Digital Payment Apps Face Hurdles to Success in Cambodia

Despite a growing lineup of digital payment apps in the country and predictions of a cashless society within 10 years, experts say major hurdles remain before such a system can catch on and become sustainable in Cambodia.

Retailers and social media entrepreneurs are preparing for growth in the e-commerce sector, but the lack of an e-commerce law, aversion among both consumers and vendors, and the tiny Cambodian market—likely yielding relatively little reward even for an eventual market leader—could prove challenging to budding firms, they say.

Spurred by major successes in China, e-wallet apps have been growing in Thailand, Malaysia and Indonesia. Vietnam announced earlier this year its intentions to rely on cash for less than 10 percent of all transactions by 2020.

Dozens of e-wallet apps with similar cash-free functions have also emerged in Cambodia, from SmartLuy, a bill payment and limited money transfer service offered by mobile operator Smart, to Tesjor, a recently released app that allows users to order and pay for food from more than 85 restaurants.

PayGo works in a similar way, allowing users to pay utility bills, book tickets and buy goods and lottery tickets through an e-wallet, but users must load money into their account through PayGo kiosks located throughout the city.

Another e-wallet app will soon be joining the growing list. Pi Pay intends to combine features from the popular Chinese social media app WeChat and Alipay, a payment system that allows the app’s users to buy goods, book travel, transfer money and send messages, said Pi Pay CEO Tomas Pokorny.

Mr. Pokorny said the app was backed by an international bank, which he declined to identify. Locally, Pi Pay had financial support from Anco Group and businessman Rithy Samnang, the son-in-law of

tycoon Kok An, he said.

The app will have a limited release and trial period in Phnom Penh in the coming weeks, Mr. Pokorny said, though he was not sure when the release would start.

Chris McCarthy, CEO of marketing company Mango Tango, said Cambodian consumers do not completely trust e-wallet services and firms will need to make an attempt to adjust people’s behaviors.

And if a digital payment app catches on in Phnom Penh and the rest of the country, the company will quickly outgrow its market, Mr. McCarthy said.

“The challenge in Cambodia is it’s actually a very tiny market,” he said. “At the end of the day, there’s not a lot of cash in a small market, so the question is what other small markets they’re going after.”

Kem Bora, investment manager for consulting firm Mekong Strategic Partners, said vendors can be slow to accept cashless payments because of the cost and risks of relying on digital transactions.

Pakk Yourng, digital financial services expert for ADG, a Singapore-based mobile financial solution company, said that a cashless society in Cambodia could be feasible within 10 years despite the prevalence of cash-only stores and food stands.

“If any of the companies would be able to consolidate all banks to a Single Payment Gateway (as payment hub), they will lead the industry,” he said.

But the government needs to encourage adoption, he said.

“Compared to Europe and the U.S., local authorities for the [Cambodian] government, they tend to be moving faster and more open-minded when it comes to this,” he said.

“As long as the government helps to push—then it would move faster.”

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