The increase in numbers of financial services such as banks and mobile platform payment services across the Kingdom has aided the efforts of the National Bank of Cambodia (NBC) to boost circulation of the riel within the country.
According to the 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 has 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 because the cards 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,” explained 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 acceptance.
“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,” added the spokesperson. While UnionPay is fully prepared to implement card payment settlements in riels, it responds to the demand of the market and the financial institutions it serves and supports. This includes the rapid evolution of electronic payments. In 2019, the number of UnionPay debit cards issued in the country grew by more than 20 percent year-on-year, while card spending jumped by close to 40 percent, continuing an ongoing upward trend.
This trend is even more marked for Visa Cambodia. Its figures show that transactions on Visa cards were 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 that electronic payments play in their travel,” said 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 because Visa can set this up as a billing currency. Cardholders travelling to Cambodia are able to conduct transactions in riels.”
However, according to Winnie Wong, the country manager of MasterCard for Indochina, its figures show that more than 90 percent of all transactions in the country are still in cash. It is currently looking at ways to convert those cash transactions to digital cashless transactions by encouraging consumers to use more digital payments with various incentives.
“MasterCard understands that encouraging the use of riels is one of the central bank’s priorities. MasterCard fully supports its 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 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 its 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,” said Wong.
She highlights the fact that MasterCard is committed to accelerating contactless payment acceptance in the country. For instance, Wing allows payments to be made through its cards to be in both riels and US dollars. For international transactions, the usual conversion rates apply. However, a city such as Phnom Penh has a majority of transactions in US dollars because it is still the most trustworthy currency. In the capital, there are far more transactions in US dollars because it is still the dominant currency.
Up to date, Cambodia’s payment-card market has had tremendous success in boosting riel circulation and, because international merchants work with the central bank to facilitate payments, Cambodians can continue to perform transactions in a safe, secure and convenient way.￼