Logo of Phnom Penh Post newspaper Phnom Penh Post - New rules for digital payments

New rules for digital payments

A customer uses the PayGo Wallet application on his smartphone.
A customer uses the PayGo Wallet application on his smartphone. Pha Lina

New rules for digital payments

The central bank has issued new regulations governing the licensing of payment services providers (PSPs), requiring that all firms providing online services to accept electronic payments have at least $2 million in registered capital, a move expected to increase the stability of the sector and encourage the consolidation of its smaller players.

A prakas signed by National Bank of Cambodia (NBC) Governor Chea Chanto on June 14 and released on June 20 establishes that all PSPs in Cambodia must obtain a licence from the NBC to operate. The licensed firms are required to demonstrate a minimum registered capital of 8 billion riel (about $2 million) and deposit 5 percent of their paid-up capital with the NBC.

PSP licences are valid for six years, with an annual licensing fee of 20 million riel ($5,000), according to the prakas.

The new regulations aim at better governance of third-party processors (TPPs) that act as intermediaries to complete payment transactions, and reflect the rapid growth of financial technology (fintech) solutions.

Chea Serey, director-general of the NBC, explained that any entity wishing to provide digital payment services, including banks and other financial institutions, must now first obtain a PSP licence.

“This prakas is targeted at the existing institutions that provide payment services or institutions that start to provide payment services,” she said. “This means that most of the existing institutions operating under a third-party processor licence would be required to be relicensed by the NBC.”

Some of the larger firms that operate as payment services providers include Wing, True Money, Asia Wei Luy and PayGo.

According to Serey, the new regulation aims to increase the security of digital transactions while enhancing fair competition and innovation in the fintech sector.

“Currently, innovation in payment areas is moving very fast, but the regulatory framework for payment systems in Cambodia is still behind and the scope of existing regulations cannot cover new payment innovation,” she said. “As a regulator of payment systems, the NBC needed to update and formulate new regulations according to the market’s needs.”

Tomas Pokorny, CEO of Pi Pay, a new payment solutions company that is currently in its beta-testing phase in Cambodia, said the prakas significantly raised the entry requirements for PSPs. Yet he said he expected the new regulations would have a positive impact in that they clearly delineate who can legally provide digital payments.

He added that previously, many entities, even nonfinancial ones, could offer payment services by satisfying the flexible requirements of a third-party processor licence, but now the sector will shift to more-established institutions.

“We believe that albeit this requirement is much higher than the previous relatively low fees for TPP licences, it is rather a good move,” he said. “I think it won’t hinder the expansion of fintech in general, but will rather boost further reclassification of the market.”

Pokorny said it was possible that the high minimum capital requirements would eventually lead to a consolidation of the sector, though he noted this could in turn increase competition in the market and benefit consumers. He added that even with the new prakas, Cambodia’s financial regulations remain some of the most advantageous of developing economies.

“It may raise higher financial requirements for financial operators, however, it also expands their possible service by allowing them to operate in a more innovative and flexible environment,” he said. “We believe it is a necessary step to bring Cambodia closer to the rest of Asean, where the fintech sector has been blossoming for the last couple of years.”

MOST VIEWED

  • ‘Kingdom one of safest to visit in Covid-19 era’

    The Ministry of Tourism on January 12 proclaimed Cambodia as one of the safest countries to visit in light of the Kingdom having been ranked number one in the world by the Senegalese Economic Prospective Bureau for its success in handling the Covid-19 pandemic. In rankings

  • Kingdom accepts Chinese vaccine, PM first to get jab

    Prime Minister Hun Sen said China would offer Cambodia an immediate donation of one million doses of the Covid-19 vaccine produced by the Sinopharm company. In an audio message addressing the public on the night of January 15, he said Cambodia has accepted the offer and

  • Reeling in Cambodia’s real estate sector

    A new norm sets the scene but risks continue to play out in the background A cold wind sweeps through the streets of Boeung Trabek on an early January morning as buyers and traders engage in commerce under bright blue skies. From a distance, the

  • PM asks India for vaccine help

    Prime Minister Hun Sen is seeking assistance from India for the provision of Covid-19 vaccines as the country has produced its own vaccine which is scheduled to be rolled out to more than 300 million Indians this year. The request was made during his meeting with

  • Cambodia, India agree to start direct flights, tourism exchanges

    Cambodia and India have agreed to start direct flight connections and promote closer tourism exchanges and cooperation in all areas after the Covid-19 saga comes to a close. The agreement was reached during a meeting between Cambodian Minister of Tourism Thong Khon and newly-minted Indian

  • Plastic-to-rice initiative transforms waste into bricks

    Volunteers in Kampong Khlaing commune of Siem Reap province’s Sotr Nikum district have been collecting plastic waste to use as a raw material for the production of bricks and clemence tiles. The volunteers are hoping that, in addition to helping clean up the environment,