The Royal Monetary Authority (RMA) will tie-up with the Reserve Bank of India sometime between the third or fourth quarter of this year, on the cross border connectivity to enable the shared payment network.
This plan falls under the Bhutan Financial Switch (BFS) project, which is being done in collaboration with all the commercial banks and the RMA.
The BFS project has been segregated into two components, the first phase was interconnecting all the ATMs in the country, and the second was interconnecting all the point-of-sales machines (PoS) terminals.
PoS also referred to as PoP (point of purchase) or checkout is the location where a transaction occurs. A “checkout” refers to a PoS terminal or more generally to the hardware used for checkouts.
A PoS terminal manages the selling process by a salesperson accessible interface. The same system allows the creation and printing of the receipt.
The PoS installation will be implemented from 10 July.
The RMA will implement the installation of PoS to facilitate sales transactions electronically.
This initiative is being implemented as part of the central banks initiative to improve the overall payments and settlements system to reduce cash transactions, to improve tax revenue generation and the risks associated with it. The encouragement for such a system also comes from the executive order sent by the Prime Minister.
“This will promote an alternate means of payment, which will bring about efficiency, transparency, and accountability of transactions,” said the Director of the RMA’s IT Department, Sherab Jamtsho.
He said this will also promote the electronic culture in Bhutan, and reduce RMA’s cost on cash note printing, and also help improve the domestic payment system.
Under the implementation, all public utility companies and service providers like Bhutan Power Corporation, Bhutan Telecom and the Road Safety and Transport Authority, fuel and retail outlets will have to install PoS machines.
The RMA will carry out this implementation in a phased manner, where all the outlets that transit huge transactions will be targeted. Thimphu will be the first followed by other dzongkhags.
Sherab Jamtsho said earlier last month the RMA had a stakeholders’ meeting with the government, private individuals, and business houses amongst others.
In the meet, it was discussed as to how the installation process will be carried out, meaning that it will have to be a bilateral decision between the bankers and the merchants, on whether it could go as a promotional offer, or if there could be some kind of a concession.
The RMA IT director said people should not be concerned as to which bank the PoS will belong to because all will be interconnected, meaning that a Bhutan National Bank account holder could use the PoS belonging to the Bank of Bhutan and make payments.
“This is a network of shared payments, which is free of cost and convenient too,” said the IT Director.
Meanwhile, the RMA is currently doing a preliminary study and studying the market assessments on mobile banking.