Home ›› 19 Apr 2022 ›› News
In the dead of night, Kamal – a private sector employee residing in Dhaka – received a phone call from his brother, informing that he had taken their suddenly ill mother to a hospital in hometown Rangamati, and he needed money immediately.
Kamal luckily had money in his Mobile Financial Services (MFS) account, and he sent the necessary funds to his brother in just a few minutes. With no banks open at that hour and no ATM machines nearby, the service saved a life by helping to pay for critical healthcare.
Such positive stories can be found all across Bangladesh, and this stellar reputation has helped the sector grow by nearly 200 per cent in four years. The number of MFS accounts reached 11.40 crore in January 2022, a 2.29 per cent increase compared to December 2021.
During that period, the number of daily MFS transactions hit 1.11 crore, a 1.26 per cent rise compared to December last year, according to data from the Bangladesh Bank. These figures clearly show the expansion of the MFS industry and financial inclusion of people.
MFS enables anyone with an account to send and receive money with just a few clicks from any place that has mobile network or internet coverage, without the hassles or delays usually found in banks.
Cashless transactions for everyone
Though the process of opening a MFS account varies slightly from operator to operator, it is often a very simple and form-less procedure that requires that the applicant have an active mobile number and a handset.
MFS have become so ubiquitous in Bangladesh that a person can usually pay for almost any product or services using his phone. Along with most businesses, merchants and restaurants, tea sellers, vendors and even rickshaw pullers are accepting payments through MFS.
MFS services and agents have reached far corners of the country, which has become a blessing to the unbanked people living in remote regions. Before the MFS sector expanded its coverage gradually, these people had no access to any traditional financial services.
Industry insiders say the service began to gain popularity among users during the Covid-19 restrictions, as an MFS account makes it possible to send and receive money without banks, and provides a cashless way to pay for products and services, including essential commodities.
Tk 3,131.06 crore has been transacted through the MFS merchant accounts this January. Some MFS operators offer cash backs and discounts to their users all year around, especially during festivals such as Eid-ul-Fitr.
Helps pay bills, disburse salaries
A significant number of people are using MFS to pay utility bills and disburse salary. Tk 2,663.62 crore was disbursed through MFS as salary, Tk 1,157.16 crore as utility bills, and Tk 908.3 crore as government payments this January.
Transactions through MFS platforms grew 37.13 per cent year-on-year to Tk 7,70,162 crore in the January-December period last year. Thirteen banks are currently providing the mobile financial services such as bKash, Rocket, and uPay.
Nagad – also an MFS – is a digital finance company operating under the postal department. The number of agents in this sector is around 11.3 lakh.
MFS to include more SMEs
Nagad’s CEO Rahel Ahmed said, “We are working on including more small and medium enterprises under the Personal Retail Account. We are already piloting this system, and it has garnered a good response.
“However, there are a lot of challenges with building a digital ecosystem which will cover people such as green coconut sellers and roadside shopkeepers, ensuring that everyone gets access to a digital payment system.”
Dr Atiur Rahman, chairperson of Unnayan Shamannay and former Governor of Bangladesh Bank, said, “MFS play a pivotal role in enhancing financial inclusion by boosting the circulation of money and helping businesses expand across the country.
“Marginalised people’s interest on using MFS has been rising steadily in the country’s remote and rural regions, such as the char areas, further fueling this sector’s growth. MFS is being used to expand f-commerce, e-commerce and micro-finance businesses.”
