One network to connect all

The central bank will launch a new system next year to connect the account records of all local financial institutions’ ATM and point-of-sale (POS) machines, allowing interoperability and making it easier for bank customers to access their funds.

Chea Serey, director-general of the National Bank of Cambodia (NBC), said the new system will connect all the ATMs and POS machines of local bank and deposit-taking microfinance institutions (MDIs) to a central shared switch maintained by the NBC.

“All machines connected can interoperate,” she said yesterday, explaining that a customer holding a debit card issued by one bank will be able to use the card on any ATM or POS in the country.

“[Customers] may have to pay a small fee for using other banks’ terminals, but it is still better than not being able to use any terminal at all,” she said.

Currently, each local bank and deposit-taking microfinance institution (MDI) operates its own network of ATMs and POS machines. While there is some interoperability, such as ATMs linked by VISA’s Plus interbank network, customers generally cannot use a debit card issued by one bank to pay for goods or services from a merchant using the POS of another bank.

Serey said the NBC’s central shared switch system would launch with a few participating banks in mid-2017. All banks and MDIs would be required to sign on by January 1, 2018.

She said representatives of the NBC and local financial institutions were working together on addressing the technical aspects of the new system, as well as the terms and conditions of its usage. They are also discussing a suitable fee for interbank transactions.

Serey said the NBC would not operate the system for profit, and expects to reach an agreement with the participating financial institutions on a nominal fee, allowing them to pass along the benefits to end-users.

Electronic payment systems have evolved rapidly in Cambodia, offering consumers better access to their funds and facilitating real-time trade transactions. According to NBC data, a total of 1.43 million debit cards were issued by local banks as of end-2015, with 1,118 ATMs and 9,639 POS machines nationwide. In addition, there were nearly 300 ATMs belonging to MDIs.

In Channy, president of Acleda Bank, which boasts about a quarter of the country’s ATMs and nearly 60 percent of all debit cards issued, said the new central shared switch will play a key role in facilitating fast and easy electronic payments, benefitting both customers and financial institutions.

“Soon, a customer will no longer need to hold a lot of ATM cards,” he said, explaining that the new system will allow people who have bank accounts at several institutions to use carry just one debit card for all their transactions.

Channy said the new system will reduce infrastructure costs for smaller financial institutions. He said banks and MDIs that did not want to invest in new ATMs or POS machines could rely on the extensive networks of larger financial institutions, such as Acleda Bank.

Hout Ieng Tong, president and CEO of Hattha Kaksekar (HKL), one of Cambodia’s largest MDIs, said financial institutions with large ATM and POS networks stand to gain from transaction fees, while those without will benefit from the increased access their customers will have to their funds.

“It is a good opportunity for banks that have many ATMs to earn a profit from the service,” he said. “For those institutions that think they have limited capital to invest in ATMs, they can simply issue debit cards to customers, who will be able to use the terminals of other banks instead.”

Ieng Tong added that while HKL currently operates over 120 ATMs nationwide, it intends to keep growing its network.