Incentivise e-payments to speed up digital transformation

Both the government and the central bank should take initiatives to provide cashback or incentive to customers for carrying out transactions using digital tools with a view to attaining sustainable economic growth, experts said yesterday.

The country has made an impressive stride in expediting digital financial services (DFS) during the coronavirus pandemic as remote working received a boost to keep the deadly virus at bay while e-commerce, e-payment and even e-learning took a major leap forward.

Now, the regulators and the government should step up their efforts to keep the wheel of the transformation moving, the experts said at a webinar.

Visa and The Daily Star jointly organised the event titled "Digital Bangladesh 2021: Payment Systems and Fintech".

The government introduced a 2 per cent cash incentive on remittance, giving a great boost to the inflow of the money sent by expatriate Bangladeshis, said TR Ramachandran, group country manager for India and South Asia operations at Visa Inc.

"Such incentives can be applicable to widen the DFS. India, Nepal and many other countries have achieved tremendous success by using the policy," he said.

The authorities should take required policy measures to allow clients to enjoy cashback or incentives on the transactions by using DFS tools. Tax rebate may also be given if people settle transactions digitally, he said. 

Bangladesh has enjoyed a surge in DFS in recent years and Visa is one of the pioneers in the area in Bangladesh, Ramachandran said.

Visa is a global payments technology company working to enable consumers, businesses, banks and governments to popularise the use of digital currency.

The US-based company facilitates electronic funds transfers throughout the world, most commonly through Visa-branded credit, debit and prepaid cards.

"The regulators should think whether charges will be imposed on clients who make cash transactions at banks," said Abul Kashem Md Shirin, managing director of Dutch-Bangla Bank Ltd.

"The use of cash will fall if such a measure is taken. This will ultimately help build a cashless society," he said.

The government may consider offering 5 per cent cash incentive per transaction, said Syed Mohammad Kamal, country manager of MasterCard.

Of the incentive, 3 per cent will go to clients and 2 per cent to merchants, he said.

A level-playing field should be ensured for all DFS providers to ensure a sound business environment, Kamal said.

"Cashless society is an indispensable part to achieve further economic growth in the country," said Mahfuz Anam, editor and publisher of The Daily Star.

"We need robust infrastructures to build the public's trust in DFS. Legal infrastructures have yet to be defined in some cases. Such infrastructure is highly important to bolster the public faith in the financial system," Anam said.

Posts and Telecom Minister Mustafa Jabbar said the coronavirus pandemic accelerated the momentum of transformation to a cashless society.

"Villages will be brought under 4G internet connectivity within the next year," he said.

Transactions through cards, mobile financial services, internet and agent banking are growing, in a sign of improving physical infrastructures of DFS, he said.

"But we will have to ensure legal infrastructures in tandem as cybercriminals are relentlessly trying to siphon off money from banks," the minister said.

Half of the population is yet to get an opportunity to open accounts with banks, said Md Arfan Ali, managing director of Bank Asia, which pioneered agent banking in the country.

"This has created a gap between the banked and the unbanked people when it comes to accessing services from the financial sector," he said.

"We should work together to remove the discrimination. And agent banking is doing well to make the digital financial inclusion vibrant."

Uniform guidelines should be rolled out to promote mobile financial services, said Kamal Quadir, chief executive officer of bKash, the country's leading MFS operator.

There are different types of MFS providers and their organisational structure contradicts with each other, he said.

"A haphazard situation will be created unless the issue is addressed properly," Quadir said.

Interoperability is highly important to give a boost to the country's MFS sector, said Tanvir A Mishuk, managing director of Nagad, another leading MFS operator.

Funds now can be transferred from one bank to another and such financial mode should be introduced for the MFS, he said.

Clients have to pay Tk 20 for cashing out Tk 1,000 but such charges should be brought down to single-digit, Mishuk said.

"A single entity will not be able to ensure infrastructure, public trust and cybersecurity," said Soumya Basu, senior director of Visa South Asia.

All stakeholders should come forward to speed up digital transformation, he said.

A national task force should be formed to strengthen the existing process of building the cashless society, Basu said.

The government may think of declaring 2021 as the year of digital payment on the occasion of the 50 years of Independence, said Ram Rakkappan, head of government engagement for India and South Asia at Visa.

A large number of workers were brought under the MFS operation and they received wages and salaries through this means during the lockdown, said Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

"We did not notice any fraudulent activities when banks disbursed salaries and wages to the workers of BGMEA-listed factories," she said.

Different types of online products are now being rolled out and this is a positive move towards a Digital Bangladesh, said Md Tohurul Hasan, programme manager of Digital Financial Service of the Access to Information (a2i), a government programme supported by the United Nations Development Programme.

"We should give space to new fintech firms to run their business. But banks are unwilling to give room to them and they are trying to introduce all types of products," he said.

"A strong relationship is needed between banks and fintech firms," Hasan said.

Financial technology (fintech) is used to describe new tech that seeks to improve and automate the delivery and use of financial services. ​​​

Internet should be offered to commoners at lower cost so that digital financial services widen, said Tina Jabeen, managing director of Startup Bangladesh, a government initiative working to create an accelerator and its accompanying ecosystem of entrepreneurs, investors, mentors, advisers.

The central bank should allow banks to store data in cloud beyond the border, said Syed Mahbubur Rahman, managing director of Mutual Trust Bank.

He emphasised introducing a cash incentive to give a boost to DFS.

Pial Islam, a managing partner of pi Strategy, moderated the event.