Cambodia To Introduce Bakong Digital Payments For Tourists
The Cambodian government is set to introduce a digital payment system for tourists on the soon to be released ‘Bakong Tourist App’, as well as addressing the ongoing issue of damaged banknotes being rejected by vendors in Siem Reap.
During the National Bank of Cambodia’s (NBC) semi-annual meeting on July 19, 2024, NBC Governor, H.E. Dr. Chea Serey, announced that Cambodia will soon launch Bakong enabled for foreign tourists to ensure seamless digital transactions for tourists visiting Cambodia, saying, “We will launch Bakong for foreign tourists. When they come to Cambodia, they can download the Bakong app and enjoy seamless transactions.”
According to the NBC governor, under this mechanism tourists will be able to download the Bakong App, and even if they do not have a local Cambodian bank account to withdraw money from to top up the Bakong wallet, tourists can still use a credit card from their home country, such as Visa, Mastercard or UnionPay, to top up the Bakong wallet.
Serey further explained that this will allow international tourists to experience using digital payments in Cambodia, and more importantly help resolve the issues that foreign visitors face when trying to use large USD denomination banknotes in the Kingdom (see below).
We are led to believe that although Cambodian banks are not meant to open accounts for visitors on tourist visas, and that documents such as passports, work permits etc are required to be show in compliance with KYC (Know-Your-Customer), there are several indications from online expat groups that individuals have opened local bank accounts with tourist visas.
US Dollar Notes Circulation In Siem Reap
Cambodia widely uses the local currency and simultaneously the US dollar, although there has been a strategy from the NBC to de-dollarise.
According to the NBC's statement dated July 21, 2024, the NBC governor met with banking and financial institutions to address the issue of US dollar notes being rejected by tourism vendors in Siem Reap, for being old, dirty or damaged.
This follows the request from the Cambodian Prime Minister Hun Manet who said on 18 July 2024, “Some problems are small, but annoying to tourists, such as the difficulty in using U.S. dollar bills that are dirty or a little torn…Counterfeit banknotes is one thing, but some banknotes are just a bit broken, old, ripped or stained. Anyway, they are rejected or their value is depreciated because the banks do not accept them. I hope our National Bank will work on this issue urgently.”
In May 2020, the NBC had instructed financial institutions to withdraw smaller US notes of USD $1, $2, and $5, but at the time, this created a panic in the market for retailers and consumers, who assumed the bills were no longer legal tender.
It's worth noting that in Cambodia, there is an ‘unofficial norm’ of incurring extra charges when exchanging torn or blemished US dollar notes for Cambodian riel at the money exchangers. This is a nationwide issue, and many Cambodian businesses refuse these notes so it's not clear why Siem Reap only has been targeted under the new Prakas.
The NBC Prakas outlines four mechanisms to be implemented:
- Require the Siem Reap Commercial Bank branch to accept old or dirty US dollars without charge from its customers, unless the paper is counterfeit.
- In the case of very old dollar banknotes, which should not be allowed to circulate in the market, the commercial bank in Siem Reap shall send them to the exchange for new notes at the NBC Siem Reap branch without the need to transfer to the head office of the commercial bank in Phnom Penh.
- Requires all banking and financial institutions in Siem Reap to place USD $20 and USD $50 banknotes instead of only USD $100 US dollars in ATMs to facilitate tourist transactions. All types of banknotes are still accepted for deposit.
- Organise outreach to money changers, hotel and restaurant owners to better understand and support the measures outlined above and to cooperate with the National Bank of Cambodia to implement the mechanism further.