Thailand Profile: Thailand Moving Towards Cashless Habits
Introduction to Thailand
An overview of Thailand's currency, population and key statistics.
Thailand's official currency is the Thai baht, denoted as either ฿ or THB. It comprises coins and banknotes. The coins include 25 satang and 50 satang, with 1 baht equivalent to 100 satang. The banknotes are denominated in 20, 50, 100, 500, and 1,000 baht. The 1,000-baht note is the largest and most prevalent and is often used for ATM withdrawals.
Thailand has a central bank digital currency. It is issued by the Bank of Thailand (BoT) and is similar to the fiat money issued by the central bank but in digital form. The BoT was one of the first central banks to recognize the importance of digitization and has researched financial innovations, including the use of technology, to enhance the capacity of the country's infrastructure.
Thailand had a population of 69,799,978 as of the middle of 2020, according to the United Nations. The country's population increased slightly to 69,912,857 in 2021, according to Worldometer's most recent analysis of UN data. Around 51.1% of the population resided in urban areas, mainly Bangkok. The median age of Thailand's population was 40.1 years at that time.
The country's population is projected to increase to 71,801,279 by mid-2023, according to the latest projections by the United Nations. This would account for around 0.89% of the global population, making Thailand the 20th most populous country in the world.
Thailand's official language is Central Thai, also known as Siamese. It is the native language of the central, southwestern, and eastern regions of Thailand, as well as Thai Chinese communities in various parts of the country.
In addition to Central Thai, Thailand recognizes 62 other languages as official. These are divided into five language families: Kra-Dai, Austroasiatic, Sino-Tibetan, Austronesian, and Hmong-Mien. Some of the most commonly spoken regional dialects include Northeastern Thai (Isan), Northern Thai, and Southern Thai.
Thailand's economy grew by 0.2% quarter-on-quarter between April and June 2023, significantly lower than the market's forecast of 1.2%. This slowdown was primarily due to reduced government spending and fixed investment, although private consumption continued to rise. The trade deficit negatively impacted the gross domestic product, as imports exceeded exports.
The Asian Development Bank forecasts that Thailand's GDP will expand by 3.3% in 2023 and 3.7% in 2024. The bank also projects an inflation rate of 2.9% for 2023 and 2.3% for 2024.
Internet & mobile phone trends
Thailand had 48.59 million internet users as of January 2021, representing an adoption rate of 69.5%, according to DataReportal. The PPRO APAC Report also notes that smartphone usage reached 45% by the end of 2020. Notably, the country's smartphone user base has been expanding steadily since 2017, and this trend is expected to continue, reaching an estimated 59 million users by 2025.
Thailand's e-commerce sector has demonstrated significant potential in recent years, reflecting the substantial growth of the Internet economy in Southeast Asia. Within this burgeoning market, e-commerce has emerged as the dominant segment, surpassing online travel and online media. In 2021, Thailand ranked second in the region in terms of the size of its internet economy, following Indonesia.
According to Statista, the e-commerce market is projected to generate revenue of approximately $16.41 billion in 2023. This revenue is expected to increase at a compound annual growth rate of 10.89% over the next five years to around $24.81 billion. The number of e-commerce users stands at approximately 36.6 million, representing 52.3% of the population.
When examining market segments, the food and personal care category stands out as the largest, contributing to 50.3% of Thailand's e-commerce revenue. It is followed by electronics and media at 25.7%, toys, hobby, and DIY at 8.8%, fashion at 7.7%, and furniture and appliances accounting for the remaining 7.5%.
Summary of fiscal policy
The BoT has advised the new government led by Srettha Thavisin to balance fiscal and monetary policies to prevent inflation. BoT Governor Sethaput Suthiwartnarueput is concerned about the impact of rising US interest rates. The central bank has already raised its rates significantly and is aiming for policy normalisation.
The BoT's caution follows Srettha's election as prime minister, which raises the possibility of a more generous budget. Despite concerns about fiscal consolidation, Srettha's Pheu Thai party plans to stimulate the economy with cash handouts and other budgetary measures. This could put upward pressure on Thai assets and the baht, given the still-hawkish stance of the US Federal Reserve and rising commodity prices.
The World Bank has suggested that the government strengthen its fiscal policy by improving revenue collection, enhancing expenditure efficiency, managing fiscal risks, and ensuring debt sustainability.
How people pay in Thailand
An overview of how people in Thailand choose to make payments.
Traditional payment methods
The primary traditional payment methods used in Thailand
A Visa credit/debit card is a financial payment card issued by banks or financial institutions. It allows users to make purchases, withdraw cash, and be used online and in person. Visa's processing network can handle over 65,000 transaction messages per second.
