Credit Card Woes in Bhutan

With the Bhutanese handicraft generating a lot of revenue besides maintaining the country’s unique culture and tradition, the need for an electronic payment network, managing payments among financial institutions, merchants, consumers, businesses and government entities is rising.

At present, only Visa is accepted in Bhutan and the American Express, which was once accepted, has now been cancelled.

Kelzang Wangmo, the proprietor of Kelzang Handicraft, Thimphu, said, “If our country has the electronic network payment system, it will definitely boost the business.” She said that most tourists had MasterCard and only few carried Visa. “If our banks introduce MasterCard, our sales will definitely increase,” she reiterated.

She added that withdrawing cash from the banks took 2 to 3 days and at times, even more than 3 weeks.

Chencho, the Druk Handicraft proprietor in Thimphu, said how he lost Nu 10,000, in 2007, due to the lengthy procedure of Visa withdrawal transaction. He added that last year, he lost Nu 5000 due to the transaction procedures. “Some tourists block their credit cards and we don’t get the money.” His minimum sales per day, during tourist seasons, is Nu 10,000 and above.

Chencho said that MasterCard would not only help the tourist but also boost tourism industries and generate more revenue.

“Most of the time tourists come with MasterCard to buy Handicrafts and they get disappointed on not accepting it,” said Sonam Zam, sales girl at Choki Handicraft,Thimphu.

Thinley Jamtsho, the Assistant General Manager at National Handicraft Emporium of Bhutan, said, that about 80 percent of the customers were tourists. “The banks send the tourists to us for their Visa encashment and we don’t have the authority to do so, because of which, we get complaints from tourists.”

He said that the government had to introduce credit and debit card and ATM facilities in order to improve revenue generation. He added, “If the banks come up with faster transaction procedures of international credit card facilities, the sales will definitely increase by 30 to 40 percent.

He said that the handicraft helped the low income group in urban and rural areas to earn some cash income and that it also created job opportunities for the middlemen who built a nexus between the handicraft makers and the emporiums. They also earn commissions.

“We are growing and competing with the private handicraft shops and its good that there is no monopoly as the customers get a wider range of choice,” said the Finance Manager of Bhutan National Handicraft Emporium.

Kipchu Tshering, the Chief Executive Officer of Bhutan National Bank Limited, said that they were trying to come up with an efficient way to transact Visa. “We send transactions for re-embossment of Visa to Standard Chatered Bank in Nepal for withdrawal and it takes time”, he said, adding, “But if the person wants cash immediately, we give them.”

Kipchu said that by 2010, they would be able to do it instantly and that the customers would be required only to swap the card in the machine and make the payment immediately rather than the bank sending it for re-embossment to Nepal.

Tharpo, General Manager of Bank of Bhutan Limited, said that they were planning to come up with MasterCard in the country. “The implementation of MasterCard depends on the policy and the balance of payment of the country,” he said, adding that the bank had put up the proposal to the Royal Monetary Authority, and if sanctioned, they were ready to implement the MasterCard system.”

He added that for introduction of International Credit Card system, they would be required to keep reserves of hard currency and conduct a study for its applicability.

At present, tourists pay by traveller’s cheque and Visa cards. Handicraft shops get most of their customers during tshechus. Most of the handicraft items are Bhutanese made except for the statues imported from Nepal.

The National Handicraft Emporium was established in 1971 as the only handicraft shop in Bhutan. Today, there are about 300 handcraft shops in the country.

Original story by Bhutan Observer

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