Transactions through point-of-sales (POS) grew 30 percent in 2013 from a year ago, thanks to urban consumers and retailers who are leaning towards electronic payments to minimise costs and risks of carrying cash. Local private banks, which were a tiny player among merchant acquiring banks even a couple of years ago, have now taken the full control of the POS market from foreign banks, to cash in on the growing demand.
An acquiring bank, which acts as a middleman in the transactions, is an important player in the system. To accept card payments against sales, a trader needs to go through a merchant acquirer (bank) to handle customers' card authorisations and to make sure that his (the trader) money ends up in the correct account. The acquiring bank is responsible for the efficient flow of data and information between them and gets 'inter-change fees' for the services.
The City Bank has become the market leader among the merchant acquiring banks with 9,500 POS terminals across the country, followed by Dutch-Bangla Bank with 6,500 and National Bank with around 3,000. Brac Bank has more than 3,500 POS machines.
“We are going aggressive and will install another 5,000 POS terminals by this year to strengthen our market share,” said Mashrur Arefin, deputy managing director of City Bank.
Goods and services worth more than Tk 1,400 crore were transacted through City's terminals last year, an increase by 35 percent compared to the previous year.
City entered the POS market in the middle of 2009 and bought all the POS terminals of Standard Chartered Bank in Bangladesh that has withdrawn itself as a merchant acquiring bank from the market.
According to industry players, there are around 20,000 POS centres across the country. About Tk 5,000 crore was transacted through these POS terminals last year, up 30 percent from the previous year.
Standard Chartered dominated the market as a merchant acquiring bank for years though the market was not big until the last few years. Also, National Bank was a major player, but its share has declined in recent years.
City Bank has captured the POS market by setting up terminals at different strategic points – from Dhaka to Chittagong, Sylhet, Khulna and other major cities.
City also enjoys an edge over other banks as it issues all the three major cards -- Amex, MasterCard and Visa, which enables a cardholder of any of the three brands to use the POS terminals of the bank.
“Merchant acquiring is a highly profitable business for us,” said Arefin, who is also the chief operations and communications officer of City Bank.
More than Tk 700 crore worth of goods and services were sold through Dutch-Bangla's POS terminals last year, up 30 percent from a year ago.
“The growing number of educated consumers and the ease of using cards have contributed to higher transactions,” said Abul Kashem Mohammad Shirin, deputy managing director of Dutch-Bangla Bank.
Brac Bank is the third major player with nearly 3,500 POS terminals; goods and services worth Tk 760 crore were transacted through the terminals in 2013, with a 32 percent year-on-year growth. “Merchants are also benefitted as their cash management becomes easier,” said Zeeshan Kingshuk Huq, head of corporate affairs of Brac Bank.
Most customers now want to pay through cards, said an executive of a store at Bashundhara City shopping mall where almost all the shops accept cards for sales of goods.
“We have 18 outlets and sales through cards help centralise our cash management,” said an executive of Lubnan Fashions, a clothing maker for the local market.