Digital currency experts often point out that Bakong is technically not a CBDC, and that is true. It is more of a tokenized deposit system since the digital currency is a liability of commercial banks. When users pay each other, an end-of-day settlement between banks occurs. That said, it Bakong is still a blockchain-powered retail payments system managed by the Cambodian central bank, so it is easy to see why it is sometimes called called a CBDC. Further, it is intended to boost interoperability among the different players in the country’s payments landscape, another common characteristic of CBDCs.
The Cambodian government launched Project Bakong because it believed a retail digital currency could accomplish three key policy objectives: boost financial inclusion—at the time of Bakong’s launch about 75% of the population was unbanked—improve digital payments infrastructure and eventually reduce the use of U.S. dollars in everyday transactions.
Working with Soramitsu, the NBC ensured that transacting with Bakong would be simple and fast. The Bakong e-wallet requires just a phone number or QR code to transfer money or make a payment.
In essence, Bakong is something of a digital payments first mover in the vein of Alipay in China 20 years ago. For that reason – and given the strong backing it has from the Cambodian government – we expect it will become a foundational part of Cambodia’s digital payments infrastructure.
Bakong continues to make steady progress in terms of adoption. On August 19, the NBC launched the Bakong Tourists mobile payment system. Once they have deposited money into the system (either via a bank or at their hotel), tourists can make payments with QR codes at 3.3 million locations across the country, just as Cambodians do. Tourists who complete a KYC process after downloading the app can spend up to US$3,000 a day with it. Tourist agents or hotels can confirm the guest’s identity to the NBC, ensuring it matches the passport details, according to Cambodia’s Phnomh Penh Post.
Meanwhile, Alipay is also collaborating with Bakong. In mid-October, the Chinese payments giant announced it had officially launched cross-border payments with the NBC. The tie-up will allow users of Alipay and partners in the Alipay+ cross-border payments network to make payments at over 1 million merchants in Cambodia by scanning a QR code. This will facilitate the payment for goods and services to businesses in Cambodia with accounts denominated in Cambodian riels, Alipay said in a press release.