Major growth barriers

Bangladesh's economy is driven by a flurry of activity in two of its major cities -- Dhaka and Chittagong -- one the political and administrative capital and the other the commercial capital.

So naturally most if the country's urban activities and lifestyle expenses are also concentrated in these two cities. Credit cards, which are slowly gaining popularity in the country, is no exception.

LACK OF INFRASTRUCTURE

According to bankers, over 80 percent of the nearly 10 lakh credit cards in the market are in Dhaka and Chittagong.

The infrastructure of banks for credit card transactions is also available in these two big cities. In other cities such as Sylhet, Rajshahi and Khulna, there is some infrastructure on a small scale but the rest of the cities and district towns lack the facility.

According to bankers, infrastructure structured on the acceptability of credit cards, such as points of sale (POS) and automated teller machines (ATM), around the country is very low with only around 10,000 merchants against a few crore shops and other establishments.

They said all network building initiatives are centred mainly in Dhaka and Chittagong.

Moreover, banks have a reason not to expand card acceptance infrastructure across the country.

Bankers say it requires a huge amount of investment to put the right infrastructure in place. But it takes long to recoup the investment.

For example, a POS terminal costs at least Tk 30,000 and an ATM Tk 10 to Tk 15 lakh, which many bankers deem is not cost-effective compared to the volume of card transactions.

TIN

A person must have a tax identification number (TIN) for availing a credit card. But many bankers feel this restriction is a strong barrier to the growth of plastic money or cashless transactions.

The restriction puts a large portion of consumers outside the card-availing population.

Government data shows that there are nearly 30 lakh TIN-holders in the country. Half of them submit their tax returns. So, a TIN-holder who does not submit returns is reluctant to avail credit cards in fear of tax officials.

Many bankers said having a TIN for a credit card is not mandatory in other countries. Rather, providing the facility depends on the credit-worthiness of clients.

FRAUD

Rising cases of fraudulence and forgery using credit cards has become another concern, which, according to many bankers, is hampering the growth of the card market in the country.

Working with foreign fraudsters, local gangs in Bangladesh have started stealing data of credit cards and making cloned cards to withdraw money from different delivery channels such as POS and ATMs.

Last year one such sensational scam created headlines. It involved fraudsters making away with Tk 25 lakh using around 40 cloned cards.

The gang, led by a foreigner, skimmed off data from six ATMs in the capital to make cloned cards.

Investigators later detected that the gang had stolen data of over 1,200 cards and had committed more frauds at POS terminals than at ATMs.

Soon after the incident, the central bank ordered all banks to strengthen security at ATMs and POS and ensure measures to make card usage more secure.

Yet most of the banks are yet to take their cards to the EMV standard. EMV stands for Europay, MasterCard, and Visa, and is a global standard for authenticating credit and debit card transactions that involves chip-compatible cards and POS terminals.

The credit cards under use at present are magnetic-stripped ones, which are very much susceptible to fraudulence. EMV credit cards are equipped with smart computer chips which hold the cardholder's data. Making a counterfeit EMV card is virtually impossible as it is extremely difficult to tamper with the chip or clone it.

Hence the fraudsters are taking advantage of the lapses on the part of the banks. And hence, the crime continues to occur.

Fraudsters, a few weeks earlier, had captured data of several debit cards from a POS terminal at a merchant's outlet in Dhaka. The terminals are calculator-like devices used for swiping cards.

They made cloned cards and used them to make off with several lakhs taka from ATM transactions before the banks could smell something was fishy.

Identity theft, with fraudsters taking advantage of weaknesses in the cards, ATMs, POS and banks, is on the rise in Bangladesh but banks do not always report these incidents fearing that it would tarnish their reputation, said industry insiders.