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The future of cashless systems in a cash-based economy

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The future of cashless systems in a cash-based economy


In a country where most people are paid in cash and the majority of businesses are cash-only, cashless payment platforms can appear out of place.

But that hasn’t stopped a number of digital payment companies from putting up impressive growth numbers in Cambodia, and the sector has continued to expand in the past few years.

One such company is Pi Pay, a smartphone application that allows you to either link your bank account to the service or top-up with cash at digital kiosks.

Following its launch in July last year, the company undertook a marketing blitz that offered steep discounts for people who paid with the app. It’s now one of the most popular cashless payment services in the country, having processed 2.5 million transactions worth about $50 million and boasting a 30 percent user-growth rate each month.

Pi Pay CEO Thomas Pokorny said he thought it was just a matter of time before the country fully embraced the cashless economy.

“Once the mobile coffee vendor . . . sees the ease and convenience of moving the payment for a cup of coffee seamlessly from her customers’ phone, through her phone and on in to her newly opened bank account, then . . . the likelihood grows that she will share this new world of convenience and security with friends and colleagues,” he said.

Wing, another giant in the field of both cash and cashless banking and transactions in Cambodia, also reported significant growth in the mobile payments sector. The company’s marketing director, Anita Harris, said she was upbeat about the potential for growth in the sector.

“Global forecasts suggest mobile payment transactions will grow by up to 40% by 2020,” Harris wrote in an email. “I would not be surprised if Cambodia surpasses this.”

But in a country where only 20 percent of citizens have a bank account, there are significant challenges to convincing people that an app can replace their banknotes.

Thy Vylin, owner of the Yes Coffee drink cart in Phnom Penh, is an example of the audience Pokorny would like to reach. And while Vylin did express interest in using a cashless payment system for his business – mostly to attract foreigners – he said he was not interested in using the service for personal transactions.

“Even if a bank account were set up for me, it’s just too complicated,” he said. “I prefer cash for myself . . . it is the normal thing.”

What is considered “normal” could shift as cashless payment services continue to grow, according to Gordon Peters, a partner at investment firm Mekong Strategic Partners.

“Consumers using digital payment services and wallets will eventually get used to this versus cash,” Peters said. “I predict it will encourage more bank accounts in the future.”

Pokorny agreed, saying that he saw Pi Pay as a driver for broad financial inclusion.

But vendors outside of Cambodia’s newly built malls and high-end shopping centres remain sceptical about the technology.

Ouk Saroeurn, a clothing vendor in Phsar Thmey, said she preferred cash and would only consider using a payment gateway to draw tourists or expatriates to her store. Her sentiments were echoed by every vendor interviewed by reporters, all of whom said they would prefer to stick with cash instead of a digital application.

That attitude can only be changed through education, according to Ngeth Chou, a senior consultant at Emerging Markets Consulting.

“When confidence in banks’ IT operations is limited, people are still more likely to spend cash or keep money in their pocket,” he said. “That will not help economic growth.”

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