Mastercard is a worldwide payment network that links financial institutions, merchants, and individuals, facilitating seamless transactions. This renowned company provides a range of credit and debit cards issued through partner banks. Depending on the specific bank, customers may enjoy supplementary benefits such as rewards programs, cashback offers, and insurance coverage.
American Express cards encompass a range of payment cards provided by the multinational financial services corporation, American Express Company. The Amex card portfolio includes diverse options like credit cards, charge cards, and prepaid cards. Renowned for their broad acceptance among merchants, these cards grant cardholders access to various advantages, including perks, rewards programs, travel benefits, and dedicated customer service assistance.
Alternative payment methods (APMs)
Alternative payment methods
TrueMoney Wallet is a versatile digital wallet service available on Android and iOS. It enables users to send money, pay bills, shop online, top up phones, and invest easily. Known for its user-friendliness, security, and low fees, it also offers promotions and discounts.
PayPal is a frequently used digital payment system that allows clients to use their PayPal accounts, debit/credit cards, or bank accounts. Customers use PayPal for secure online shopping and to send/receive money.
Google Pay is a digital wallet and payment service developed by Google. It allows users to make secure payments using their mobile devices or computers. It supports various payment methods, offers compatibility across different devices, and provides features like loyalty program integration and transit ticketing. Google Pay prioritises security and convenience with tokenisation and biometric authentication. It has expanded to include digital banking services and continues to evolve.
GrabPay Later is a buy now, pay later (BNPL) service offered by Grab, the Southeast Asian ride-hailing and delivery giant. It is available to eligible Grab users in Thailand. Users can apply for the service through the Grab app and, if approved, can start using it to pay for their Grab transactions in instalments.
Krungsri First Choice
Krungsri First Choice is a subsidiary of Thailand's top financial service provider Krungsri Consumer. It offers a BNPL option. With this service, customers can make purchases at select merchants and pay in instalments, provided they meet specific credit criteria.
Accepting payments in Thailand
A guide to accepting payments in Thailand
How to accept online payments in Thailand
Before accepting online payments, you must determine which methods you prefer. Then you can choose a payment gateway provider, a service that authorises and processes online payments with their specific system.
Although there are plenty of payment gateway options in Thailand, the general process for online payments typically involves an acquirer, issuer, retailer, and cardholder in the following steps:
The cardholder initiates a payment by presenting their payment card to the retailer to purchase goods or services.
The retailer sends the payment details to the acquirer, who processes the payment request and sends it to the payment scheme (such as Mastercard or Visa).
The payment scheme sends the payment request to the issuer (such as a bank or licensed issuer) who issued the card to the cardholder.
The issuer checks if the cardholder has enough funds to complete the transaction and approves or declines the payment request. If the payment is approved, the issuer sends an authorisation code to the payment scheme.
The payment scheme sends the authorisation code to the acquirer, which then sends it to the retailer, completing the transaction.
How long does an international payment from Thailand take?
The payment processing time may vary depending on the method and the recipient's bank. For instance, online money transfers through platforms like PayPal can quickly and conveniently send money to multiple destinations.
Bank debit/credit cards: International payments with bank debit or credit cards may take a few minutes to a few hours, depending on bank processing times.
Online money transfers: Platforms like PayPal can process international payments within minutes to hours, depending on the service and destination country.
Wire transfers: Traditional bank-to-bank transfers via SWIFT or wire may take one to five business days or longer, depending on the destination country, intermediary banks, and transaction requirements.
Merchant fees for online payments in Thailand can vary depending on the payment method and the merchant services provider used. Here are some examples of typical merchant fees for online payments in Thailand:
Credit and debit cards: Merchant fees for accepting online credit and debit card payments can range according to the transaction amount. It also varies depending on the type of card used and the merchant services provider.
Bank transfers: Bank transfer fees can vary depending on the bank used, with some banks charging a flat fee per transaction and others charging a percentage of the transaction amount.
Other fees surrounding online payments in Thailand include charges incurred by merchants, payment processors, and financial institutions involved in the payment processing chain. Below are some common fees:
Interchange fees: Interchange fees are charges paid by merchants' banks to cardholders' banks to cover the costs of processing card transactions. These fees are usually based on a percentage of the transaction value and can vary depending on the type of card used and the merchant's industry.
Payment gateway fees: Payment gateway providers charge a fee for processing transactions on their platform, which may be a percentage of the transaction value or a flat fee per transaction.
Cross-border fees: If a merchant accepts payments from customers outside the country, they may be subject to additional fees for cross-border transactions, including currency conversion fees and international processing fees.
Merchant discount rate: A processing fee that merchants are charged for transactions made using credit or debit cards. This fee generally falls within 1% to 3% of the total transaction amount.
