Bangladesh must establish its own payment scheme for local credit and debit card transactions to prevent the outflow of money to global payment services, finance sector insiders have said.
International payment services like VISA, MasterCard and American Express (Amex) earned about Tk37 crore in charges for credit card transactions from Bangladesh between 2013 and 2016, as the country does not have a national payment scheme.
It is estimated that they will earn an additional Tk12.92 crore by the end of 2017.
These charges are not taken from the card users directly; rather, they are paid by merchants who use point of sale (POS) machines to receive payments from customers.
“Bangladesh needs an electronic payment service of its own to help us stop the outward movement of a huge amount of revenue from the country,” said Khaliqdad Khan, a certified smart card industry professional (CSCIP) and adviser of South Korea-based smart card producing firm, Kona I.
“Introducing a national payment scheme – similar to RuPay of India, SAMA of Saudi Arabia and Elo of Brazil – can help to reduce the outward flow of revenues to a great extent.”
There are currently around 1,080,000 active credit cards in Bangladesh, while the number of active debit cards is 10,570,000, according to sources at Bangladesh Bank.
International payment services charge 0.3% of the purchase amount for each credit transaction on POS machines, and 0.1% for each debit transaction.
For online transactions via e-commerce platforms, the charges are even higher: 0.7% for credit cards and 0.3% for debit cards.
“Besides counting charges for each financial transaction, payments have to be made to get VISA, MasterCard and Amex certifications, as well as their annual renewal charges,” added Khaliqdad Khan.
The central bank has taken an initiative to launch a national payment scheme in the future. Sources said a policy would be formulated to create a “base platform” to that end.
SM Rezaul Karim, deputy general manager of the Payment Systems Department in Bangladesh Bank, said chip-based specification will be required for the implementation of this initiative.
“Coordination among the banks will be required to run this. It will enable us to complete transactions using our own channel,” he said. “However, even when there is a national payment scheme is in place, VISA, MasterCard and Amex services will still be needed for international transactions.”
Ashish Chakraborty, chief operating officer of payment gateway system SSL Wireless, said Bangladesh is still not ready to take up a national payment scheme.
“The near universal acceptance of (plastic) cards has yet to be achieved so it is not implementable straightaway. It will take 5 to 10 years to have a system like that properly implemented and used,” he said.
This article was originally published on Bangla Tribune