Usages of plastic cards (debit/credit cards) have increased impressively in retail shopping, paying bills at hotels and restaurants.
Traders attribute the surge to the increment in the number of card holders and awareness among the people about card usage. “The trend of using debit/credit cards while shopping is increasing remarkably,” said Panu Poudel, head of operation at Bhat-Bhateni Supermarket, the country’s largest retail chain. “Professionals, expats, tourists are among the users of plastic money.”
According to Poudel, currently, around 20-25 percent of shoppers at Bhat-Bhateni use cards, up from around 12 percent the last year.
To encourage payments through cards, the department recently conducted a month-long campaign, in which it provided a 10 percent discount on payment through Visa cards. Bhat-Bhateni incurs a service charge of 2.5 percent to establish plastic money as a prominent mode of payment at its stores. “It is an easy mode of payment. It saves time of both buyers and sellers. This is why we are promoting plastic money,” Poudel said, adding that it also helps people who don’t carry enough cash. Going by the current trend, Pouldel feels that the percentage of Bhat-Bhateni shoppers using cards would reach up to 50 percent in the next four-five years.
According to Antim Ranjit, branding and purchase manager at Big Mart Department Store, around 40 percent customers at Big Mart’s Lazimpat branch use debit/credit cards to make payments. “As 80 percent of our customers in Lazimpat outlet are foreigners and high-profile people, the trend of using plastic money at this outlet is really high,” he said.
Same is the case in the hospitality sector. According to Tejendra Nath Shrestha, president of Restaurants and Bars Association of Nepal and the owner of Ying Yang and Third Eye restaurants, around 30-35 percent transactions at his restaurants are done through cards. “While almost all foreigners pay by debit/credit cards, Nepalis are slowly imitating them and the number is growing notably,” Shrestha said. “Mostly foreigners and high-income people pay by credit cards, while those with limited income use debit cards.”
Shrestha feels plastic money has the potential to match the uses of hard cash in the near future if financial intuitions focus on promoting the technology even in small retail stores.
The use of plastic money is also growing in retail outlets. According to Sachin Khanal, store manager at Store One, one of the famous clothing outlets in Durbar Marg, Kathmandu, around 10 percent of transaction at the store is done through debit/credit cards. “We are witnessing around 8-10 transactions a day through plastic money,” Khanal said, adding that the trend of carrying hard cash is slowly declining among working people.
Sanima Bank
Sanima Bank launched debit card service in 2008 and currently has 25,000 card users and a network of four ATMs. The bank maintains only four ATMs, but its customers can use any ATM under the SCT network without paying a transaction fee. “We bear all the transaction charges of our customers,” said Sunil Khatiwada, business development officer of Sanima Bank. “In this way, we are managing a cost effective way of providing card service to our customers.”
The bank also offers mobile banking service to make balance inquiries. Customers using the service receive the balance and withdrawal through the mobile banking service and the bank plans to provide transaction facility in the future. The bank is, however, reluctant to provide credit card facilities to its customer as there is no tracking mechanism of customers. “Also, the country does not have a credit bureau with a database of credit,” said Khatiwada. “So we do not have plans to launch credit cards in the near future.”
Kist Bank
Kist Bank has been offering debit cards since 2005 from its 80 ATM counters across the country. More than 190,000 customers of the bank are being provided the service through SCT and the Kist Payment Network.
Kist is planning to launch Visa debit card service from May. “We have already received membership from Visa International Associate for the service,” said BN Gharti, deputy manager of the bank. According to him, they will start the credit card facility shortly after they receive the Visa debit card.
Apart from the card service, Kist Bank has been offering internet banking services from the last three years. According to Gharti, the bank is providing services like transaction statement, balance inquiry, funds transfer and utility bill payment to its customers. “Similarly, customers can also ask the bank for services like cheque book and disabling one’s account along with fund transfers of a customer to another using internet banking,” said Gharti.
The bank has also come up with mobile wallet service. “It offers all the services of internet banking using a mobile phone.” He claims that the bank is among the few to provide funds transfer service under mobile and internet banking.
Sunrise Bank
Sunrise Bank offers Visa debit cards—domestic and international—for the last two years. Besides providing the service through its own network, the bank also has a tie-up with SCT and NPN, a network of Nepal Investment Bank Limited. A customer is charged Rs 20 for each transaction conducted through NPN.
Apart from Visa cards, the bank issues travel cards which allow withdrawal up to $2,500 at a time. Sunrise also has mobile banking service—Sunrise m-banking. “Customers can pay utility bills and transfer funds through m-banking,” said Anis Tamrakar, head of the bank’s card centre.
Sunrise has halted its internet banking service temporarily for upgradation work. “We will resume the service within a month,” said Tamrakar, adding that the bank plans to start corporate internet banking after upgradation. “It will facilitate mainly the business houses to ease their regular transaction, including the salary payment to workers.”
Tamrakar said the bank would also start one-time password facility internet banking users. “The password becomes invalid automatically once it is used. This secures users from the threat of password hacking,” said Tamrakar.
Smart Choice Technologies
Establishment of Smart Choice Technologies (SCT) in 2001 was a milestone for the card business in Nepal. Currently, SCT offers a shared service network to its 81 member BFIs. SCT’s network consists of 1,050 ATMs, more than 2,000 POS and more than 1.4 million card users.
The number of card users in the SCT is network is seeing an average annual growth of 30 percent. The growth was 120 percent in fiscal 2007-08 followed by 50 percent in 2008-09, 30 percent in 2009-10 and 22 percent in 2010-11.
SCT ATMs register 25,000 transactions on an average day. According to Rabindra Malla, managing director of SCT, the number of transactions itself is a revolution. “Without this technology, all these people have to visit the teller at the bank premises, significantly increasing the operation cost of BFIs,” said Malla. “Equally, this technology has given a lot of convenience to users.”
However, the use of plastic cards is limited to cash withdrawals from ATMs. Although the cards are equally convenient for making payments by swiping them, their use for that purpose has been very negligible, according to Malla. “We are planning to conduct an awareness campaign to promote the use of cards to pay for the purchase of goods and services,” said Malla.
The next venture of SCT is mobile banking service within the next four months. That service will facilitate funds transfer, balance inquiry and utility bill payment in the first phase.
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