Shadow market thrives on streaming services
Netflix, Amazon Prime Video, Spotify, Disney+, perhaps even a bit of HBO Max -- one must have them all to be a regular everyday netizen.
One can, of course, with a credit card, endorsed with foreign currency. When Netflix, US-based streaming service and production company, came to Bangladesh in 2016, everybody rushed towards that one friend with a credit card to screen share as parasite accounts.
The unlucky ones with no such friends found willing acquaintances who were happy to onboard an account-holder for a slightly higher price than the actual dollar to taka exchange rate. Mobile financial wallets made it easy to do such transactions.
Smart entrepreneurs like Kamrul Hasan were quick to catch up with this trend. He and scores of others realised that people were willing to transfer money to complete strangers in exchange for login credentials. That people wanted to buy a username and a password.
So, Kamrul started selling exactly that via a Facebook page.
"Gift-cards cost less than Netflix's monthly subscription packages, so we all buy that for greater profit margins. Most of us buy Netflix Turkey gift cards because they are the cheapest in the world," said Kamrul.
Netflix Turkey offers monthly packages for four simultaneous screens, or four user profiles, at 75 Turkish lira, which comes to roughly $6.67. The actual subscription rate is $11, leaving Kamrul with a profit of a US dollar per user per month.
Then he registered as a seller on a major e-commerce platform. Hundreds like him did the same, expanding into a whole new category called "digital services".
This section is now under the scanner of the law enforcement agencies who are battling with one question: Is this legal?
Their concern lies in two places.
First, law enforcement agencies think that sellers like Kamrul are not using Bangladeshi credit cards for purchase -- they believe that sellers have foreign counterparts who purchase the accounts sitting abroad. The money earned from selling the digital products are then transferred via hundi, and e-commerce platforms are legalising this form of illegal money transfer.
"We have heard that the merchants are transferring the money as physical cash via hundi," said Md Humayun Kabir, special superintendent of police at the Financial Crime Unit of the Criminal Investigation Department.
"We launched an investigation into the trading of digital products to figure out whether this is legal or there is any illegality involved," he said.
Second, they are concerned that this service is being sold without paying any tax, depriving the government of revenue.
None of the streaming services, except Netflix, have yet obtained VAT registration as the process lays entangled in a bureaucratic mess. Netflix received value-added tax registration from the National Board of Revenue in the first week of December.
It's true -- go to any of the websites selling, or rather reselling, login credentials to streaming sites, and should you choose to pay with a digital wallet, the only thing you would be charged on top of the "monthly package price" is the cash-out charge.
The purchase also comes with a list of "terms and conditions". For example, here's one: "Do not repeatedly log in and log out", and another: "Do not fiddle with the payment settings".
As soon as the investigation was launched, Daraz took these products off the shelf.
The company's chief marketing officer Md Tajdin Hassan and chief corporate affairs officer AHM Hasinul Quddus told The Daily Star that they were currently verifying how the sellers source the products.
"We had about 80-100 sellers selling digital products. Their monthly gross merchandising value is around Tk 1 crore," said Tajdin.
That's just one website, albeit the biggest, showing the sheer demand of such products.
According to Netflix's own terms and conditions, such resale is not allowed.
"The Netflix service and any content accessed through the service are for your personal and non-commercial use only and may not be shared with individuals beyond your household," says the content provider on its website. One estimate puts the number of Netflix users in Bangladesh at 2 lakh.
But this is a country where there are only 18 lakh credit cards issued.
On the flip side, the number of internet users goes into the crores, the potential market for content streaming platforms. According to the Bangladesh Telecommunication Regulatory Commission, there were 12.92 crore internet subscriptions in the country as of October this year.
And there lies the conundrum: should streaming services only be limited to those with the bank balance needed to get a credit card, or are sellers like Kamrul an essential step towards net neutrality?
For the time being Kamrul's e-commerce account remains suspended.
He received an email from the e-commerce platform where he used to sell his products, saying, "It is with extreme sadness that we have to let you know that your seller account is being closed because of the limitations issued upon digital products by the Bangladesh government. Your account will remain suspended until further notice."
In July 2019, the NBR made it mandatory for tech giants to either set up offices in Bangladesh or appoint agents so that the government can collect VAT on the advertisements and other services provided by them to local firms.
Google, Facebook, Amazon, and Microsoft obtained business identification number.
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