You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

September 10, 2024

Fintech Insights: E-payments in Thailand

Subscribe to Updates

In recent years, Thailand has witnessed a significant transformation in its financial landscape, particularly in the rapid adoption of financial technology (fintech). At the forefront of this evolution are electronic payment systems and services, which have revolutionized how individuals and businesses conduct financial transactions.

This transformation has been driven by both traditional financial institutions and alternative financial service operators. Overseeing this dynamic landscape are two primary regulators: the Bank of Thailand (BOT) and the Securities and Exchange Commission (SEC).

This article explores the development of electronic payment systems in Thailand, with a particular focus on the Payment Systems Act (PSA) of 2017 and its role in shaping the fintech ecosystem.

Payment Systems Act

In October 2017, Thailand took a significant step forward in regulating its burgeoning electronic payment sector by adopting the Payment Systems Act. This landmark legislation was designed to create and ensure electronic payment system stability and enhance consumer protection in the digital financial realm. The PSA establishes a comprehensive framework by categorizing electronic payment businesses into two main categories: payment systems and payment services.

Electronic Payment Systems under the PSA

The PSA recognizes two types of electronic payment systems that require specific licenses or registration:

  • Central or network systems. These include systems that act as a center or network between service users for fund transfers, clearing, or settlement. Examples include:
    • Inter-institution Fund Transfer System
    • Payment card networks
    • Settlement systems
  • Systems of public interest. This category encompasses any other payment systems that may affect public interest, public confidence, or the stability and security of the payment infrastructure.

Electronic Payment Services under the PSA

The PSA also identifies several electronic payment services that require specific licenses or registration:

  • Credit cards, debit cards, and ATM cards
  • Electronic money
  • E-payments
    • Acquisition
    • Payment facilitation
    • Receipt of payment on behalf of others
  • Electronic fund transfer
  • Other payment services that may affect financial systems or public interest

Looking Ahead

As Thailand continues to embrace digital transformation in its financial sector, the PSA serves as a solid foundation for future developments in payment technologies. The regulatory framework established by this law provides a structure for the ongoing evolution of electronic payment systems in the country.

The BOT and SEC continue to play pivotal roles in shaping the future of electronic payments in Thailand. Their ongoing efforts to balance innovation with stability and consumer protection will be crucial in maintaining Thailand’s position as a fintech leader in Southeast Asia.

For businesses operating in or looking to enter the Thai fintech space, understanding and navigating the PSA is essential. As the electronic payment landscape continues to evolve, companies should stay informed about regulatory updates and be prepared to adapt their services to comply with the PSA’s requirements. This proactive approach will not only ensure regulatory compliance but also position businesses to capitalize on the growing opportunities in Thailand’s evolving electronic payment ecosystem.

