The increase in numbers of financial services such as banks and mobile platform payment services across the Kingdom has aided the National Bank of Cambodia’s efforts to boost riel circulation within the country. According to the National Bank of Cambodia (NBC) 2019 Review and 2020 Outlook report, there has been a noticeable growth of 33 percent on year-on-year circulation of the national currency and a 37 percent increase in deposits over the same period. While boosting riel circulation locally by implementing monetary policies have been applauded and adhered to, there is also the matter of electronic payment service providers for international merchants such as Visa and MasterCard, which allow payments to be accepted in both riels and US dollars.
UnionPay Cambodia, a subsidiary of financial services corporation China UnionPay, says it supports card payments in multiple legal tenders as the cards under UnionPay can be issued in one or more currencies. “UnionPay cards may be used globally within UnionPay’s expansive global network of 178 countries and regions, regardless of the currency of the card,” explains a spokesperson for the company. At the point-of-sale, the card-accepting bank, also known as the acquiring bank or the merchant, jointly make the decision with UnionPay about the acception.
“For example, when using a Cambodian-issued card in China or Malaysia, although these are issued in US dollars, customers may still use the UnionPay card in both countries respectively for purchases. UnionPay will then seamlessly handle the currency conversion,” adds the spokesperson. While UnionPay is fully prepared to implement card payment settlements in riels, they respond to the demand of the market and the financial institutions they serve and support. This includes the rapid evolution of electronic payments. In 2019, the number of UnionPay Debit Cards issued in the country grew by over 20 percent year-on-year while card spending jumped by close to 40 percent, continuing a strong upward trend from previous years.
This upward trend is even more marked for Visa Cambodia. Their figures show that transactions on Visa cards have been up by 93 percent in the fourth quarter of 2019 in comparison with the previous year. “We are also seeing strong growth in international spending, which seems to demonstrate the important role Cambodians see electronic payments play in their travel,” says Monika Chum, Visa country manager for Cambodia. “Today, all of our cards are in US dollars, but it does not mean that banks cannot issue a card in riels as Visa can set this up as a billing currency. For cardholders travelling to Cambodia, they are able to transact in riels.”
However, according to Winnie Wong, the country manager of MasterCard for Indochina, their figures show that more than 90 percent of all transactions in the country are still being conducted in cash. They are currently looking at ways to convert those cash transactions to digital cashless transactions by encouraging consumers to use more digital payments.
“MasterCard understands that encouraging the use of riels is one of the National Bank of Cambodia’s priorities. MasterCard fully supports their goal in realising a thriving and fully functioning riel economy. The persistent use of US dollars in the country is a complex phenomenon that goes beyond digital payments,” Wong said.
“In the provision of our payment processing services, we deal with our institutional customers directly these issuers and acquirers, are typically, but not necessarily, banks. We do not have direct contractual relationships with cardholders and merchants,” she added. In their efforts to boost the use of digital payments, MasterCard has introduced contactless payments.
“A simple tap of a card or smartphone is just one of many contactless payment options that are increasingly favoured by the younger generation,” says Wong.
She highlights that MasterCard is committed to accelerating contactless payment acceptance in the country. This would lead to an upgrade of the country’s capacity and capability in payment transaction processing. For instance, Wing allows payments to be made through their cards to be in both riels and US dollars. For international transactions, the usual conversion rates apply. However, a city like Phnom Penh has a majority of transactions in US dollars because it is still the most trustworthy currency. in cities such as Phnom Penh, there are far higher transactions in US dollars because it is still the dominant currency. To date, Cambodia’s payment-card market has had tremendous success in boosting riel circulation and as international merchants work together with the National Bank of Cambodia to facilitate payments, Cambodians can continue to perform transactions in a safe, secure and convenient way.