Financial deepening or the percentage of Cambodians with access to formal banking services is pegged to almost double in the next six years, according to the Credit Bureau of Cambodia. But the success of such a rapid expansion depends greatly on access to payment systems. Visa, one of the world’s biggest payment providers, has operated in the Kingdom since 2001. Today, with 20 licensed Cambodian banks offering Visa solutions, the company is confident Cambodia is shifting away from a predominantly cash-based economy. Sean Preston, Visa’s country manager for Vietnam, Cambodia, and Laos, spoke with the Post’s Eddie Morton about Cambodia’s payments arena.
How has Visa’s presence in Cambodia evolved?
The first Visa cards were issued in Cambodia in 2001. The main challenge we faced when we started operating in Cambodia was the low level of knowledge around electronic payments. Our initial focus was around educating people on the benefits of both accepting Visa cards and using their Visa cards.
As part of this, we will be committing more resources to help our clients bring new products on board and increase cardholder education – creating greater awareness of how and where to use Visa cards. We’ve seen strong growth in card transactions over recent years and we expect this to continue.
How is Cambodia’s banking industry progressing in the payment technologies arena?
The banks in Cambodia have really made significant progress along with Cambodia’s economic growth. It is a big challenge that the banks face to shift consumer behavior from cash to electronic payments, and Visa’s role is to support the banks in educating the market.
We have witnessed the tremendous growth of Cambodia’s banking industry over the last 20 years, and we can expect to continue seeing developments accelerating electronic payments growth.
As the country evolves and grows, and as Cambodians become more financially savvy and their earning power increases, Visa-card usage will continue to grow. Overall, increased card usage contributes to economic activity by reducing transaction costs and improving efficiency in the flow of goods and services. Merchants also benefit because there is less cash in the system, eliminating the burdens and risks associated with holding cash.
What have been the biggest hurdles in establishing a comprehensive electronic payments culture in Cambodia?
The biggest hurdle in the growth of domestic electronic transactions in Cambodia is the practice of merchants charging an additional fee, often referred to as a surcharge, for customers to use their cards to settle their payments. Surcharging is not allowed under Visa’s operating regulations as we believe consumers should not have to incur additional charges for choosing to pay with a credit or debit card.
Visa and the banks need to continue to educate merchants on the benefits accepting electronic payments brings to their business, such as increasing sales and reducing costs associated with handling cash.
At Visa, we work closely with our local banking partners and the merchant community to educate them about the value of electronic payments and to remove the practice of surcharging.
Visa maintains that the simplest, most economically efficient and pro-consumer policy is for merchants to not surcharge consumers for using cashless payment methods.
Is there competition between electronic payment providers to capture the Cambodian market?
It might come as a surprise to many people, but at Visa we feel our biggest competition isn’t another electronic payment network. It’s cash. We view competition in electronic payments as good for the industry because it signals greater investment and value-driven innovation, which benefits consumers, merchants and economic growth.
Cambodia’s appetite for credit is pegged to increase dramatically in the coming six years, could this improve understanding of financial services?
The promotion of long-term, sustainable and responsible lending from banks is in everyone’s interest. In addition, the establishment of the Credit Bureau in Cambodia is also a good platform for the growth of financial services.
How will electronic payment systems evolve here in Cambodia?
With the advancements in information technology, and as more Cambodians adopt the use of mobile phones, electronic payments will become more attractive and a part of Cambodians’ everyday lives.
This interview has been edited for length and clarity