Interoperability across all financial systems this year
The government has taken an initiative to make all accounts of banks, mobile financial services and payment system providers interoperable this year, a development that will allow people to move funds effortlessly within the financial sector on real-time and at lower costs.
The new system -- Interoperable Digital Transaction Platform (IDTP) -- will be set up to establish the interoperability among banks, MFS operators and payment service providers (PSPs) and would give a major boost cashless transaction.
The government will cough up Tk 56 crore to set up the IDTP and the central bank will govern and operate it, according to a central bank document.
The coronavirus pandemic has already given a big push to cashless transaction as people from all walks of life are increasingly embracing digital payment tools to avoid cash in order to keep the pathogen at bay.
Transaction through MFS rose 41 per cent year-on-year to Tk 53,598 crore in November.
The issuance of credit cards stood at 16.31 lakh as of October, up 8.73 per cent year-on-year. The number of debit cards grew 8.70 per cent to 2.10 crore.
The central bank will pilot a study between February 1 and February 14 to implement the IDTP.
Eleven banks, two PSPs and one MFS provider will take part in the piloting.
The central bank will set up the required hardware and software to start the new payment method in a full-fledged manner this year.
A mobile app has already been developed to allow clients to register with the IDTP.
Clients will complete the registration by using the mobile app of banks, PSPs and MFS providers if the firms attach the app to their internet banking and digital payment platform.
Banks, PSPs and MFS providers will complete the registration process on behalf of their clients.
If a client holds a number accounts with banks, PSPs or MFS providers, they will not require to register in the system for every account.
Only one account will be registered and other accounts will be added by the financial institutions by verifying the national identification card of clients.
The IDTP will generate an account profile of every registered client, which will provide an "alias" to clients.
The alias will be created by using the name of clients. As a result, they will not need to disclose the account number .The alias will represent all accounts of a client.
"The IDTP will help people transact money without using their account number, which will subsequently reduce fraudulent activities," said Syed Mahbubur Rahman, managing director of Mutual Trust Bank, which will take part in the pilot scheme.
According to Rahman, cashless transaction will receive a huge momentum when clients are able to deposit or withdraw money on a real-time basis from banks, PSPs and MFS providers through the IDTP.
The registered clients of the IDTP will be able to purchase products from shops by scanning the QR (quick response) code.
A QR code is a type of barcode that stores information as a series of pixels in a square grid and can easily be read by smartphones.
The new system will be highly secure as clients will have to be verified through a two-factor authentication for every transaction.
Banks, PSPs and MFS providers will provide clients a one-time password when they attempt to carry out a transaction.
"Money-laundering will be tackled to a great extent when the IDTP commences its operation," said Mohammad Ali, an additional managing director of Pubali Bank.
A launderer may try to invest their ill-gotten wealth in phases in various financial institutions, but the alias of clients will check the issue, he said.
E-commerce will widen tremendously as well, Ali said.
Banks and MFS providers often offer discounts. Under the new system, clients will transfer money from one account to another account, which is offering the discounts, to purchase the products.
There is a big gap between the clients of banks and users of MFS providers in terms of using fund in a common platform, but the new system will bring clients under a uniform payment platform, Ali said.
"The cost of cash transaction will reduce significantly when the IDTP becomes operational," said Md Arfan Ali, managing director of Bank Asia.
Clients will not require to withdraw money from MFS providers, PSPs and banks as they can easily move money from one channel to another channel. As a result, the money will always circulate in the financial network.