Mobile payments help the unbanked transfer funds securely

Money may talk in Cambodia as audibly as in other countries, but now it also increasingly vibrates, pings and beeps with the Kingdom’s recent boom in mobile payment services. Since the first domestic provider Wing was launched by ANZ Banking Group in 2009, traditional means of moving cash around the Kingdom by road are being abandoned in favour of swifter and safer transfer via the airwaves.

“These services are very useful if you want to keep your money secure,” says Pheak, a vendor on Phnom Penh’s Norodom Boulevard who five years ago became one of Wing’s now estimated 4,000 dealers. “When I travel to the provinces, I don’t need to carry my cash with me and members of my family can pick it up anywhere they want.”

The cash transfer system pioneered by Wing, now part of the Royal Group, enables customers to send money by simply paying cash at an outlet in exchange for a code which can be texted to an individual or organisation, and then redeemed. Payments can be made in either riel or dollars and are available to Wing’s some 600,000 registered account holders, as well as one-off customers for competitive fees from around $1.50. Among a population that is 80 per cent rural and overwhelmingly cash-dependent and unbanked (about 95 per cent do not hold bank accounts), the mobile transfer system seems to have pressed all the right buttons.

“As in other countries like Indonesia, where there is large reliance on cash by individuals and small businesses, people are opening up to new ways of paying by going digital,” says Gerald Ferguson, Asia General Manager at global business intelligence and media provider, RFi Group, who this year surveyed payment systems in the region. “[We] are seeing emerging and developing markets surge ahead in the usage of mobile and cashless banking. This trend is due to the absence of large legacy systems from a banking perspective, coupled with a predominantly unbanked or underbanked population that is highly digitally engaged.”

A population weighted toward Generation Y and Millennials like Cambodia’s is also spurring the so-called e-wallet industry, says Ferguson.

“Our research shows customers are constantly interacting on mobile phones – a form factor that they are very familiar with and have a certain comfort level with transacting on,” he says.

However, the industry did not hit the ground running in the Kingdom. Rather, former Wing CEO Anthony Perkins says that serious leg work was required to tailor products and services to local idiosyncrasies.

“The first main product we wanted to roll out – a payroll service aimed at blue-collar employees – was a total non-starter,” he said, explaining that workers’ typical practice of withdrawing their entire salaries on their monthly payday meant that Wing agents could not feasibly provide enough cash at each location.

“We needed to use our understanding of the nuances of Khmer culture to develop our key products,” he says. “The main service is money transfers for groups like migrant workers who come to the city to work in factories, and used to send 50 to 60 per cent of their money out of town via moto, taxi or bus.”

As Perkins explains, such customers can now transfer funds securely, instantaneously and cheaply to a Wing outlet within an estimated kilometre of provincial homes. “We were all about the mass market and the key thing was convenience,” he says.

Wing’s successful adaptation is echoed by the observation of its agents. “Business was slow at first, but it became really busy after a few years,” says agent Pheak. “The most important change was when the scratch password was updated to a safer mobile phone number system. Many Cambodians did not understand the idea of a secret code and would shout it in public and then complain when their money never arrived.”

However, the success of Wing’s finely-tuned products has led a growing number of providers to venture into the local market.

“Wing customers are starting to decrease now because there are many other new services like AMK and True Money,” Pheak observes.

Alongside companies like AMK, Asia Wei Luy and E-Money, the Thai-owned True Money has made a visible entry with outlets cropping up around the capital and provinces offering similar cash transfer and payroll, bill and retail payments. The company has some six million registered e-wallet users in Thailand where its most popular product has been bill payment, and is now hoping to extend its reach.

“Business has been good and we have had a lot of customers for money transfer,” says Chan, a new True Money agent in the capital’s Boeung Keng Kang district. “Provinces like Kampong Speu and Kampot are very popular for this.”

However, the brand has yet to widely register with Phnom Penh residents who can readily point to the nearest Wing outlet. And unlike in other countries where joint ventures between mobile payment services and telecom operators are the norm, the Kingdom’s new players, like True Money, have not yet established such a business model.

“I am uncertain how successful they can be without telco behind them,” says Perkins, noting that it took Wing years to develop its current relationships with mobile providers like Cellcard to manage its colossal number of transactions. “You really need telco agreements to handle that volume of traffic if True Money is aspiring to a big scale.”

Additionally, as a specialised bank, Wing can also handle accounts with the regulatory framework overseen by the National Bank of Cambodia.

“Third party companies like True Money and eMoney have next to no experience in handling bank quality transactions and must learn very quickly,” says Perkins, warning of protections against fraud, upholding customer privacy and anti-money laundering practices.

Thomas Hundt, CEO of Cambodia’s second largest mobile provider Smart Axiata, declined to comment on the possibility of future collaboration with True Money, but noted that the company also recently launched its own rival e-wallet service, SmartLuy.

As Ferguson observes of this unfolding market: “The level of competition in this space is enormous and will only continue as more and more FinTech’s and digital disrupters enter the marketplace and further disintermediate the banks in key payment scenarios.”

True Money representatives were not available for comment on its business strategy or services in Cambodia.