Ministry of Finance signed MOU appointing two EDC providers for deployment nationwide; boosting card usage under the National e-Payment Master Plan

Ministry of Finance signed MOU

appointing two EDC providers for deployment nationwide;

 boosting card usage under the National e-Payment Master Plan

 The Ministry of Finance and the Screening sub-committee today signed an MOU appointing two electronic-data-capture (EDC) service providers to deploy EDC at merchants and government agencies nationwide, fostering the development of the national payment system in accordance with the National e-Payment Master Plan. The MOU signing was witnessed by the Bank of Thailand and the Comptroller General’s Department.

The two selected consortiums came from two groups of commercial banks.

Mr. Apisak Tantivorawong, Finance Minister, said, “The Finance Ministry has highly been emphasizing on the National e-Payment Master Plan, as implementing services that are convenient, secure and cheap are key in elevating efficiency and enhancing the economic growth and competitiveness of the country.”

The National e-Payment Master Plan comprises six projects, all of them have been progressing continually. The two projects under this Master Plan are led by the Bank of Thailand, including the development of PromptPay fund transfer service that was launched since January 2017 and the other is the promotion of card payment through EDC expansion. While PromptPay is a non-card payment system, the expansion of EDC will foster card payments.

The card payment expansion is inaugurated today after the MOU signing ceremony. Under the current phase, EDC terminals will be deployed nationwide. The Screening sub-committee was appointed to select the installers, chaired by the Permanent Secretary of the Finance Ministry, has screened and selected appropriate consortiums through a transparent process under which qualifications of the bidders were thoroughly considered. The screening process has been completed and the selected installers will be able to begin their EDC deployments from today.

The EDC expansion project focuses on two major tasks: 1) enabling shops across the nation to install EDC terminals at a lower cost and encouraging individuals to use debit cards for daily payments. Both selected consortiums will ensure that EDC installations are distributed to all parts of the nation, not to concentrate only in urban areas. The installation of EDCs will enable small retailers and government agencies to accept debit cards with a low cost. At the same time, it will encourage individuals to use debit cards more frequently for payments. It can be assumed that most people who own a debit card have used their cards only for cash withdrawal, without realizing that it is, in fact, a debit card that can also be used for purchasing goods and services.

Currently, there are over 54 million debit cards and 400,000 EDC terminals nationwide. The EDC per capita is considered to be low compared to developed nations, while the usage of debit cards have also remained low relatively. The Ministry hopes that this project will change the behavior of the Thai people, shifting from paper-based payments towards
e-Payment for greater convenience. While shops can also offer their customers with a variety of payment options at lower costs, which results in a lowering cash-handling cost for the country and promotes an efficient payment ecosystem.

For the next phase, the EDC machine will be further enhanced to accept more types of cards, such as the common ticket card (new card scheme for transit) and the social welfare card. To the end, it will improve the quality of life of the Thai people.

“I wish to thank the two consortiums and concerned parties for taking part in this project. We realize that hard work is ahead for the two consortiums in honoring their contracts. I wish to thank the Screening sub-committee for completing the selection process smoothly and efficiently. I believe that this project will finally become a great success and be the
e-Payment infrastructure that will in the end bring us towards the digital economy,” said the Finance Minister.

After the EDC machines are installed, the government will further attract e-Payment usage through a marketing campaign that will offer cardholders and shops a chance to be rewarded from their payment transactions through EDC terminals and ATM machines. The campaign will run for the period of one year, starting from June 2017 as the first time to announce the reward (for debit card transactions in May 2017). The total prize of 7 million baht will be distributed monthly, comprising the total of 84 million baht for whole campaign.

Dr. Somchai Sujjapongse, Permanent Secretary of the Finance Ministry, said that under the National e-Payment Master Plan, this project that aims to boost debit card usage, has made a good progress with the selection of the two consortiums completed. The MOU signing remarks a significant step in distributing EDC terminal across the nation.

The EDC expansion project is a significant step under the National e-Payment strategy as it builds a card payment infrastructure with a goal to equip over 560,000 merchants and government agencies nationwide with EDC terminals. The National e-Payment Committee then assigned the Screening sub-committee to select the EDC providers. The screening sub-committee comprises representatives from the Ministry of Finance, Commerce Ministry and the Bank of Thailand. The term of reference was announced to invite interested entity, both banks and non-banks, to bid for the project. Major criteria for considerations are:

  1. Fee structure
  2. Machine deployment plan
  3. Experience and readiness to perform the task
  4. Cost reduction measures for shops/government agencies and methods in promoting debit card usage

“The Screening Sub-committee unanimously announced that the two consortiums have the right qualifications and offer the best benefits and they are therefore being selected. The two consortiums include: 1) “The Consortium” comprising Krungthai Bank, Bank of Ayudhya, Thai Military Bank, Siam Commercial Bank and Thanachart Bank, and 2) “The e-Payment Consortium” comprising Bangkok Bank and Kasikorn Bank.

Both consortiums have proposed benefits in lowering Merchant discount rate (MDR) for debit card from 1.5-2.5% to the maximum of 0.55% and waiving equipment rental fee. The consortiums may require deposits to cover possible damage to the EDC terminals and will be returned once the shops discontinue the service.

The government has also introduced various measures to incentivize card acceptance among merchants, including using the MDR expense as tax exemption at 2 times of the total amount until 31 December 2017. This will significantly reduce shops’ financial burden.

After the MOU signing ceremony, the two consortiums will to start deploying EDC terminals and are expected to complete within the first quarter of 2018, according to Dr. Somchai.