MFS booming
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enhance the digital financial ecosystem.
Bkash has put in place innovative technologies and services and formed partnerships with various financial institutions.
“All these efforts will boost digital transactions and empower customers in their daily financial activities,” Sadique said.
Muhammad Zahidul Islam, head of public communications of Nagad Ltd, said the MFS provider is working on upgrading the country’s overall position when it comes to going cashless and paperless.
“We have removed the paper-based know your customer process and introduced charge-free bill payments alongside easing merchant payments. The strategy has facilitated the expansion of financial inclusion and given a push to popularise cashless payments.”
Nagad, a majority of which is owned by the government’s postal department, is now placing emphasis on resolving merchant and other payment issues. It is offering cashback and discounts.
“We are going to introduce some new services within a short time. We are very hopeful that cashless payments will be popular in the country and day-to-day transactions using mobile phones will be at the top,” Islam said.
Abu Saeed Khan, a senior policy fellow of LIRNEasia, a think-tank based in Colombo, said transactions through MFS providers are rising, which shows that the overall pie has become larger. “This is a very positive sign.”
He said the market is still in a growing mode and there is room for growth.
Khan, however, laments that MFS is yet to become a medium for over-the-counter transactions in stores on a massive scale.
“It is a big setback. Policymakers and industry should see how this sort of transaction can be raised.”
Khan also sees cost as a major issue. “Cost of transaction needs to be contained.”
Selim Raihan, executive director of the South Asian Network on Economic Modeling, said the slow growth in the shares of digital transactions does not go with the aspiration for a digital Bangladesh.
Problems exist on both demand and supply sides.
Products and services of MFS such as salary payments have not been publicised and promoted from the supply side. And firms that can avail the benefits have not shown interest, he said. One reason, Raihan said, is the high prevalence of informal transactions.
“It may be that many firms don’t want to use digital platforms to avoid recording transactions. There are firms that maintain more than one book of accounts to avoid taxes.”
There is also an absence of push for digital transactions from regulators and policymakers, said the economist, calling for the formalisation of digital payments.
“India has nicely implemented digital payments and Bangladesh can learn from the neighbouring country.”
Raihan, also a professor of economics at the University of Dhaka, said increased digital transactions would ensure transparency of businesses, which will eventually bring more taxes for the state.
He cited the International Monetary Fund’s condition of raising the tax-to-gross domestic product ratio.
“This is high time to promote digital payments.”
Last month, the central bank launched an interoperable payment method, Bangla QR, to help customers pay bills through mobile banking applications, MFS providers and payment services.
The central bank also asked lenders to replace their proprietary QR codes within June with Bangla QR.
“There will be a boom in the cashless transactions when payments become interoperable,” said Syed Mohammad Kamal, country manager of Mastercard.
“We are on the right track to becoming a cashless economy.”
Md Mezbaul Haque, executive director of the BB, said the central bank monitors cash-out.
“The ratio of cash-out is falling. It will reduce further once the Bangla QR code transaction gains traction. But it is a big challenge to change people’s habits. It takes time.”
The BB plans to launch cashless transactions in three districts before Eid-ul-Azha, the biggest religious festival in Bangladesh.
“We are very optimistic. There are some challenges but we are working to give a boost to digital transactions,” Haque said.