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Financial Inclusion Importance of Mobile Payment System Report

Introduction Financial Inclusion refers to the ability of individuals to access financial services. One of the major barriers to achieve financial inclusion in Bangladesh is providing the online money transferring facility as maximum people in rural areas do not maintain any formal bank account. The main problem of this research is how to provide online money transferring facility to the people who do not have any formal bank account. The main objective of this report is to find how mobile money transfer can be used to achieve financial inclusion. Secondary objective of this report are discussing the background Financial Inclusion, discussing the available mobile payment system in Bangladesh and analyzing the prospect of Mobile Payment System to achieve Financial Inclusion in Bangladesh. Only 19% people in rural areas have a formal bank account. So they can get online money transferring facility from Banks. This is a barrier for achieving financial inclusion in Bangladesh. The service of bKash can solve this problem immediately by giving access to money transfer facility to more than 50% of population with a mobile connection. The service is cost effective and quicker than Banks. bKash number of outlet is more than branches of bank in rural areas. And these outlets are open from 8a.m.–8 p.m where transaction time in banks is normally 10 a.m. to 4 p.m. So it is easier for both sender or receives to send or receive money through bKash. These facilities can play an important role in achieving financial inclusion in Bangladesh. In the chapter 1 of this report discuss definition and concepts of financial inclusion. In the second chapter discuss about overall status of financial inclusion in Bangladesh. In the third chapter I discuss some barrier in achieving financial inclusion. In the fourth chapter discuss detail process of transferring money through bKash and Banglalink. In the fifth chapter discuss the prospect of mobile payment system in achieving financial inclusion. In this chapter mainly discuss the advantages of


mobile payment system. The last chapter is concluding remarks where give conclusion and recommendation of this report.

All the data used in this report are secondary data. There is no information collected from field visit as primary data. This report mainly based on the information provided by websites of Bangladesh Bank, bKash and Banglalink. The theatrical part mainly based on internet publication, finance books and BB website. Chapter 1 Definition and Concept of Financial Inclusion Concept of Financial Inclusion Financial inclusion has emerged as a tool to achieve inclusive growth for poverty reduction since 2005, a year that the UN has declared International Microcredit Year. Studies positive correlation exists between financial development and

indicate that a

economic growth. Current

development theories suggest that greater financial inclusion can have a positive impact on the lives of the poor. Financial e x c l u s i o n

refers t o

the lack of a c c e s s t o f i n a n c i a l

services. It limits

opportunities for employment and enterprise development and imposes a premium on the c o s t o f basic services.

Financial e x c l u s i o n t h u s m a k e s i t d i f f i c u l t t o r e d u c e inequalities

and alleviate poverty. Financial exclusion is a barrier to economic development. Financially excluded populations include marginal farmers, l a n d l e s s labors, u n o r g a n i z e d e n t e r p r i s e s , u r b a n s l u m d w e l l e r s , m i g r a n t s , senior citizens and women. Financial inclusion is thus a high priority policy goal for developing and developed countries in order to ensure stable and equitable economic growth1. 1.1 Definitions/Concept 1.1.1

While the need to promote financial inclusion has received global importance, a

consensus has not been reached on the definition of financial inclusion. The provision of financial services from banks is sometimes referred to as financial inclusion refer s to a broader c onc ept. 1.1.2

United Nations (2006), in its blue book titled

Sectors for Development�, defines financial

inclusion

“Building

Inclusive

Financial

as the “access to the range of

1 Islam and Mamun (2009), Financial Inclusion: The Role of Bangladesh Bank


financial services at a reasonable cost for the bankable people and farms�. Basic financial services include savings, short and long-term credit, leasing and factoring, mortgages, insurance, pensions, payments, local money transfers and international remittances. 1.1.3

Financial inclusion also refers to the ability of individuals to access appropriate financial

products and services (House of Commons Treasury Committee, 2006). An understanding o f appropriate financial products and services includes financial awareness, knowledge about banks and banking channels, facilities provided by the banks and advantages of using the banking channel. The Center for Financial Inclusion (CFI), an affiliate of US-based nonprofit ACCION International, argues that quality financial services in a full inclusive financial system would be provided at affordable prices, in a convenient manner, and with dignity for the clients. Mainstream providers considered as officially regulated and supervised entities provide quality products developing capacity and usage of financial services reflected in the perfect financial inclusive system.

1.1.4

Rahman (2009) defines financial inclusion in Bangladesh as access to financial services

from officially regulated and supervised entities in which banks and financial institutions are licensed by the Bangladesh Bank, MFIs by the Microcredit Regulatory Authority

(MRA),

registered cooperatives by the Department of Cooperatives; and official entities themselves including

post

offices

and

National

Savings

Directorate. Microfinance

activities

in

Bangladesh, pioneered by Nobel laureate Dr. Yunus and replicated extensively worldwide, have been expanding the access of financial inclusion.2

1.1.5 is

Thus, the definitions of financial inclusion indicate that appropriate financial inclusion

multidimensional in nature offering quality financial services in a convenient way,

extending access to all segments of the population and providing equal opportunities and reducing inequalities in an economy.