Related Professionals

Industries

Fintech

Location

RELATED INSIGHTS​ 

August 23, 2024
Thailand’s Securities and Exchange Commission (SEC) amended its utility token supervisory framework by issuing seven notifications that came into effect on August 13, 2024. Ready-to-use utility tokens (tokens that can be used immediately to acquire specific goods or services), which were previously unregulated, are now subject to the supervisory scheme set forth by the seven new notifications in both primary and secondary markets. This is intended to provide an investor protection mechanism that responds to the characteristics, risks, and usage of the different types of ready-to-use utility tokens. Under the new notifications, ready-to-use utility tokens are categorized into two groups. These are detailed below. Group 1 Utility Tokens Group 1 utility tokens include ready-to-use utility tokens issued for consumption purposes or as a digital representation of a certificate. Examples include loyalty points, digital movie or concert tickets, NFTs, and carbon credits, among others. Principally, there is no change in the regulation of group 1 utility tokens under the new notifications. In the primary market, issuance of this type of token is not subject to the initial coin offering (ICO) requirements. In the secondary market, providing services related to group 1 utility tokens is not considered to be the same as operating a digital asset business with licensing requirements under the Emergency Decree on Digital Asset Businesses B.E. 2561 (2018). Licensed digital asset operators (including exchanges, brokers, and dealers) are not permitted to list or trade group 1 utility tokens. To provide services in relation to group 1 utility tokens, these licensed digital asset operators must establish a separate entity to provide those services and must not use names or messages that could cause the public to misunderstand that the separate entity is engaged in a digital asset business under SEC supervision. Group 2 Utility Tokens Group 2 utility tokens
Read More
June 26, 2024
Tilleke & Gibbins’ Fintech Law in Southeast Asia provides fintech operators and service providers with an overview of relevant regulations across all of our full-service jurisdictions—Cambodia, Laos, Myanmar, Thailand, and Vietnam.
Read More
June 19, 2024
Vietnam’s financial landscape is set to further transform on July 1, 2024, when the government’s long-awaited Decree No. 52/2024/ND-CP dated May 15, 2024 (“Decree 52”), will officially replace Decree No. 101/2012/ND-CP dated November 22, 2012, on non-cash payments (“Decree 101”). Decree 52 marks an important milestone by introducing the country’s first-ever legal definition of e-money. In addition, the decree brings forth new updates to regulations governing payment and intermediary payment services, laying the groundwork for more comprehensive guidance that will be provided in draft circulars now being developed by the State Bank of Vietnam (SBV). Non-Cash Payment Instruments The new definition of non-cash payment instruments under Decree 52 expands upon the previous definition in Decree 101. Notably, it clearly specifies the issuing entities as payment service providers, financial companies licensed to issue credit cards, and e-wallet service providers. Additionally, the new definition further clarifies that bank cards include debit, credit, and prepaid cards, and adds e-wallets to the list of non-cash payment instruments. Unlawful non-cash payment instruments are still defined as those that are not otherwise specified. E-Money Prior to Decree 52, the concept of e-money lacked a precise legal definition, despite its growing prevalence in forms like prepaid cards and e-wallets. The absence of a clear framework for e-money led to confusion with terms like “cryptpcurrency” and “virtual currency” and left significant ambiguity on whether e-money includes certain instruments, such as online game cards and mobile money. Decree 52 addresses this issue by clearly defining e-money as value in Vietnamese dong (VND) stored electronically and prepaid by customers to banks, foreign bank branches, and e-wallet service providers. It also specifically designates e-wallets and prepaid cards as types of storage mechanisms for e-money. Non-Cash Payment Services Decree 52 categorizes non-cash payment services into services with and without client payment
Read More
June 18, 2024
On June 1, 2024, Thailand’s Securities and Exchange Commission (SEC) issued four notifications amending existing regulations to recognize sustainability-related tokens and institute specific measures for regulating them. These tokens are intended to offer diverse sustainability-related products to ESG funds in Thailand and drive the growth of a sustainable digital economy in the country. The key points in the notifications are summarized below. Definitions Under the notifications, sustainability-related tokens are classified into four types: Green tokens: Digital tokens specifically intended to incentivize or fund projects that promote environmental sustainability. Social tokens: Digital tokens specifically intended to support and fund initiatives that contribute to social welfare. Sustainability tokens: Digital tokens intended to support projects that enhance both environmental and social welfare through funding and incentives. Sustainability-linked tokens: Digital tokens intended to fund activities that promote sustainability. This includes tokens that have adjustable returns based on the performance of the issuing entity or its affiliates in meeting specified sustainability-related goals or outcomes. The offering of sustainability-related tokens is subject to Thailand’s general requirements for token offerings: (1) approval from the SEC and (2) filing the registration statements and the draft prospectus with the SEC before marketing and offering the sustainability-related tokens to public investors in Thailand, unless exempted. The sustainability-related tokens must be offered through an SEC-approved ICO portal, which will assume a role similar to that of a financial adviser and an underwriter in a public offering of securities. Sustainability-Related Token Offerings In addition to complying with the general requirements for token offerings, sustainability-related token offerings must comply with the following measures: Issuer disclosure: The issuer must disclose certain sustainability information, both before and after the offering, according to standards comparable to those of nationally or internationally recognized green, social, and sustainable bonds (GSSBs) and sustainability-linked bonds (SLBs)—such as the principles
Read More