Nepali Times: How is SCT doing?
We have over 150,000 cardholders and will soon be adding 15 more machines to our 57 ATMs. There are 17 banks and financial institutions in our network, and we've invested a total of Rs 100 million.
The fault rate is zero in the SCT network. After we issue the PIN, responsibility lies with the customers. We have a five-year projection for returns, and we have barely been around for two-and-a-half years.
How is your card different from those issued by banks?
International cards like Visa and MasterCard are issued by four banks: Standard Chartered, Nabil, Himalayan, and Nepal Investment Bank. We issue local cards. Just under 25,000 credit cards have been issued in Nepal. Debit cards, such as Visa Electron, are much more popular, and the SCT card aims to take these on. Like Visa Electron, now our cards also work in ATMs in India.
Why the focus on debit cards?
They are more secure than credit cards, as you can only withdraw money already in your accounts. Banks still have to recover all the money they are owed on credit cards. Globally, distribution of debit and credit cards is at 60:40.
It's also expensive to issue Visa and MasterCards, so banks have started using ours because they require a lower investment. The banks do not need to invest in technical manpower or in technology. We do all the work, the banks just dispense the cards.
Why do banks join the SCT network?
For a bank to invest in an ATM network they need a minimum of Rs 20 million. Our service costs Rs 1.5 million. We integrate the banks' account management systems, make the cards, and generate the serial numbers. The bank merely has to distribute this package. We also provide 24-hour services, monitor the system, and keep track of machines that need to be refilled. Basically, banks outsource their work to us.
Standard Chartered, Nabil, Himalyan, and Nepal Investment Bank have each invested Rs 80-90 million in similar services. How will they get returns from a small market like Nepal? They've invested a lot and are still providing free service, which will cost them at some point.
But that cost difference gets passed on to the customer.
We have to cover our costs and pay the banks for each transaction. We just get a small share for fixing the network. Compared to going all the way to the bank and queuing, the charge of just Rs 25 per transaction at an SCT ATM is very competitive.
You can also withdraw money using cards from banks not in our network for a charge of Rs 125-150. Other banks' networks don't offer this service.
We're ensuring that people who live outside the Ring Road don't have to enter Kathmandu. Of the four entry points to the city, only Balaju is still awaiting an ATM.
Cards will be the way to go in the future-it's not safe to carry cash, and it's a hassle to always go wait in line.
What are your plans for the future?
We are establishing a network in India, and we want every Nepali to have a card. We're also trying to facilitate bill payment using the card over the internet.