Security challenges of online payments in Thailand
The rise of digital wallets and e-commerce has made Thailand one of the most popular countries to make payments online. But like other countries, there are still issues related to security.
One of the biggest concerns that payment providers face is the threat of cybercrime and fraud. This issue can arise due to phishing, malware, and hacking attempts, which can steal financial and personal data. To prevent this threat, payment providers should have multi-factor authentication and encryption in place.
The lack of education and awareness regarding the security risks associated with making transactions online is also a challenge faced by payment providers. Many consumers may not be aware of how to avoid fraud or how to protect themselves. This is why government agencies and payment providers must educate their customers properly.
Key sectors & industries in Thailand
According to Interns in Asia and the US International Trade Administration, the top 10 industries in Thailand are:
Thailand boasts a robust economic foundation and abundant resources for the automobile and automotive parts industry. Strategic government policies have helped Thailand evolve into a thriving foreign original equipment manufacturer, especially in the automotive industry. In 2021, Thailand emerged as a frontrunner in Southeast Asia, achieving an impressive 18% growth rate in vehicle production.
Tourism has long been a primary engine of economic growth in Thailand, accounting for approximately 15% of its GDP. Despite recent setbacks, the country remains a top global tourist destination. Several key factors underpin this enduring success, including effectively executed tourism policies, robust infrastructure, and natural beauty.
Agriculture is vital to Thailand, contributing 8% of the GDP in 2019 and employing 33.7% of the labour force. Almost half of Thailand's land is used for agricultural purposes, with rice, sugar, poultry, and seafood being major exports, accounting for 16.5% of total shipments. Sugarcane was the most cultivated crop in 2022.
Airports of Thailand (AOT) and the Department of Airports are actively pursuing airport expansion projects, especially for connecting smaller cities to the capital and popular tourist destinations. Before the coronavirus pandemic, Suvarnabhumi International Airport, the country's primary international airport, had already exceeded its annual capacity of 45 million passengers. AOT expects a return to 2019 passenger levels at the country's three major airports – Suvarnabhumi, Don Muang, and U-Tapao – by 2025.
Thailand's petrochemical industry is a major driver of its economy. Map Ta Phut district in Rayong is home to a major global petrochemical complex. In 2022, petroleum products were a leading source of energy in Thailand. The country is aiming for energy self-sufficiency and is therefore driving research in petroleum exploration and products. PTT Public Company Limited is a major player in Thailand's petroleum market.
Defence and Security
Thailand, Southeast Asia's second-largest economy, maintained a consistent defence budget of around $6 billion during the coronavirus outbreak and is set to increase to $7 billion post-pandemic. This commitment is driven by challenges such as illegal immigration, border conflicts, the southern insurgency, and political unrest. In 2022, Thailand allocated over 1% of its GDP to defence, with the budget divided among the army (49%), navy (20%), and air force (19%).
Thailand's education sector faces post-pandemic challenges, such as safety concerns and inadequate online learning infrastructure. The Education Ministry administered 10 million doses of coronavirus vaccine to teachers and students aged 12 to 18, achieving over 80% vaccination coverage. Many Thai students prefer universities with ESL and English-intensive programs to improve their English skills.
Thailand has a total power capacity of 49 gigawatts, of which 11 gigawatts (about 23%) come from renewable sources. The country relies on domestic sources such as solar, wind, hydrogen, biomass, biogas, and waste-to-energy for its renewable energy.
To reduce its dependence on natural gas, the country plans to increase the share of renewable energy in its total energy production to 21% by 2037, and over 30% of its installed capacity. Experts anticipate that bioenergy will play a major role in this shift, supported by government initiatives.
Thailand is a top global destination for medical tourism. It is known for its robust healthcare infrastructure, skilled professionals, and affordable services. In 2019, 3.5 million medical tourists visited Thailand. As of June 2022, 62 Thai medical facilities have been accredited by the Joint Commission International, offering a variety of treatments. Thailand has 38,512 healthcare facilities, and most foreign tourists seeking care in the country do so at private hospitals, many of which are in Bangkok.
Thailand aims to lead the Association of Southeast Asian Nations (ASEAN) in digital innovation. The adoption of 5G technology could contribute up to 10% of GDP by 2035. The "Thailand Industry 4.0" plan targets a 25% GDP contribution from the digital sector by 2027. In 2021, CP Group and Telenor announced a merger of True Corporation and Total Access Communication to invest in technology. Thailand's telecom market was steady in 2022 and is expected to recover to pre-pandemic levels by 2023 due to economic recovery and increased tourism.
Thailand's Imports and Exports
Thailand ranked 25th globally for exports and 23rd for imports in 2021. Key exports included office machine parts, integrated circuits, and vehicles and their parts. Major export destinations were the United States, China, Japan, Vietnam, and Australia.
