Nuttawut Atiratana

Last week, a bold move by Thai banking industry to cut its fee on interbank fund transfer, known as ITMX bulk payment, to Bt 12 per transaction up to Bt 2 million were met with sheers.

Earlier, banks had charged three rates for the service- Bt12 for transfers of up to Bt100,000, Bt40 for transfers of over Bt100,000 up to Bt500,000, and Bt100 for transfers of over Bt500,000 up to Bt2 million. It’s expected that the new fee rate which is lower than cost of cheque payment, around 15 Baht per one paper cheque, will entice many businesses to convert their payment mode from cheque to the ITMX bulk payment. The new rate has already been effective since December 15, 2010.

For the ones who might not be familiar with the service, ITMX bulk payment is an electronic interbank fund transfer that is designed to facilitate both private and public agencies to make recurring funds transfers, such as, payments for vendors and suppliers, payroll, dividends, pension, annuity payments, etc. As an interbank funds transfer, the service allows payers to initiates transfer orders to move funds from their accounts into payees’ accounts with other banks. For example, in case of payroll, at the end of each month, a company is required to sends a batch file, consisting of its employees’ salary information, both online or offline, to its bank, then the funds will be distributed to each of its employees’ accounts with different banks.

ITMX bulk payment service is aimed to be an alternative to cheque payment which is the country’s predominant commercial payment method widely used by corporate segment for a long time. According to a research by Thailand Development Research Institute (TDRI), cheque is costly for both corporate users and banks as service providers. For companies, apart from cost of paper cheque, there are also other costs, associated with cheque issuance and reconciliation processes. For payees or receivers of cheques, there is an opportunity cost as they have to wait during cheque clearing process which takes at least one to three business days before they can use their money. For banks, the cost of cheque clearing process keeps increasing, especially the transportation cost for cumbersome physical presentation of the cheque. In Thailand, it’s estimated that the cheque clearing cost shouldered by banks was around 40-70 Baht per paper cheque; whereas, the cost of ITMX processing cost is in the range of 36-45 % of the check clearing cost.

Presently, there is a growing awareness among corporate leaders toward the need to turn to electronic payment methods like ITMX bulk payment. However, the Small and Medium Enterprises (SMEs) are still reliant more on costly and inefficient cheque payment which impedes them from being competitive in current business environment.
The current global economic downturn requires that today’s businesses increase their focus on the way to find better payment solution to streamline their processes to operate more efficiently and eliminate costs associated.

The opinions expressed in this article are the author’s own and do not necessarily reflect the official opinion of the Bank of Thailand.