10 June, 2010 - A new phase of competition in the Bhutanese banking sector might be underway, after the oldest bank, Bank of Bhutan (BoB) recently became the first bank to obtain primary membership of MasterCard, widening its range of services in the area of cards circulation.
MasterCard is a multinational corporation, whose principal business is to process payments between the banks that use its “MasterCard” brand debit and credit card to make purchases. It has a membership of 25,000 plus financial institutions that issue its card.
According to the chief executive officer (CEO) of BoB, Kinga Tshering, initially the bank will set up post terminal machines in hotels this year throughout the country - with a charge of Nu 20,000 for each - for tourists to use their credit cards.
He added that, though the income is minimal, with BoB charging an interest of 1.5 percent on every withdrawal, it would boost the economy, because the convenience in drawing money would encourage more tourists.
“The facility of MasterCard will ease the payments methods, be it for tourism and businesses, or the huge government projects in partnership with India,” said the CEO, adding that BoB would issue MasterCard to its customers only from next year with a membership fee of Nu 50,000 annually.
MasterCard would not only provide consumers a secure and convenient alternative to cash and checks, when making purchases, but also provide consumers with a line of credit.
“MasterCard debit cards provide consumers with a tool to better manage daily expenses via accessing their personal funds directly from their bank accounts,” said BoB’s chief monitoring officer, Dil Bhadur Rahut.
In a press conference yesterday, Rahut said that BoB has to pay a membership fee of USD 50,000 and USD 100,000 as collateral, but talks are going on for a waiver.
“Through this membership, BoB can sponsor any bank to be its associate member,” he said. BoB plans to issue MasterCard for the dollar as well as the Indian rupee to its customers. Meanwhile, BoB officials are also close to getting membership for VISA, a global payments technology company.
By Passang Norbu
