The digital wallet market in Thailand is expected to grow rapidly in the next few years, but it also faces many challenges and uncertainties, according to analysts. The government’s push for a cashless society, the rise of e-commerce and the Covid-19 pandemic have all contributed to the increasing adoption of digital payments in the country. However, the market is also fragmented, competitive and regulated, posing difficulties for both existing and new players.
According to a report by Statista, the digital wallet market in Thailand is projected to reach $30.4 billion in 2023, up from $22.6 billion in 2021, with a compound annual growth rate (CAGR) of 16.2%. The number of users is expected to grow from 30.3 million in 2021 to 37.8 million in 2023, with a penetration rate of 53.9%. The average transaction value per user is estimated to be $802 in 2023, up from $746 in 2021.
The main drivers of the market growth are the government’s policies and initiatives to promote a cashless society, such as the PromptPay system, the e-payment tax incentive scheme and the National e-Payment Master Plan. These policies aim to reduce the reliance on cash, increase the efficiency and transparency of transactions, and foster financial inclusion and innovation.
Another factor that boosts the demand for digital wallets is the rise of e-commerce and online shopping, especially during the Covid-19 pandemic. According to a report by Google, Temasek and Bain & Company, the e-commerce market in Thailand grew by 81% in 2020, reaching $11 billion, and is expected to grow further to $18 billion by 2025. The report also found that 50% of online shoppers in Thailand used digital wallets as their preferred payment method in 2020, up from 43% in 2019.
Market Fragmentation and Competition
Despite the promising outlook, the digital wallet market in Thailand is also highly fragmented and competitive, with many players vying for a share of the pie. According to a survey by Visa, there are more than 40 digital wallet providers in Thailand, offering various features and services, such as QR code payments, peer-to-peer transfers, bill payments, online shopping, loyalty programs and cross-border remittances.
Some of the leading players in the market include TrueMoney, Line Pay, AirPay, Rabbit Line Pay, G Cash, BluePay, mPay, PromptPay and SCB Easy. These players have different strategies and target segments, such as telecom operators, social media platforms, e-commerce platforms, banks and fintech startups. They also have different partnerships and alliances, such as with merchants, regulators, payment networks and other digital wallet providers.
The competition in the market is expected to intensify as more players enter the fray, such as GrabPay, GoPay, ShopeePay and Lazada Wallet, which are backed by regional and global giants, such as Grab, Gojek, Sea Group and Alibaba. These players have strong brand recognition, customer base and financial resources, and they aim to leverage their ecosystem and network effects to gain an edge over the incumbents.
Market Regulation and Uncertainty
Another challenge that the digital wallet market in Thailand faces is the regulation and uncertainty that surrounds the industry. The Bank of Thailand (BOT) is the main regulator of the digital payment sector, and it has issued various rules and guidelines to govern the operations, licensing and supervision of the digital wallet providers. For example, the BOT requires the providers to obtain a license for e-money service, comply with the anti-money laundering and consumer protection laws, and report their transactions and performance to the BOT.
However, the regulation of the digital wallet market is also evolving and changing, as the BOT tries to balance the objectives of promoting innovation and competition, and ensuring stability and security. For instance, the BOT has recently announced that it will revise the e-money service license criteria, and introduce a sandbox program for new entrants and innovative products. The BOT has also stated that it will collaborate with other regulators, such as the Securities and Exchange Commission (SEC) and the Office of the Insurance Commission (OIC), to oversee the convergence and integration of the digital payment, investment and insurance sectors.
The changing and uncertain regulatory environment poses both opportunities and risks for the digital wallet providers, as they have to adapt and comply with the new rules and standards, while also seizing the potential for new products and services. The providers also have to cope with the changing consumer behavior and preferences, as well as the external factors, such as the Covid-19 pandemic, the economic downturn and the political situation, that may affect the demand and supply of the digital payment market.