Digital transactions boost rural economy

Digital transactions are playing a vital role in boosting the rural economy as the rural people can now receive or send money in a moment through their mobile phone, said Zahid Hussain, former lead economist of the World Bank Dhaka office.

“Digital transactions or card transactions also help to reduce the cost of doing business,” the economist told The Business Post in an interview.

He said that a growing number of rural people joined the formal financial channel through their mobile financial services (MFS) account.

At present, 13 mobile financial service providers are operating through 1554,637 agents across the country.

In December last year, total transactions through the MFS account stood at Tk 96,132 crore, up from Tk 92,125 crore a month ago, as per the latest data from the Bangladesh Bank.

Rural people who have no ability to open a bank account can easily open an MFS account using their NID card and those MFS accounts help them to come to a formal financial channel, Hussain pointed out, adding that

“It is true that there is a cyber-risk issue but carrying cash also has a risk.” He mentioned that banking services are not available in remote rural areas and the MFS providers are filling up the gap.

“Now clients are not carrying cash due to the growing trend of digital transactions. Digital transactions are also time-saving as clients can conduct transactions very easily and they do not need to go to bank branches for sending or receiving money,” he said.

Gaining momentum during the Covid-19 pandemic, the transaction of debit card, credit card, and prepaid card, as well as ATM transactions, POS transactions, CRM transactions, e-commerce transactions, and MFS transactions, have increased since the pandemic.

In January of this year, ATM transactions, POS transactions, CRM transactions, and e-commerce transactions by card stood at Tk 39,757 crore, up from Tk 14,679 crore in the same month of 2019, the pre-pandemic period. The digital transaction will grow further in the upcoming days as the country’s banks and other financial institutions are adopting digital infrastructure, said Zahid Hussain.