MFS interoperability by December
People will be able to transfer funds from their mobile wallets to other accounts belonging to another carrier and banks by December in a development that would give the mobile financial service (MFS) industry a massive boost.
Bangladesh Bank has already completed the necessary tasks to ensure interoperability of the service, which was rolled out in 2011.
Interoperability refers to the basic ability of different computerised products or systems to readily connect and exchange information with one another, in either implementation or access, without restriction.
The central bank carried out a study between February 1 and February 14 to establish interoperability among MFS providers and banks. Twelve banks, two payment service providers, and one MFS provider took part in the piloting.
"We encountered some problems while conducting the study. We are working to resolve them," said a central banker, who has strong knowledge on the matter.
The upcoming system will allow clients to transfer funds from banks to MFS providers and vice versa.
In the last decade, the MFS industry has made significant strides.
The number of registered accounts with MFS providers spurted to 10.27 crore at the end of March this year. Transactions rose 50 per cent year-on-year to Tk 59,642 crore.
The interoperability will be ensured through two platforms: the Interoperable Digital Transaction Platform (IDTP) and the National Payment Switch Bangladesh (NPSB).
The IDTP, a government initiative that makes all accounts of banks, MFS and payment system providers interoperable, will be governed and operated by the central bank.
The government will invest Tk 56 crore in setting up the IDTP.
The NPSB will also be used to ensure interoperability among MFS providers and banks, which will ultimately help people transfer funds smoothly.
Set up in 2012, the NPSB is an electronic platform that works to attain interoperability among banks for card-based and online retail transactions.
At present, the NPSB is processing the transactions carried out on interbank automated teller machines, point of sales, and internet banking.
The interoperability will eliminate the charging of fees for sending money. As a result, users will not count any fee in transferring funds within the same carrier and from one carrier to another.
This will put pressure on some MFS providers, which now impose a charge on their clients while sending money, the central banker said.
After the interoperability comes into force, MFS providers will have to stop charging.
In October last year, the central bank had moved to make financial services interoperable. It asked all banks to complete their preparations by March 2021 so that interoperability could go live in the first quarter.
The central bank later backtracked, citing a technical glitch.
"The same will not happen this time as the central bank has taken the preparation to remove all of the potential barriers that may emerge," the central banker said.
Atiur Rahman, a former central bank governor, welcomed the move, saying interoperability would positively impact the entire financial sector.
"This will help banks understand clients' nature by analysing data of interbank MFS transactions," he said.
Lenders can roll out new loans or deposit products targeting different segments of the clients, said Rahman, who played a crucial role in introducing MFS in Bangladesh.
"Although MFS-related data is still available, managing the data will be easier once interoperability is introduced."
Abul Kashem Md Shirin, managing director of Dutch-Bangla Bank, which pioneered MFS in Bangladesh, said MFS would be more convenient for users when the central bank made the service interoperable.
"In addition, the reliance on some MFS providers will decline."
For instance, an account-holder of Rocket, the MFS brand of DBBL, cannot send money to a remote part of the country where the provider has no agents, he said.
"Clients will not face such situations thanks to the upcoming interoperable service," Shirin said.
Tanvir A Mishuk, co-founder and managing director of Nagad, said interoperability would push society towards using less cash.
Shamsuddin Haider Dalim, head of corporate communication and public relations of bKash, said MFS providers had taken the necessary steps to join the central bank initiative.