Multiple tourism associations have called on the Thai government to protect local flights and hotel booking companies, according a recent report, as large hotels and online travel agents (OTAs) are now spending big on the local market. But this trend applies as much, if not more so, to Thai’s expansive attractions, tour and activity operators as online demand for their products reaches new heights.
Simultaneously, both the Thai government and private sector have been promoting the move away from cash toward e-payments for businesses and consumers across the board. This is true according to the Siam Commercial Bank Economic Intelligence Center. To back it up, as of March 2018, the government claimed some 7,000 state agencies are set to fully deploy an e-transaction system for money transfers and social welfare payments to citizens starting in June.
As macro-movements shift the ground beneath us, SME tourism operators in Thailand are now being forced to think about how their own mechanisms will change over the next three to five years. Relevant questions they’re asking likely include: “Will my business still be able to compete without an e-booking apparatus?” and “How much longer can I be run a cash-based operation in Thailand?”
With these questions in mind and more, here are five things SME attractions, tours and activities operators in Thailand need to know about e-commerce.
1. The government wants Thailand to be cashless
Despite a slow start, glitches, and even a system crash, the nation’s central Bank of Thailand (BoT) is plowing ahead with PromptPay, a system which involves linking bank accounts to mobile phone or ID card numbers, which are then used as reference points for money transfers. As such, someone wanting to receive money does not need to use their actual bank account number. In short, PromptPay is designed to make locals more inclined to rely on e-transfers rather than cash.
It’s all part of the government’s plan to lower banking costs and improve tax collection efficiency. As of April 2018, there were 97 million PromptPay transactions since the programme’s 2017 launch, with 370 billion baht transferred and 37 million savings accounts used to sign up for the service, of which 25 million were opened with citizen ID numbers.
PromptPay incurs a fee per transaction. In response, several commercial banks in Thailand started waiving transaction fees altogether on their own digital platforms. In turn, smaller banks and state-owned ones did the same (e.g. the domino effect).
The Thai finance ministry has ordered more than 7,000 state agency departments to adopt e-payments by June 2018. This is part of a bid to slash the nation’s cash usage by 50 percent. Further, BoT is looking to link PromptPay with Singapore's PayNow which would mean users in both nation’s could send money to each other using their just their mobile phones.
In the long run (whether it’s catalysed by the central bank’s PromptPay or not) these signs point to the idea that most Thai consumers will soon be running around paying for goods and services with their mobiles. SME tourism operators need to get on board and make sure they can accept these kinds of payments from locals.
2. Even SMEs need payment gateways
It’s true that Thailand has low credit card penetration. Only 3.7 percent of all transactions in Thailand are done so via credit cards. While many businesses with predominantly local customer bases may then choose to ignore credit cards altogether (and just stick with cashless mobile payments), tourism operators do not get to enjoy that luxury.
Tour and activities providers in particular need to cater to an international audience, and that means being able to process credit card payments. In case you’re not in the know about how to set this up, you’ll need to get acquainted with the concept of a payment gateway and speak to your tech solutions provider about the steps involved.
Essentially, a payment gateway authorises credit card or direct payments processing for e-businesses, online retailers, bricks and clicks, or traditional brick-and-mortar companies. According to tech solutions advisory firm Analyzo, there are five top e-payments gateways that businesses of all sizes in Thailand should consider implementing. The list features ThaiePay, PayPal, SiamPay, 2Checkout, and MOLPay.
3. Online bookings are becoming vital
So now that you’ve settled on your mechanisms for collecting e-payments from both local and foreign customers, the next step (or maybe first, depending on the order in which you like to do things) is to figure out how to get people to book your tours and activities online.
For many operators, OTAs are an important additional channel through which to reach and convert more customers. Operators in Thailand would do well to explore getting their bookings listed on OTAs like Traveloka, Ctrip and others. There are several end-to-end tech service providers to help on this front. Consult with one of them before trying to set yourself up.
In addition to getting your business calibrated with OTAs, these service providers can also help you set up a direct e-booking and management system on your own site, and even give you payment gateway options. Tip: make sure your site is mobile friendly as well, eMarketer says more than 90 percent of internet users in Thailand use smartphones to access the internet.
In the end, it’s a simple equation. The more online ‘baskets’ that SME operators can cultivate with which to scoop up customers online, the more revenue they will ultimately be able to grab.
4. The pie is getting bigger
Euromonitor says online travel sales to Thai residents is expected to continue on a strong growth trajectory. This will be driven by the increasing number of tech-savvy consumers, cheaper smartphones and higher standards of online payment security. OTAs are also expected to introduce new features to support customers’ travelling experiences. One example is virtual reality technology that can let users view the tour destination prior to booking.
Meanwhile, Siam Commercial Bank Economic Intelligence Center cites research by Roubini ThoughtLab, which found that receiving money via e-payments can help boost sales for businesses of all sizes in Thailand. On average, a small business can grow sales by up to 17 percent after adding an e-payment option, as it reduces lost sales from consumers that don’t have enough cash on hand. It also allows them to expand market reach toward online consumers in general.
5. How to get plugged in
SME tour and activities operators in Thailand may find the notion of getting themselves all set up with e-payments and e-bookings to be a daunting task. It’s true, there’s a lot to consider, and having an expert liaison to guide you will likely pay off in the end.
Luckily, there are some solutions providers out there to help you capitalise on emerging trends in the market. Start by thinking hard about how your target audience’s collective purchase behaviour is changing -- and will continue to change. If Thai tour and activities providers can predict these kinds of behaviours, then a sound strategy will likely emerge.