Bangladeshis, after all, seem to be getting used to digital money amid the global coronavirus pandemic.
In October, card transactions stood at Tk 18,089.8 crore, up 16.9 per cent from a year earlier, according to data from the Bangladesh Bank.
The amount, in fact, is the second-highest in history. Only in July, which was a record-setting month for digital money across the board, were card transactions were higher.
Transactions through the mobile financial service platform, another form of digital money, stood at Tk 53,258.8 crore in October, up 41 per cent year-on-year.October’s figure, which is up 8.5 per cent from a month earlier, is the second-highest since MFS was introduced nearly a decade ago.
In October, person-to-person transfers overtook cash-out to become the most common MFS transaction, meaningthe amount is staying within the system and is not being converted into paper money.
The pandemic has fast-tracked the digital transformation for payments as people avoided handling banknotes for fearing of catching the virus, which has so far killed 7,089 and infected 492,332 in Bangladesh, according to Syed Mohammed Kamal, country manager of Mastercard, one of the two leading card service providers along with Visa.
“People who have never paid a bill online are doing so now, people who have never bought groceries online are buying online,” he told Dhaka Tribune.
However, the digital payment platforms did not get off to a flying start straightaway: the countrywide shutdown enforced by the government from March 26 to May 30 to flatten the curve on coronavirus slammed shut almost all economic activities and with it the business of the platforms nosedived.
“March was okay. April was bad, as economic activities slowed almost to a halt. We came back strongly from July.”
In April, card transactions stood at Tk 8,920.7 crore, the lowest since December 2018 at least, according to data from the Bangladesh Bank.
In that month, transactions on the MFS platformwas the lowest since February 2018 at Tk 29,029.1 crore.
Transactions on the internet banking platform too were the lowest since February 2019 in April.
One of the reasons card transactions have gained momentum is for the increasing demand for e-commerce, said Ahsanullah Chowdhury, head of card operation of Eastern Bank, which has about 7 lakh cards in circulation.
Online food delivery has also increased during the ongoing pandemic, which helped boost card transactions.
E-commerce transactions stood at Tk543.1 crore in October, which is the second-highest in history after July, as per the central bank data.
A significant chunk of the card business comes when customers travel abroad and all forms of international travel have been on hold for the pandemic save for the odd essential trips here and there, Kamal said.
“That business came down to zero. So if you consider the numbers from July onwards, they are pretty impressive and those only show people are genuinely getting used to digital payments.”
Local airways have resumed their flights and crowds have started to increase in domestic hotels and resorts since October.
“This is another reasonfor the sharp rise of card transactions,” Kamal added.
Card transactions will increase further when international travel starts in full swing, Chowdhury said.
Nowadays, conscious people have moved away from the use of notes and in the next couple of years, most of the people in Dhaka will go to the digital transactions, said Selim RF Hussain, managing director of BRAC Bank, which aims to take up the top spot in the card business within the next couple of years.
The challenge now is getting the people to continue with the newly-acquired habit and not revert to cash once the virus, which has made people wary of close interpersonal interactions, is extinguished.
Kamal called for a 5 per cent incentive -- similar to the one remitters get for sending money home through the official channel -- to convert it into a lifelong habit.
“The government should push digital payment for Bangladesh.”
Of the 5 per cent incentive, 3 per cent would be for the customers and 2 per cent for the merchants.
Mastercard has taken up the issue to the central bank, the Bangladesh Association of Software and Information Services, the banking secretary and the Information and Communication Technology division. All have responded favourably to the proposal.
“It is up to the ICT Division to see this through,” he added.
