The financial switch that allows ATM and PoS to function has a less than perfect record

Banking: Almost a quarter of transactions made through Bhutan financial switch (BFS) in the last two years have been unsuccessful.

BFS facilitates connectivity between the banks for customers to avail automated teller machine (ATM) services of one bank from another’s ATM.

Another BFS component was the point of sales (PoS) launched in July 2012.

Figures from the central bank reveals that from April 2013 until March this year, a total of 3.2M (million) transactions were made through BFS, of which only 2.46M transactions were successful.  On an average Nu 6M to Nu 9M were withdrawn every day.

However, about 31,116 transactions every month, which is 1,037 transactions per day, failed.

For the interbank ATM, bankers attribute the transaction failures largely to technical errors, such as network and problems with machines.

T-bank’s chief executive officer, Tshering Dorji, said that, since the bank’s switch was hosted in Nepal, and other banks, like Druk PNB, either had their switch in India, or had their own switch, like Bank of Bhutan, network is a major problem.

Druk PNB’s chief executive officer, Mukesh Dave, said that, if portions of transaction failures were small compared with total transactions, it was not a concern. “The problem with the leased line and network are out of the bank’s control,” he said.

BFS, he said, was more convenient for clients who could avail five interbank transactions free of cost.  On the sixth transaction done in a month, clients will be charged Nu 12 if it is successful.

Initially, the clients were charged Nu 5 a transaction.But the banks still has to pay Nu 18 a transaction to other banks whose ATM was used.

The charges were made to recover the investment the banks had made in installing and procuring the ATMs.

Although the banks are still on the losing end, Mukesh Dave said this service was offered to add value to their banking services.

However, clients like Ngawang Dorji, a corporate employee, said he didn’t mind paying for the transactions.  What was frustrating, he said, was when the cash was not dispensed but debited from his account.

In such cases, he said, it took months to reverse the transaction, and appealing to one bank and following up with another bank was a hassle.

However, an official from the central bank said, besides technical error, unsuccessful transactions occur because of the clients’ fault.  For instance, he said, the ATM in no way would dispense Nu 50,000 if the client has only Nu 5,000 in their account.

Some forget their pin code and, after three wrong entries, the machine will no longer accept the card. “These problems would also account as unsuccessful transactions”

As for the PoS, RMA official said that Bhutanese were used to transacting in hard currency.  In the last two years, only 9,063 transactions were made via PoS, against 2.6M interbank ATM transactions.

Mukesh Dave also said because of low volume of transaction from PoS, it did not make business sense for smaller banks to offer this service given the investment and returns on it.

Only Bhutan National Bank and Bank of Bhutan provide the 306 PoS services in the country today.

Tshering Dorji