Bangladesh poised to be a big payment market
Bangladesh's payment ecosystem is poised to leapfrog to become a very large substantial payment market within the South Asia and Asia Pacific region in the next few years, said Vikas Varma, chief operating officer for South Asia at Mastercard.
"The signs of economic growth and prosperity, especially in urban areas, are very visible. I can see a lot of organisation and presence of a lot of new spending power in the country now."
The youths have always been very vibrant in Bangladesh, he said.
Emergence of large infrastructure, rising public spending and a stable government for over the last 10 years have led to a continuum of very strong economic and social policies, which allowed the economy to take a giant stride in terms of development, he said.
In the payment industry, where Mastercard operates in, the effects are no less dramatic, Varma told The Daily Star in an interview recently.
Global trends are changing the way people pay and get paid and some are naturally impacting Bangladesh in good ways. With smartphones and data, all people are getting connected and getting closer to others in many ways
He said Mastercard has been here in Bangladesh for over 31 years and the country office was established 9 years ago with local staff.
"We have started with a few thousand cards and now we have millions."
Over the years, Mastercard has introduced a wide variety of payment tools, including debit, credit, prepaid, SME, dual currency and single currency cards, he said.
"What I am also seeing is very dramatic and very large opportunity for future growth."
He said the global trends are changing the way people pay and get paid and some are naturally impacting Bangladesh in good ways.
With smartphones and data, all people are getting connected and getting closer to others in many ways.
Smartphone and data penetration are also very high in Bangladesh and the quality of telecom infrastructure also seemed good, he added.
"The benefits of connectivity, from Bangladesh as well as the outside world, is very dramatic. It leads to a real time exchange of information, data, payment movement and commerce as well, said Varma, who is responsible for managing business development for the South Asia division.
At the same time, consumers, as their lifestyles evolve, need to find more safe and convenient ways to pay, he said.
The consumers should have the confidence on future payment solutions, he said.
"Innovation and finding a balance between safety, security and convenience is very critical for us."
He thinks consumers want to feel safe and they must be educated about how they will feel safe and how they can do online payments.
They must be educated about taking care of some dos and don'ts like not sharing password, not letting mobile phone move far from reach and not handing over cards to random folks.
Risks to the ecosystem are also increasing every day, he said.
The good guys are advancing, but the bad guys are not far behind as there are hackers and people who are targeting phones with malware, he added.
Therefore, a lot of work has to be done by the ecosystem players like banks to ensure that security of the entire transaction ecosystem is ensured, Varma said.
With time, innovations will present new use cases and payment methods, but it will also need focused efforts on cyber security and knowledge for customers about how to use the tools more safely.
Mastercard does not normally share its country-level market data.
The company is doing business here in Bangladesh for longer than other networks, especially with physical capacity, and Mastercard has built very strong relation with financial institutions, banks and regulators, he said.
Varma said he thinks Mastercard is very well placed as a network to become a dominant market player.
He said Mastercard would focus mainly on the growth of debit and prepaid segments as the country has over 110 million adult population and not all are banked yet.
Driving financial inclusion along with regulators and other influencers in the government will help the company gain more debit and prepaid clients, he added.
According to him, another focus sector for Mastercard would be the SME sector -- the backbone of the Bangladesh economy where 25 per cent of its gross domestic product come from.
"In general, SMEs are least served from a financial solution capability standpoint. So, the SMEs need more attention."
There are some areas where banks can help SMEs run their business more efficiently and get capital and payments easily, he said.
E-commerce is another sector, which needs more focus, some progressive policy and investment from ecosystem players, he said.
He said Bangladesh has a lot of room for growth since only 10 per cent of the eligible population currently own a card, whereas one person has at least one card in most of the other nations.