4:42 pm - Friday January 18, 3056

E-payment cost to see major reduction

Mobile Point of Sale (mPOS) service, expected to be launched within the next few months in Bangladesh, will significantly reduce the electronic payment cost and open another door of accelerating inclusive banking in Bangladesh, a top official of Visa Inc said.

“Some banks are now in the process of buying the mPOS devices; within the first half of this year, you will see it in Bangladesh,” Uttam Nayak, Group Country Manager, India and South Asia, Visa Inc, told the FE in an interview at a city hotel recently, reports Financial Express (FE).

“mPOS will really open the door of inclusive banking,” he said.

epaymentBecause, the current POS terminal requires telephone line and thus is quite expensive worth almost $400, whereas mPOS needs no such connection and accordingly is very less expensive, attracting the banks to set up the mPOS, the VISA official said.

Thanks to the very low cost for setting up mPOS terminal, Mr Nayak projected tremendous expansion of electronic payment under mPOS in Bangladesh, facilitating acceleration of the financial inclusivity.

To make a payment under the mPOS, the banks just need to attach a chocolate-like small device with a cell phone; “every phone with such tiny attachment can become a payment device”, he said.

Quoting a Moody’s report, the world leading electronic payment network’s high official said that electronic payment has significant positive impact on the whole economy of the country and creation of jobs.

“Greater usage of electronic payments added $938 billion in global economic growth between 2008 and 2012, the GDP equivalent of 1.9 million jobs.

Electronic payments contributed to 0.8 per cent increase in GDP in the emerging markets while 0.3 per cent increase in GDP in the developed markets,” he quoted the report as having noted.

Tremendous prospects of increasing the volume of electronic payment is left for Bangladesh, he said.

Against Bangladeshi citizens’ total expenditure worth $100 billion, only $1.0 billion (1.0 per cent) is spent through electronic payment; while the rate is 3.0 per cent in the neighboring India and the global average is 16 per cent, Mr Nayak, said.

Bangladesh has issued about six million cards, but their utilization is almost nothing; customers normally withdraw money from ATMs and then spend at the merchants; they do not spend directly at the merchants through the cards, he continued.

Terming the 20,000 merchants having POS as very low in number, Mr Nayak said you need half a million merchants for the size of Bangladesh market.

“Overall, Bangladesh is one a promising market for us, the country’s market on mobile payment is moving fast than that in the world; we are very keen to be part of the transformation here,” the official said.

As electronic payment doesn’t need any infrastructure like branch, and even all the banks can share the same infrastructure; so, the cost of banking tremendously goes down under the electronic payment, helping facilitate inclusive banking, he said.

Under the cashless payment system, banks’ profitability goes up and cost goes down by keeping more money in the accounts, he said, adding that as such the banks became able to invest more into the business.

Praising the Bangladesh Bank’s progressive move on expansion of cashless payment, Mr Nayak, however, underscored the need for active participation and encouragement from the government agencies and the state-owned banks in the electronic payment.

The plastic cards can enable the users at home or office to pay bills, insurance premium, mobile top-up, airline ticket, book hotel rooms, buy books, order music and download etc, he said.

Terming the VISA’s payment network in the world as its biggest strength, he said, “In Bangladesh, we have deployed the technology, ‘verified by VISA’, which is much secured as it authenticate the user by his/her password.”

Mr Nayak suggested usage of another technology named EMV (EuroPay, MasterCard, and Visa), chip of which, he said, cannot be counterfeited or copied as such it protects the customers’ security. “Three private banks here already launched the EMV technology-supported cards in Bangladesh.”

The official said that VISA will launch campaign for creating awareness among the consumers and business about the benefit of the electronic payment.

“Our ambition in Bangladesh market is to work with the banks to bring about consumers education and awareness on how the people’s life is improved by paying in a cashless manner,” he continued.

Saying about different VISA services including credit, debit and hajj cards, Mr Nayak said that all these cashless payments significantly improve the consumers’ lifestyle.

Regarding setting up of its local office in Dhaka, he said that the best people from VISA are regularly flying to Dhaka from its India office every month to support the local market in Bangladesh. Mr Nayak thought the current model is better than having any local office, because it cannot hire 50 people for it here.

By its single network, VISA actually connects the consumers, merchants, businesses to transfer the money electronically.