This week, bKash announced it was making sending money within its network free of charge to five numbers
Until last year, the charge for withdrawing cash from the mobile financial services platform, introduced in 2011, was Tk 18.5 for every Tk 1,000.
That changed when Nagad, the digital financial service provider of the postal department, brought down the charge and also made sending money to other accounts on their network through the mobile app free of charge.
The move appears to have worked in its favour, with the two-year-old player eating into the market share of Rocket, the MFS arm of Dutch-Bangla Bank and the number two player after bKash for long.
It also appears to have ignited a much-needed price war of sorts in the industry of 16 players, where the rates have stayed the same since the platform’s initiation nearly a decade ago.
This week, bKash announced it was making sending money within its network free of charge to five numbers.
Once the transactions to the five numbers hit Tk 25,000 in a month, a Tk 5 charge would be applicable in the subsequent transactions. When the transactions hit Tk 50,000 in the month, a Tk 10 charge is applicable on the following transactions.
Typically, when a service gets the scale, the charges come down, which is what happened with mobile phone service and broadband internet -- the two industries where the rates have come down exponentially, thanks in part to the proactive nature of the regulator.
In December last year, the average daily transactions through the MFS operators stood at Tk 1,824.4 crore. Five years earlier, it was Tk 773.8 crore, according to data from the Bangladesh Bank.
After fixing the rates ten years ago, the banking regulator has not revised them once.
As per that guideline, a cash-out charge of Tk 20 for every Tk 1,000 is allowed.
Contacted, BB Spokesperson Md Serajul Islam said the central bank asked the operators to revise their cost modelling.
“After getting their opinion, we will make a decision about the issue.”
Had the BB ran a fresh cost modelling process, the charges would have invariably come down, making the platform more affordable for the marginal people, who tend to remain out of the banking umbrella, according to experts.
“We have designed our service delivery plan at a convenient price,” said Tanvir Ahmed Mishuk, managing director of Nagad.
Nagad uses state-of-the-art technologies that enable it to reduce charges.
“In a healthy competitive market, customers will always get a reasonable price for any service, which we all should encourage and welcome.”
Mishuk says the charges can be brought down for the other MFS services other than cash-out.
“But for that, all the service delivery operators need to come to a consensus. Regulatory support is also needed,” he added.
About 77 per cent of the charges go to the agents and the distributors, said Shamsuddin Haider Dalim, head of corporate communications at bKash.
“It is difficult to reduce the charges but we are now emphasising the use of digital money, which will reduce instances of cashing out. We hope soon, customers would not be cashing out their money at all.”