Cambodia’s Bakong, a payment system operating as a central bank digital currency
(CBDC), is expanding its scope outside the country following the signing of a memorandum of understanding (MoU) with Alipay.
The MoU will allow local vendors in Cambodia to settle cross-border transactions between Bakong’s KHQR network and Alipay as part of increasing trade relations between Cambodia and China, according to a report by the Phnom Penh Post. The MoU, signed during the FinTech Expo in Singapore, will provide Cambodian residents access to the goods and services of over 80 million global Alipay merchants.
Bakong, operated by the Cambodian central bank and utilizes blockchain technology, offers support for the local Cambodian riel and the U.S. dollars. Still, commercial banks bear full liabilities for use, unlike traditional CBDCs. The platform’s popularity has seen it rack up over 35.4 million transactions in the first six months of 2022, processing over $12 billion in volume in the same time frame.
The National Bank of Cambodia (NBC) described the development as an economic boost for the Southeast Asian country, urging merchants to adopt the payment system. Per the report, the MoU offers a range of benefits for tourists visiting Cambodia with the integration with Alipay, allowing them to make seamless payments for services from local merchants.
“The simplicity of making payments provides merchants with a revenue boost, helping to stimulate economic activity,” said NBC Governor Chea Serey. “I’m confident this collaboration with Alipay+ will be beneficial for all parties, and I extend my wishes for continued success to all stakeholders as we embark on this journey of cooperation and achievement.”
Local banks, including ABA Bank, said the MoU will create new opportunities for local businesses in Cambodia and pledge to offer seamless support for the Bakong KHQR network. ABA Bank’s Head of Public Relations and the Corporate Social Responsibility (CSR) department, Khim Sambo Rothana, disclosed that customers can open new KHR accounts using the bank’s mobile app without hassles in alignment with NBC’s goals.
“ABA arguably has the largest network of merchants nationwide, with hundreds of thousands of in-store and online merchants,” said Rothana. “We are committed to further growing our network of merchants and vendors and making it easier for Cambodian businesses to accept and use KHR.”
NBC’s Bakong plans
Cambodia’s central bank has embarked on a series of initiatives to promote greater adoption levels. In July, NBC signed a similar MoU with China’s UnionPay to improve the international appeal of the platform for local vendors and international tourists.
In 2022, the central bank launched the BHQR as a unified QR code-based payment system for merchants designed to save time and costs. With over 32 institutions onboarded and several more on the sidelines, NBC aims to improve the payment ecosystem to promote financial inclusion and seamless cross-border transactions for residents.
To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.
Watch: CBDCs are more than just digital money
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