Many developments in the e-Payment industry in Thailand, including the local debit card scheme, have recently occurred. Featured updates include:
- Service providers of debit cards issued and used domestically are now subject to new requirements, including the requirement to use local debit card network (local brand) and to comply with the central chip card standards.
- All newly issued ATM and debit cards must be chip-based, while existing magnetic stripe cards currently in use must be transformed to chip cards by 31 December 2019.
The Electronic Transactions Commission ("ETC") issued the ETC Notification re: Requirements, Procedures, and Conditions for Undertaking the Electronic Payment Service Business, B.E. 2559 (No. 2) ("ETC Notification 2559 No.2")1 , which further specifies and stipulates requirements for service providers involved in debit card issued and used domestically. These developments will be of particular interest for any service providers involved in debit card payment in Thailand.
The objectives of the ETC Notification 2559 No.2 is to improve the safety of e-payment services, promote the use of debit card instead of cash and increase efficiency of and deduct service costs. The issuance of the notification is a crucial step taken in line with the National E-Payment Master Plan, of which the ultimate goal is to drive Thailand into a "cashless society."
Before the issuance of the ETC Notification 2559 No. 2, following the so-called Local Switching Scheme launched in 2012, the Bank of Thailand ("BOT") and the Thai Bankers' Association ("TBA") have further promoted the launch of the Local Debit Card Scheme. The BOT also announced the policy re: the migration of ATM and debit cards from magnetic stripe cards to chip cards complying with the Thai bank chip card standard stipulated by the TBA. From 16 May 2016 onwards, all newly issued ATM and debit cards will be chip-based. This policy requires that all existing magnetic stripe cards currently in use must be transformed to chip cards by 31 December 2019.
With regard to the ETC Notification 2559 No.2, its key requirements include the following:
- The issuer can only issue cards to be used domestically by using a local debit card network (except for On-Us transactions) and must comply with the central chip card standards stipulated by the BOT. The issuer can issue a multi-brand card which uses two or more debit card networks, provided that one of the debit card networks is in Thailand.
- The acquirer must provide devices and systems that can accept the cards using a local debit card network and which comply with the central chip card standards stipulated by the BOT. The agreement between the acquirer and the merchant must not restrict the right of the merchant to use the service of any debit card network.
- The switching, clearing, and settlement service providers must make sure that their systems can accept the cards under all debit card networks I Thailand including multi-brand cards, and that their systems can connect well to any other service providers' systems.
- For multi-brand cards, when the merchant chose a particular network to process a particular transaction, the acquirer may not charge any extra fees or expenses from any networks other than that chosen.
- The issuer and the acquirer must comply with the requirements under this regulation within 180 days after the effective date. The issuer must make the cards, including those issued prior to the effectiveness of this ETC Notification 2559 No. 2, comply with this notification by 31 December 2019.