The problem in Cambodia

Three-quarters of Cambodians (78%) lack a bank account, despite the fact that more than half of the population has a smartphone. Even though the local currency, the Khmer riel (KHR), has been stable for 20 years, the majority of the population still uses the US dollar. The price of everything from a cup of coffee to a vehicle has been presented in US dollars since a major UN operation in the mid-1990s. In a bustling market, converting a price to KHR requires multiplying by a factor of 4,075: not the easiest computation. The NBC has a long-standing desire to "de-dollarize" the retail sector, or reclaim control of the country's currency. The wholesale settlements between domestic banks are usually the focus of central banks. However, different retail banking systems used by different banks and other parties often do not interact efficiently with one another.

Bakong as a payment system

Cambodia's central bank sought to establish a digital token backed by fiat cash housed securely in its vaults in order to be cautious. The new payments infrastructure would be used 5to transmit electronic currency while maintaining the central bank's trustworthiness and security. Individual consumers—even the unbanked—could pay with their cellphones, retailers might depend less on cash, and banks could save money on interbank transfers with a digital payments infrastructure in place

Three phases of opening Bakong account

The soft launch was intended to foster innovation in retail payments, facilitate interbank transactions, and boost economic growth for the NBC. The initiative was also created to help the country's significant number of unbanked residents get access to financial services. Even if they do not have a standard bank account, any citizen of the nation may create a Bakong account. The three phases of the procedure are as follows:

1. A person may establish their identification using a smartphone and an ID by shooting a document picture and a selfie, which are both authenticated by a powerful AI system.
2. The user joins one of the Bakong member banks as a member.
3. They may then use Bakong to purchase and sell items from participating businesses, as well as send money to friends and family through peer-to-peer (P2P) transactions.

Advantages of Bakong

Individuals may use Bakong as an e-wallet to make mobile payments and conduct online banking. Users may transfer money using a personal QR code without exposing any personal information. The system handles cashless transactions for merchants with consumers, other merchants, and their own bank. Merchants that take Bakong may also be found on a map inside the app, and there are already over 500 merchants registered. Bakong lowers the high costs for interbank transactions for banks. The technique is also dependable and quick for everyone. Transactions are completed in under 5 seconds, with a system throughput of over 2,000 transactions per second. This system is speedier and more reliable than the one it replaced

More information

This is a part of my research regarding retail and wholesale payment in Cambodia.

The full version is here: Bakong as a retail payment