Experts for greater interoperability, safety of digital payment system

FT ONLINE

The banking industry leaders have called for greater interoperability and safety of the digital payment infrastructure to facilitate the country's move towards becoming a digital economy.

At the same time, there should be increased investment in internet banking, as online will be the future of financial transactions, they also said.

Their views came at a roundtable - "Building Payment Ecosystem for Digital Bangladesh: Challenges and Opportunities" - held at a city hotel on Monday.

The Association of Bankers, Bangladesh (ABB) organised the programme.

"The key thing for boosting digital payment is building the necessary infrastructure," said ABB Chairman Syed Mahbubur Rahman.

"For instance, there should be redundancy for the electronic platforms like the National Payment Switch Bangladesh (NPSB), so that there are necessary backups and enough choices for the customers," he added.

The banking industry insiders also observed that there has been a huge proliferation of mobile money accounts in the country. But, still there is a pressing need for interoperability among the mobile financial service (MFS) providers.

"There are currently 57 banks in the country, but only two MFS providers are truly active in the market," said Abul Kashem Md Shirin, Managing Director and CEO of the Dutch-Bangla Bank Limited.

"The MFSs are not at all interoperable, and they are not connected to the bank accounts also," he added.

"Bangladesh needs to improve the regulatory environment to achieve more competition in the MFS market," said Dianne Rajaratnam of the Better than Cash Alliance.

"It also needs to improve interoperability to create unrestricted flow of money among the user accounts of different MFS providers," she added.

Addressing the issue, Lila Rashid, General Manager of the Bangladesh Bank (BB), said the central bank is planning to handover the NPSB to third party.

"We are very accommodative in this regard. We have already formed a committee to handover the system to a third party."

She, however, focused on the lack of private sector initiatives in the scheme.

"There is no restriction to bring private players in the NPSB. However, the private sector is shying away from this due to the huge investment that is required."

Lila Rashid also observed that the banks need to invest more in internet banking, as online banking would be the future of financial transactions.

"Although, around 30 to 32 banks have already introduced internet banking, many of them are not offering full-fledged internet bank services, while many of them are not interoperable."

The BB official also lamented the low proliferation of debit and credit cards in the country.

"Only 5.0 percent of the total electronic payment in the country takes place through debit or credit cards. Even out of that small volume of card-based transactions, 89 percent is mainly characterized by ATM withdrawal."

She suggested the banks to issue debit cards against all the deposit accounts to ensure greater proliferation of cards.

Addressing the observations, the banking industry insiders pointed out that the proliferation of credit card is low, as it is currently mandatory for a customer to have a Tax Identification Number (TIN) to have a credit card.

In this context, they called for relaxing such regulations to increase the usage of cards in country.

Meanwhile, experts attending the event identified greater room for innovation and competition in the emerging markets.

"Security threats are universal in the digital payment system. We need a global collaborative approach to digital payment security," said Tom Crawford, Public Policy Advisor of FTI Consulting, a Washington-based global business advisory firm.

The Daily Star Editor Mahfuz Anam in his speech opined that there are scopes for greater awareness and motivation among the consumers to ensure higher usage of digital payment schemes.

"The next growth driver of Bangladesh, in terms of fast-moving consumer goods, will be the rural areas. Therefore, credit facilities need to reach those rural areas," said Shehzad Munim, President of Foreign Investors' Chamber of Commerce and Industry (FICCI).

Managing Director and CEO of Mutual Trust Bank Limited Anis A Khan as well as representatives from various banking and financial institutions also spoke on the occasion.