Programmable Payment, a new innovation in finance
project Programmable Payment Or payments with automatic conditions This is a collaboration between the Bank of Thailand (BOT) and the Securities and Exchange Commission (SEC) that is testing new payment innovations to pave the way for a more modern and secure financial landscape.
The project is currently being tested in the Regulatory Sandbox, a limited-scale experimental environment with no public access or availability. The testing area is designated, the number of participants is limited, and the testing timeframe is clearly defined. This allows the Bank of Thailand to comprehensively assess its potential and manage risks before launching it for widespread use.
This innovative system uses fixed-value electronic data units tied to the Thai baht (1 unit equals 1 baht) and has a constant reserve of baht in a separate account not less than the value of the data units created to certify their value and prevent misuse.
The key is to use distributed ledger technology (DLT) and smart contracts that can automatically execute transactions when pre-defined conditions are met.
First step towards practical use
During testing, the Programmable Payment project is being evaluated through several key case studies, each designed to address a specific financial problem.
- For tourists, services Purpose Bound Money (Money that is subject to spending conditions)
This model is being tested with international tourists who can exchange their digital assets for programmable payments in Thai baht, which can then be used to pay via QR code at participating merchants. The aim is to streamline currency exchange and reduce fees for international travelers, while also testing payments based on specific conditions, such as locations or merchants.
- For buyers and sellers, services Escrow Payments (Middled Payment)
The service uses smart contracts to temporarily hold funds and automatically transfer them to the recipient's account when pre-defined conditions are met, such as completing a freelance assignment or delivering a product. This case study helps increase transparency and reduce the risk of fraud for both parties.
- For digital assets, payment media services Asset Tokenization (Conversion of assets into token form)
This model enables seamless trading of digital assets such as e-tickets, NFTs, and investment tokens, using programmable payments for settlement. This increases the convenience and efficiency of digital asset transactions, and opens up new opportunities for future transactions.
- For the ecosystem type Multi Chain Bridging (Cross-Blockchain Connection)
Specific uses of THBK (Thai Baht KUB) are being tested for their ability to be transferred across different blockchains to increase accessibility, efficiency and interoperability between different systems in the digital economy.
New payment methods offer more benefits than convenience
Programmable Payment is designed to deliver multiple benefits to a wide range of users. By utilizing DLT and smart contracts, it can solve everyday payment problems quickly and securely.
- Convenient and secure transactions
The system features a Cash In – Cash Out transaction via Mobile Banking that testers are familiar with and easy to use, while the Escrow payment method enhances security by reducing the risk of fraud.
- Efficiency and transparency
Programmable Payments improve transaction efficiency, such as faster payments for digital asset trades, for both buyers and sellers. It also provides transparency in tracking transactions, which helps build trust in the system.
- Promote responsible innovation
The collaboration between the BoT and the Securities and Exchange Commission (SEC) under the Regulatory Sandbox promotes the development of beneficial innovations while maintaining stability and protecting consumers. Participants will receive guidance on IT risk management, regulatory compliance, and consumer protection, along with strict controls to prevent misuse, speculation, or use of electronic devices outside the testing scope.
Leading companies join innovation testing
During the Regulatory Sandbox testing phase, it is not widely available to the public, but it is being pushed towards real-world use in areas such as:
- Purpose Bound Money
Company SCB 10X Kasikorn Bank Participate in the trial spending for international tourists, which reduces the steps for exchanging currency.
- Escrow Payment
Company Bitkub Blockchain Technology Ompatform We are a payment processor that uses smart contracts to increase transparency and reduce fraud risks.
- Asset Tokenization
Company Bitkub Blockchain Technology, TrueMoney Future Competere Venture Testing the use of Programmable Payment to pay for digital asset transactions such as e-tickets, NFTs, and Investment Tokens.
- Multi Chain Support bridging
Bitkub Blockchain Technology Is a tester of electronic data transfer services THBK (Thai Baht KUB) In the future, THBK can be transferred to the JFIN Chain between different blockchains to be used to pay for goods and services within the Jaymart Group, opening the door to a wider ecosystem. Partners participating in the THBK testing include: Bitkub NFT, Villa Market, Jaymart, Casa Lapin JOIN WALLET etc.
The next step for the Thai financial system
The Programmable Payment project is a significant step forward for the Bank of Thailand in collaborating with the private sector to explore and develop payment innovations for the digital age. This limited-scale trial will not only improve transaction efficiency and security, but also lay a crucial foundation for a more resilient and interconnected financial system of the future.
While this technology is not yet available to the general public, it is a clear sign that Thailand is moving forward in a positive direction, preparing to cope with the ever-changing financial world.
refer
Follow and read other columns in the September 2568 Bank Finance Journal, Issue 521, in digital format: https://goo.gl/U6OnIi
Including channels for ordering banking and finance journals Both current and past editions Complete in one place: https://ma.co.th/product-category/mb-shop/
