Faruk Ahmed :
The coronavirus outbreak is prompting second thoughts about reaching for cash. It is changing consumers’ shopping behavior quickly. Luckily people in Bangladesh have found mobile financial service (MFS) as an ultimate option for shopping which has opened a window of opportunity for Bangladesh to build a strong digital economy, which is inclusive, smarter, and safer.
What essentially started as an initiative to include the unbanked and under-banked rural population in the formal economy, MFS has now become an essential part of the lives of all strata of citizens of Bangladesh. According to the reports published in the leading newspapers based on market survey report, shopping with mobile payment is rising across the county fuelled by lucrative discount and cashback offers by retailers and payment operators under a pro-people policy of Bangladesh Bank. On an average, almost 40 per cent of total payments in some branded stores in the capital city’s Eid markets were made with mobile financial service (MFS) tools.
Bangladesh Bank increased limit of transactions through MFS and allowed people to transfer cash from their bank accounts to facilitate people to pay through their mobile phones. The government has been encouraging the MFS industry by distributing billions of takas as grants, stipends, allowances etc through MFS operators.
As most people embrace the MFS tools like bKash, Rocket and Nagad and both the government and Bangladesh Bank remained proactive to this innovation, MFS is leaning towards mobile-first channels in Bangladesh with over 181.32 million mobile phone subscribers thanks to the impressive performance of 13 MFS operators. “More youngsters are now using the bKash app in markets, shopping malls and coffee shops as more shop owners have deployed QR codes in their shops to accept mobile payments”, according to a report published by Bangladesh Journalists’ Foundation For Consumers and Investors (BJFCI).
Not only youngsters, many consumers who are older than 45 years and above are also using digital payment channels adopted during the Covid pandemic days as paying with mobile wallet is often easier and faster. Necessity makes the frog jump. So, payment through mobile phone is jumping day by day. MFS transactions increased to Taka 5.35 trillion during the 11 months from March 2020 to January 2021, compared to Taka 4.10 trillion during the previous 11 months. Meanwhile, merchant payments, which include payments to retail shops and e-commerce by customers, surged to Tk 27,914 crore in the first 10 months of 2021, up by a massive 230 per cent compared to the same period a year ago.
The main reason for the changing consumers shopping behaviour is mainly cashback offer and central bank’s pro-active policy. MFS operators are announcing lucrative cashback offers to attract customers and speed up the country’s cash journey towards growth and prosperity. Some operators have enhanced their service coverage from money transfer and payment to merchant from payment to utility service providers. The government’s Digital Bangladesh Vision is a big impetus for these MFS innovations. From its regulatory front, Bangladesh Bank prudently increased transactions limit during the Covid pandemic and in festival shipping in Eid while the government disbursed millions of taka as allowances, aids and stipends through MFS channels.
The governments of many developing countries are using this digital payment tool to cut cost of operations and encourage this innovation. For example, Afghanistan pays police officers through mobile-enabled accounts. Pakistan uses it to send salaries and pensions to soldiers. In Malawi, more than 80 per cent of payments from donor groups such as nonprofit organizations to private citizens are now made digitally. The Mexican government digitized its payments, saving $1.2 billion a year. Mobile payment is not a charity, but a necessity in everyday life.
As most people embrace the MFS and both the government and Bangladesh Bank remained proactive to this innovation, MFS is leaning towards mobile-first channels in Bangladesh with over 170 million cellphone and over 112 million internet subscribers thanks to the impressive performance of 13 operators. So, this has opened an opportunity for Bangladesh to build a digital economy which is inclusive, smarter, and safer. Industry experts say the government can push up digital transactions providing the MFS users mostly who are poor and low-income with cash incentives in line with its existing incentive policy to remittance earners.
New innovations create new mutations and new fusions take place with apparently dissimilar partners creating a need for other adaptations. Such a fusion is now occurring in the country’s payment landscape driven by rising trends of shopping with mobile payment. This fusion is necessitating a change in the regulatory institutional environment to accommodate and adapt to the new reality.
So, the massive shift to shopping with Mobile Pay in the country calls for urgent action. Bangladesh should see the changing shopping behaviour with MFs as an opportunity to boost its digital economy.
(The writer is a senior journalist and Chairman of Bangladesh Journalists’ Foundation For Consumers
and Investors-BJFCI).