Top imports in 2022 were mineral fuels, electrical machinery, machinery (including computers), gems, and iron and steel. Primary import partners were China, Japan, the United States, the United Arab Emirates, and Malaysia.
Regulation in Thailand
The regulatory environment of Thailand
Summary of the regulatory environment in Thailand
To maintain fairness and operational smoothness in business ventures in Thailand, entrepreneurs are required to comply with a range of laws and regulations, which include:
Company law: This includes regulations governing companies' establishment, operations, and dissolution.
Employment law: This includes regulations governing employment contracts, working conditions, and employee rights.
Product liability law: This includes regulations governing the legal liabilities and responsibilities of manufacturers, sellers, distributors, and other parties involved in the production and sale of goods.
Intellectual property law: This includes regulations governing copyrights, patents, and trademarks.
Competition law: This includes regulations governing competition and antitrust matters to promote fair competition.
Consumer protection law: This includes regulations governing the rights of consumers, product safety, and advertising standards.
Data protection law: This includes regulations concerning the collection, use, and storage of personal data.
In Thailand, businesses adhere to various legal frameworks related to corporate governance, just like in many other countries. For instance, the Department of Intellectual Property (DIP) manages the nation's intellectual property system. The DIP is responsible for registering and safeguarding trademarks, patents, designs, layout designs of integrated circuits, and geographical indications within Thailand.
How card payments are regulated in Thailand
In Thailand, the BoT is responsible for regulating card payments. The central bank has implemented multiple measures to ensure the security and efficiency of card transactions. These measures include establishing standards for card issuers and acquirers, encouraging the adoption of chip-based cards, and creating a framework for consumer protection.
Do I need a licence?
Yes, starting a business in Thailand typically requires obtaining a licence, depending on the specific type of business you intend to establish. Most businesses in Thailand must obtain a licence from the appropriate government authority before commencing operations. For example, if you are launching a restaurant, you will need a food and beverage licence from the Public Health Ministry. Similarly, if your business involves running a factory, you must obtain a factory licence from the Industry Ministry.
Payment solutions in Thailand
An overview of how to accept payments from customers in Thailand
Payment gateways and providers in Thailand
The evolution of payment methods in Thailand has necessitated merchants to adapt to diverse transaction types. Consequently, businesses are seeking solutions to cater to customer demands. APEXX, leveraging its payment orchestration layer (POL), assists by facilitating connections between payment methods and banks.
A notable advantage of POL is its support for diverse payment methods, complemented by features that enhance business efficiency.
The integration of APEXX's payment processing capabilities into existing systems is seamless, thanks to the company's pre-built plugins and APIs. This enables easy integration with various platforms like e-commerce shops and POS terminals, minimising disruptions and enhancing operational fluidity.
APEXX's payment processing solutions empower Thai companies to process more transactions and handle a range of payment methods. The adaptable framework empowers them to deliver improved customer service.
Cheapest payment solutions in Thailand
To reduce fees in their payment stacks, merchants in Thailand can implement the following strategies:
Negotiate fees: Merchants should negotiate with their payment providers for better rates, including transaction fees, and monthly fees.
Choose a suitable payment provider: Merchants should research and compare different payment providers to select the one that offers competitive rates and low fees.
Use alternative payment methods: Merchants can reduce fees by using alternative payment methods such as e-wallets or bank transfers instead of traditional card payments.
Prevent chargebacks: To avoid chargebacks and additional fees, merchants can offer clear product descriptions, prompt customer complaint resolution, and refunds when necessary.
Implement fraud prevention measures: Merchants should adopt fraud prevention measures to prevent fraudulent transactions, which can lead to chargebacks and additional fees.
Monitor payment processing fees: Merchants should keep a close eye on their payment processing fees and use payment analytics tools to track their expenses and identify areas where they can reduce costs.
Merchants can also consider using payment aggregators such as APEXX, which allow them to accept multiple payment methods through a single platform, reducing the need for multiple payment providers and lowering costs.
BNPL in Thailand
The rapid emergence and evolution of the BNPL market in Thailand can be attributed to the increasing number of companies entering the sector. However, it is important to keep in mind that these services can also expose consumers to various risks. For instance, if customers cannot manage their financial situation properly, they might take on more debt.
One of the leading BNPL providers in Thailand is Krungsri Consumer, a subsidiary of the Bank of Ayudhya. The company offers a service called Krungsri First Choice, which allows customers to make purchases at participating merchants and pay for them in instalments.
Due to the increasing number of payment providers and the acceptance of BNPL, merchants can benefit from using APEXX. This platform allows them to manage their operations and integrate various systems.