Digital means can halve remittance sending costs

Bangladeshi expatriates would be immensely benefitted if they send remittance through digital platforms as it cuts that cost of sending money from overseas by roughly half, according to a recent study.

The global average transaction cost of sending funds from one mobile wallet to another in different countries stood at 3.5 per cent in the third quarter of 2020 compared to 6.75 per cent for other channels.

This is because cash out costs are not included in the charges for remittance sent through digital platforms, said Bazlul Haque Khondker, chairman of the South Asian Network for Economic Modeling (Sanem).

He made these comments while presenting a research paper by his organisation during a roundtable on "Remittance Through Legal Channel: Prospects of Digital Platform" at the Economic Reporters' Forum (ERF) office in Dhaka yesterday.

Besides, it is cheaper to send money digitally even when the receiver wants to withdraw cash as the sender does not need an agent to make transfers, Khondker added.

He then said that digital transfers are quicker, safer and more convenient as neither the sender or receiver need to leave home for making transactions.

"So, digital financial services (DFS) can boost remittance in the financial sector, especially during crises," he added.

Ahsan H Mansur, executive director of the Policy Research Institute (PRI) of Bangladesh, said there is a need to increase the flow of remittance to bolster the country's foreign currency reserves as it is losing about $1.5 billion each month due to surging imports.

Mansur went on to say that Bangladesh should aim to increase the service exports to earn more remittance.

In addition, digital literacy should be ensured among migrant workers so that they can send remittance home through legal channels using electronic platforms instead of turning to hundi operators, he said.

Most migrant workers from the country do not have any knowledge on digital money transfers and so, they depend on illegal channels to send funds.

As a result, the hundi operators are getting a portion of the money while Bangladesh is being deprived of remittance, Mansur added.

M Masrur Reaz, chairman of the Policy Exchange of Bangladesh, said global service exports grew 18 per cent last year while merchandise exports grew 3 per cent at the same time, which indicates the potential of the service exports.

"Japan, Jordan, Bulgaria, Poland, Romania and even Russia have been hiring a lot of manpower and Bangladesh should send workers to those destinations," he added.

Bangladeshis who live in North American countries have digital money transfer knowledge so they send money through legal channels using digital systems, said Sheikh Md Monirul Islam, chief external and corporate affairs officer of bKash.

On the other hand, expatriates who work in Middle Eastern countries either use banking channels, agents or hundi to send money.

As a result, the country does not get remittance at the expected level from this region, he said, adding that of 1.3 crore Bangladeshi expatriates, 70 lakh live in various Middle Eastern countries.

Mohammed Monirul Moula, managing director and chief executive officer of Islami Bank Bangladesh, said the launching of interoperability in receiving remittance may solve the problem to a great extent.

Planning Minister MA Mannan said people are reluctant to send remittance through banking channels due to their negative attitude towards such institutions.

"Remitters are scared as they are not accustomed to visiting banks regularly," he added.

Moreover, the weekly holiday system in Bangladesh deters migrants from sending funds through banks. This is because the public holidays are on Friday and Saturday in Bangladesh while it is Saturday and Sunday in other countries.

Sharmind Neelormi, a professor of economics at Jahangirnagar University, said that if it is possible to facilitate an easier and quicker way to send money through digital platforms, then remitters would opt for electronic channels.

"It is necessary to recognise the people who earn remittance working from Bangladesh while the definition of migrant workers also needs to be sorted out," Neelormi added.

Md Iskandar Mia, former executive director and deputy head of the Bangladesh Financial Intelligence Unit, said necessary initiatives should be taken to bring remittance of illegal migrant workers through legal channels.

"For that, engaging mobile financial service agents could be a solution. It is also important to take steps to stop money laundering," he added.

ERF President Sharmeen Rinvy chaired the event, moderated by ERF General Secretary SM Rashidul Islam.