A new facility is set to launch in Bangladesh’s digital transaction system starting in November. Mobile Financial Service (MFS) providers—specifically bKash, Nagad, Rocket, Upay, mCash, and TAP account holders—will be able to send money to each other.
Under this new system, the maximum cost to send Tk1,000 will be Tk8.5.
Furthermore, money can also be transferred from an MFS account to any bank account.
While this is not entirely impossible now, it is quite complex.
Currently, money can be sent from one MFS account to another through the Binimoy app (launched during the previous government's tenure), but both customers must be registered with the app.
The new rule eliminates this hassle.
To give a simple example: if you are a bKash customer, after the new facility launches, you will easily be able to send money to any MFS account holder, including Rocket, Nagad, or Upay.
This means money can be instantly transferred to another MFS account holder through a mobile app from the comfort of your home.
The new rules are not limited to just MFS companies transacting among themselves.
Any bank and Payment Service Providers (PSPs) can also transact with each other and among themselves.
This initiative, which aims to reduce cash transactions, is being launched using the National Payment Switch of Bangladesh (NPSB) infrastructure.
The maximum fees for these transactions have also been set, although some have criticized the transaction costs.
What’s new
Currently, it is easy to send money from one bank’s app to another bank.
Additionally, many banks offer the option to send money from their apps to MFS accounts, often free of charge.
Transfers can also be made from bank apps to some Payment Service Providers (PSPs).
A PSP is a service that processes digital payments from credit and debit cards on behalf of sellers of goods or services.
The funds are transferred to the seller's account through this medium. PSPs also act as intermediaries in transactions between consumers and retailers.
Separately, money can be sent from bKash accounts to some banks, primarily for credit card bill payments, which can incur a maximum fee of up to Tk12.50 per Tk1,000.
The new service introduced by the central bank now allows everyone to send money to everyone else, encouraging digital transactions among customers.
How much it costs
Under the new rules:
- Bank to Bank, MFS, or PSP: A customer will be charged a maximum fee of Tk1.50 per Tk1,000 sent. However, banks may choose to offer this service for free, as they did before.
- MFS (bKash, Rocket, Nagad) to another MFS, Bank, or PSP: The maximum cost to send Tk1,000 will be Tk8.5.
- PSP to Bank or MFS: The cost will be Tk2 per Tk1,000.
In these types of transactions, all parties involved in the process will receive money through a 'revenue sharing' model.
Benefits
Bangladesh Bank officials say that the launch of this new service will usher in a new era in the country's financial transaction system.
They note that there is a huge demand for sending money from bKash to Rocket or other MFS platforms.
Customers will be able to complete transactions when vendors accept payment on a different MFS platform.
There is also demand for transferring money from MFS accounts to bank accounts.
If a large amount accumulates in an MFS account, customers can now easily transfer that money to their bank account.
This provides relief to customers and plays a role in reducing cash transactions, which helps prevent corruption.
MFS transactions at a glance
Currently, the total number of account holders across MFS providers (bKash, Nagad, Rocket, Upay, mCash, Tap) is 146.4 million.
According to the Bangladesh Bank, approximately Tk150,000 crore is transacted through MFS every month.
In August, the total transaction value was Tk151,123 crore.
In that month, MFS account holders like bKash and Nagad transacted an average of over Tk5,000 crore daily.
