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The Bank of Thailand (BOT) is currently inviting applications (until September 23, 2024) for its programmable payments trial as part of its Enhanced Regulatory Sandbox that launched in June. The sandbox is intended to allow participants to test innovative financial products under specific thematic initiatives determined by the bank.
The bigger picture
Programmable payments are a relatively new product on the digital asset scene, pioneered by the Monetary Authority of Singapore (MAS). Programmable payments, as the name suggests, can generally be “programmed” for specific conditions, recipients or payment types.
Thailand’s trial represents the second South East Asian country to pilot programmable payments, with Singapore having started trials of its central bank digital currency (CBDC) based version, known as Project Orchid, in late 2022.
How does this compare?
Thailand’s pilot has a number of significant differences to Singapore’s Project Orchid (the only other programmable payment pilot in the region to date). Perhaps the most apparent of these is that Project Orchid is a CBDC-based regime and forms the bedrock of Singapore’s retail CBDC study, whereas Thailand has not specified that entrants need necessarily to use a digital currency as part of their trials. Although the BOT does mention distributed ledger technology and smart contracts as part of its motivations for inviting applications to conduct a trial, it does so only as examples, not as requirements.
Thailand has also opted for an industry-led approach to its programmable money trial, opening its sandbox to applications from any firm that meets the criteria and is willing to apply. This is in contrast to Singapore, which started with a government-led trial in Phase 1 of Project Orchid, followed by an industry-led trial in Phase 2 dominated by local e-commerce giants including Amazon, Grab and Ant Group.
Why should you care?
If you are a payment service provider with the resources and ability to conduct a programmable money trial, this pilot represents the perfect opportunity to trial a solution that, although having to be agreeable to Thai authorities, can be completely home grown, allowing more flexibility than a government-sanctioned trial that uses state-run facilities that may not be the most suitable or up to date. But you be quick, as there is only a short application window.
Payment service providers currently operating in Thailand may do well to observe how these trials (if any) are received by the government and the public at large, as a successful trial may mean that you could be required to implement systems to process such programmable payments in the future.
