must invest in robust cybersecurity measures, including advanced encryption, real-time monitoring, and incident response strategies.

2. Regulatory Harmonization

Different regulatory frameworks governing digital payments in Cambodia and India can pose challenges. It is essential for both countries to collaborate closely to harmonize regulations, ensuring a seamless and compliant integration process.

3. Technical Integration

The technical integration of Bakong with India’s payment systems requires meticulous planning and execution. This includes ensuring interoperability, data security, and system reliability. Engaging experienced technology partners and conducting thorough testing can help overcome these challenges.

4. User Adoption

For the integration to be successful, it is crucial to ensure user adoption among businesses and consumers. This can be achieved through awareness campaigns, training programs, and incentives to encourage the use of the integrated payment systems.

The Road Ahead

The integration of Cambodia’s Bakong with India’s payment systems is a landmark development with far-reaching implications for trade and business activities. As the system goes live, it is expected to revolutionize the way transactions are conducted between the two countries. Businesses can look forward to more efficient and cost-effective cross-border payments, enhanced financial inclusion, and strengthened economic ties.

Conclusion

The collaboration between Cambodia and India in linking their payment systems through Bakong is a forward-looking initiative that holds immense potential for both nations. By simplifying transactions, reducing costs, and fostering financial inclusion, this integration will create a conducive environment for businesses to thrive. As Cambodia continues to modernize its financial infrastructure, such strategic partnerships will be instrumental in driving economic growth and development.

We would love to hear your thoughts on this significant development. How do you think the integration of Bakong with India’s payment systems will impact trade and business activities in Cambodia? Share your opinions in the comments below or reach out to us through our contact information.

References:

  • Khmer Times. (2023). Cambodia-India to link payment systems by June. Retrieved from Khmer Times
  • National Bank of Cambodia. (2020). Bakong Payment System. Retrieved from National Bank of Cambodia
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