The central bank officially held a soft launch last Friday for its central shared switch mechanism, which connects account records of three of the Kingdom’s leading financial institutions, allowing them to operate ATM and point-of-sale (POS) terminals in tandem.

In a move to increase interoperability of banking operations from different banks and microfinance deposit-taking institutions (MDIs), the National Bank of Cambodia (NBC) pioneered the Cambodian Shared Switch (CSS) mechanism and has fully launched it with Acleda Bank, Sathapana Bank and Prasac Microfinance.

The CSS mechanism enables customers who hold debit or credit cards issued by any one of the three financial institutions to access their accounts at any of the participating banks. All commercial banks and MDIs will be required to have the system in place by January of 2018, the NBC said in its Friday release.

“The development of the CSS is aimed at modernising payment system, reducing cash circulation in the market, enhancing efficiency of payment service in Cambodia and further stimulating inter-bank transaction by providing customers with additional transactional channels,” the NBC said in the announcement.

According to the announcement, the CSS allows for various types of transactions including the payment of goods and services, cash withdrawal, inter-bank fund transfer and balance inquiry.

Without the CSS mechanism, each local bank and MDI has to operate its own ATM network and POS machines. While there is some inoperability for cards backed up by major credit card labels, such as VISA’s Plus interbank network, the fee charges are generally high for transactions.

Just including Acleda, Sathapana and Prasac, the financial intuitions have a combined network of nearly 500 ATMs across the Kingdom with over 900,000 debit and credit cards issued.

While NBC representatives could not be reached for comment yesterday on the fee structure of the system, So Phonnary, vice president of Acleda Bank, said the CSS allows for both transactions in riel and US dollar with an interbank fee for withdrawals set at 1,800 riel ($0.44). She added that ATM interbank fund transfers fees are set at $1 for $1,000 and $2 for $5,000. The fees continue to rise according to the value of the fund transfer.

“The new system will be an option for financial institutions to reduce costs on infrastructure investment,” said Phonnary. “Other financial institutions that did not want to invest in new ATMs or POS machines can just issue the cards for customers and they can rely on larger networks.”

Say Sony, vice president of Prasac, said that the new system is very useful and shows how quickly electronic payment systems have been deployed in Cambodia to give customers better access to financial services.

“There is an increasing trend towards cashless transactions and we see that consumer behaviour shows a willingness to embrace new technology and easy electronic payments,” he said. “It is a good trend for both customers and financial institutions.”