Dhaka, Bangladesh
Trimming MFS charges crucial for financial inclusion

Trimming MFS charges crucial for financial inclusion

Like many other countries, Bangladesh has also gone for digital innovations in the field of financial transactions for the past two decades in particular. As its part, some mobile financial services (MFS) have come into operation since 2011. Bangladesh Bank, the regulatory body for all banks and non-bank financial institutions, has so far allowed a total of 16 institutions to provide the services. The advent of digital innovations in the field introduced a new era of paperless money transactions in the country. It is also regarded as the means of inclusiveness in finance. When one has to go to the bank for certain transactions like paying bills, withdrawals, etc MFS refers to branchless banking whereby financial services are offered to both banked and unbanked people efficiently under reasonable charge-rates. Rather, MFS offers advanced-level financial services combining traditional banking system with the wireless telecommunications technology to assure instant and secured money- transaction process. Nowadays, MFS platforms through their ‘mobile wallets’ are offering wide-ranging facilities like remittance, purchasing goods and services, etc. MFS has speeded up the process of making deposits, withdrawing cash, sending or receiving funds using a registered mobile account. Simply put, MFS provides easy access to formal banking system. It is then small wonder that MFS platforms have earned a huge popularity within a short period. However, according to experts, the services have a potential to go many miles more, the unlocking of which is being held back by some factors, especially the exorbitant charges one has to face when it comes to withdrawal of cash via MFS. As different media reports say, at this moment, cash-out charge is Taka 18.50 for per Taka 1,000 although the agents of MFS providers have been charging Taka 20. Such a high charge is enough for keeping marginal people as well as micro-and small enterprises away from availing the services. Moreover, according to different studies, the charge is much higher compared to other countries in the world. Under the circumstances, experts have time and again suggested bringing the cash-out charge to a single-digit figure. But the major platforms of MFS in the country are still to heed the suggestion. Not only that, when a new MFS provider, Nagad, a wing of the Bangladesh Post office (BPO), has reduced cash-out charge to Tk 9.99 for every Tk 1,000 cash-out to make transaction process to customers easier and comfortable, the major players are reportedly pressuring Nagad to rethink the decision. Notably, as Nagad has said, even after trimming the cash-out charge to single digit, its income from this segment is still prevailing. According to NAGAD officials, if Tk 1,000 was cashed out using app at previous rate, its revenue would have been Taka 2.74, which has now been brought down to less than Taka 0.02. In case of full calculation of cash-out, the cost of SMS is Taka 0.064 as before while this cost is same like all MSF operators. In the new charge structure, revenue portion for distributors is also reduced. However, income of the agents remains same as before. Moreover, their income has already increased more than before due to the increase in transactions. In the new charge structure of Nagad, agents are getting Taka 4.10 for cash-out of Taka 1,000 as before. All other carriers should follow the path shown by Nagad in greater interest of the nation as a single-digit cash-out charge will boost the country’s financial inclusion and digitalisation process. The regulator also needs to intervene in the issue.

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