Interbank online payments from next year

The government is currently developing an e-payment gateway that will inter connect all local banks for online transactions

ICT: By next year, you should be able to pay for public services using only a mobile phone, irrespective of which bank you’re a customer of.

By the following year, all kinds of payments, irrespective of bank, could become available.

As part of an effort to enable cashless transactions, the government is currently developing an e-payment gateway. The first phase of this gateway, which will include only G2C (government to citizen) and G2G (government to government) services that require payment by the citizen, is expected to be ready by June, next year.

Once achieved, the second phase is most likely to focus on e-commerce, for instance, paying for your groceries instantly at the shop’s check out counter using a mobile phone. While Bank of Bhutan’s (BoB) recently launched mobile application can already allow this, it is restricted to only BoB accounts. The development of the e-payment gateway would allow transactions between the various banks.

The second phase is expected to be operational by December 2017.

There are currently 46 G2C services that require payment. Some of these services include issuance of passport, citizenship identity card, issuance and renewal of business licenses, company registration, clerical re-check of examination papers, vacant tanker services, among others.

“We’re yet to consolidate the actual list but our priority is on services provided by the Department of Revenue and Customs, and Department of Public Accounts such as tax payments, salary disbursement, etc.,” Department of Information Technology and Telecom (DITT)’s manager for the project, Sonam Penjor, said.

“Depending on the readiness of the service provider, banks and telcos, consumers can expect interbank e-payment facility by June 2016,” he added.

The DITT is responsible for creating the gateway or infrastructure while respective government agencies, banks and telecommunication service providers will be responsible for ensuring compatibility of their systems with that of the gateway.

One of the major works currently underway is to upgrade the financial switch at the Royal Monetary Authority (RMA) of Bhutan. The financial switch is a network that connects the ATMs of all banks in the country. As the financial switch was installed with technical assistance from the Reserve Bank of India (RBI), it was also asked to carry out an assessment on upgrading the switch to handle interbank transactions. The assessment will be carried out between July-August, this year.

“RBI has indicated that the up-gradations will not be a big challenge. As per RMA, all required financial legislations are in place,” Sonam Penjor said.

The assessment is also expected to provide an estimation of how much the up-gradation will cost.

“All economies are gradually moving towards cashless transactions,” the former DITT director, Phuntsho Tobgay said, in an earlier interview. “Case in point are the developed countries but it will be sometime before we get there.”

However, he said that by cashless transactions he did not mean all payments would be done online, as there would still be a need to carry loose change for certain payments like, for instance, public transport. The director was mostly referring to the second phase of the project.

One of the major benefits of taking all transactions online would be the storage of electronic records. “When all transactions are electronically captured, black money or the underground economy cannot flourish, this even includes subversive activities,” he said. “So going cashless can have a positive impact on fighting corruption and crime.”

For the average person, life will be more convenient, at least in terms of money. “Firstly, you don’t have to worry about losing your wallet, even if you were to lose your card you can always inform your bank and freeze payment,” Phuntsho Tobgay said. “Also for transactions carried out over the net, if goods are not delivered the transaction will not be carried out meaning the money actually resides in a nodal account and the payment is released only upon confirmation of delivery.”

The director said this would be possible as there will be two types of payment: an instant debit but delayed payment and an instant debit and instant payment capability.

However, Phuntsho Tobgay said despite the advantages, there is a downside to taking all transactions online. “There can be loss of privacy and security issues,” he said. “So legislations have to be strengthened and people have to be educated,” he added. “The gateway operators and the banks have to work closely.”

By Gyalsten K Dorji

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