Cambodia: Positive response to NBC bid to popularize KHQR

The efforts taken by the National Bank of Cambodia (NBC) to standardize the banking QR codes across the country through the implementation of the KHQR code have been welcomed by the financial sector with many banks already joining the system officially launched earlier in July this year.

All financial institutions that are members of the Bakong system, the interbank transaction platform of the country, are encouraged to implement KHQR code as this would help businesses to accept digital payment from customers of any participating bank through a single QR code and make transactions also easier for the customers.

While several institutions have already joined the system, many others are in the process of implementing the KHQR code. Banks and other financial institutions that are delaying their participation in the KHQR code system can end up losing customers when the common code is widely implemented as merchant outlets and other businesses may not be interested in keeping separate QR codes anymore.

As of 2021, 55 institutions, including commercial banks, specialized banks, micro financiers and payment service providers are members of the Bakong system, launched in the country in 2019, with 27 officially connected and 28 more in the process of integrating with their own systems as well. It is also much easier for members of the Bakong system to implement the KHQR code, it has been pointed out.

“The Bakong system has gone a long way in enhancing the interconnectivity and interoperability of financial institutions. This has also helped people to make banking transactions safely during the Covid-19 pandemic and promote financial inclusion. By using the blockchain technology, it is also considered highly secure,” Rouen Nimol, Deputy Head of Payment Support Division and Lead of Bakong Promotion and Functional Support, IT Department, NBC, said while participating in a workshop in July, adding that the system has already reached 7.9 million people. The Bakong system is also used for cross-border transactions and through Maybank, the system can be availed in Malaysia already. Soon, Cambodians working in Thailand can also use the system to transfer money back home, Nimol said then. Bakong, a blockchain-based payment platform was officially launched by NBC in October 2020. Using distributed ledger technology (DLT), Bakong is a backbone payment system that aims to enable interoperability among banks and financial institutions, enhance efficiency in payment systems, promote financial inclusion, and encourage the use of cashless payments in local currency. The system has been recognised regionally and globally as the first central bank payment system using blockchain technology. In April 2021, the PwC CBDC global index ranked Cambodia’s Bakong project first in Asia and second in the world for retail projects just after Bahama’s Sand Dollar. Moreover, in January 2022, the system won one of Asia Nikkei’s Awards for excellence for its innovative technology and impact on the country’s economic and social development. In 2021, the total value of transactions through the Bakong system was recorded at KHR 14.3 trillion with 8.2 million transactions.

Also in 2021, the total value of online payments using e-wallet accounts expanded by 17.3 percent to almost KHR200 million with 343.8 million transactions, according to the Financial Stability Review 2021, released by NBC. Advancements in financial technology and the rapid adoption among the public have also encouraged more banks and financial institutions to develop and provide online services to enable customers to perform a wide range of digital banking operations including loan repayments, fund transfers, bill payments, phone top-ups, payrolls, and balance inquiries. In 2021, the value of internet banking doubled to KHR90.1 trillion with 4.4 million transactions and that of mobile banking increased 28.6 percent to KHR28.9 trillion with 254.1 million transactions, the Financial Stability Report said.

Going forward, the NBC will enhance regional financial connectivity, particularly with the Asean member states, to deepen regional integration and cooperation through cross-border payments to facilitate trade, e-commerce, tourism, and remittances as well as to promote financial inclusion. Furthermore, NBC is studying the use of the Bakong system for large value payments by strengthening the efficiency and security of gross settlements in the Cambodian financial system in line with regional and global developments, the report said.