RMA to launch Bhutan Financial Switch
This will facilitate digital payment transactions between Bhutan and India
The Royal Monetary Authority (RMA) will soon launch the Bhutan Financial Switch with the RuPay network of India to commemorate the 50th anniversary of IndoBhutan friendship this year.
Bhutan Financial Switch comprises of technology and system which has been developed looking into providing and facilitating interoperability among the banks in terms of ATM, post transactions.
RuPay is India’s indigenous card scheme created by the National Payments Corporation of India. It was conceived to fulfill the Reserve Bank of India’s vision to offer a domestic, open-loop, multilateral system which will allow all Indian banks and financial institutions in India to participate in electronic payments.
The ICT officer of department of information and technology of RMA, Ravi Raj Mishra said that this initiative is expected to improve and facilitate cross-border remittances between the two nations.
He said although Bhutan’s financial system is small comprising five banks, one pension, two insurance and three microfinance institutions, the interconnectivity of two switches is congruent with the objective of promoting digital payments transactions, which is evidenced by the effort from central bank of the both the countries.
Through this initiative, there are two phases, the cross-border interoperability would allow the citizens of both nations to seamlessly perform banking transactions using their local bank issued ATM/ Debit Cards through delivery channels such a ATMs, PoS and merchant’s e-commerce site. The first phase of the project will enable the acceptance of RuPay Cards in Bhutan across all customer abovementioned access points (delivery channels).
Ravi Raj Mishra said that the first phase will be launching on December this year and Bhutanese banks will be serving as acquirer.
The second phase will enable acceptance of Bhutanese banks’ local cards in all the access points offered by the banks in India.
Further, the integration is expected to pave way for RuPay brand to become one of the growing payment networks in the cards space at par with the dominated players.
The interconnection of these two switches would not only usher safe and convenient banking but also help realize costeffective and cashless transactions by formalizing the flows into mainstream banking system in both countries through proper legal and regulatory frameworks.
It is mainly initiated due to lack of proper mechanisms to facilitate cross-border payments between nations, however some of the transactions are believed to be executed through cash that is unrecorded from the formal banking systems.
The ICT officer also said that although some of the banks in the country provide international cards, the facility is expensive.
The cost of this initiative will be very minimal, he added.