1.2 1.2.1

Various criteria to measure the status of financial inclusion Studies (Mehrotra et. al 2009, Sarma, et. al 2010, and United Nation, 2006) use various

criteria to measure the status of financial inclusion in an economy such as

(i) outreach

dimension and (ii) actual usage dimension. In terms of outreach dimension, there are two types of indicators: geographical penetration (number of bank branches or ATMs per 1000 square kilometers) and demographic penetration (number of bank branches or ATMs per 100000 2 Islam and Mamun (2009), Financial Inclusion: The Role of Bangladesh Bank


people). More bank branches and ATMs per 1,000 square kilometers indicates smaller distances to nearest physical bank outlets and easier geographical access. Demographic penetration measures the average number of people served by each bank branch or ATM. Higher numbers imply that there are fewer clients per branch or ATM and also indicate easier access to bank’s services. Sarma et al. (2010) constructed a multidimensional index for measuring the degree of financial inclusion that includes information on bank penetration,

availability of banking

services and usage of the banking system. DemirgĂźc-Kunt et. al (2008) also compiled demographic and geographic penetration data on access of general banking branches or ATM booths. 1.2.2 In terms of actual usage dimension the indicators are (i) number of loan accounts per 1000 people (ii) number of deposit accounts per 1000 people. These indicators measure the use of banking services/access to financial services. Another frequently used indicator of usage is the ratio of deposits/GDP or credit/GDP or (deposit + credit)/GDP. financial

inclusion

The

measurement

of

depends on the level of development of a country and varies across

countries/regions. 1.2.3

In Bangladesh, as in other developing countries, indicators are measured in terms of

outreach and actual usage dimensions. According to Rahman (2009), we also measure overall financial

inclusion for Bangladesh. Bangladesh and an inclusive financial system may

consider the following institutions in measuring access to financial services (Rahman, 2009): i)

Banks and financial institutions supervised by the BB;

ii)

MFIs supervised by the Microcredit Regulatory Authority (MRA);

iii)

Credit cooperatives supervised by the registrar of cooperative societies;

iv)

Insurance companies supervised by Insurance Regulatory Authority

v)

Capital

market

institutions

like

investment

banks,

merchant

banks,

stock

exchanges supervised by the Securities and Exchange Commission; vi)

Post offices under the Post Office Department of the government offering savings, money transfer and insurance services; bureaus of National Savings Directorate of the government issuing government savings instruments.

1.2.4

Insurance companies and capital market institutions are not the primary sources of

clientele information for deposit-taking financial services; therefore, these need not to be included in measuring the extent of inclusion.


1.2.5

A c o mp r e h e n s i v e pr i ma r y m e a s u r e o f financial i n c l u s i o n i s , therefore, the

coverage

of deposit services

which

is

measured

by

the

number

of

deposit

accounts/clients in deposit schemes in banks, MFIs, post offices as percentage of total population. The coverage of credit services is another benchmark in measuring the extent of inclusion, expressed in terms of gaps, exclusions and barriers in access to financial services.3 1.3

Importance

1.3.1

Access to credit in the formal sector may also

open up entrepreneurship

opportunities for low income populations and increase the scope for investment. 1.3.2

Linkages with the formal financial sector enable clients to access different credit, savings

and insurance products with soft conditions provided by regulated institutions. In terms of cost, easy access to the formal financial sector reduces the growth of informal sector credit provided by moneylenders which can often be expensive and exploitive. 1.3.3

An account can be used for multiple purposes including making payments for essential

utilities, receiving benefits from government programs; therefore contributing to financial deepening. 1.3.4

Studies suggest that access to financial services allows the poor to save money safely

outside their homes, prevents the concentration of economic power with a few individuals and helps to mitigate the risks that the poor face as a result of economic shocks or natural calamities (Mehrotra et. al, 2009). Chapter 2 Financial Inclusion in Bangladesh 2.1. The Status of the Overall Financial Inclusion in Bangladesh Geographical penetration indicates that number of bank branch per 1000 square kilometer increased from 44.24 in 2005 to 53.34 in 2010. Number of ATM booth per 1000 square kilometer increased tremendously from 0.82 in 2005 to 14.43 in 2010 (Chart 1). In term o f d e m o g r a p h i c p e n e t r a t i o n , number of branches per 100,000 populations increased from 4.67 in 2005 to 5.28 in 2010. Number of ATM per 100,000 populations increased from 0.09 in 2005 to 1.43 in 2010 (Chart 2). Trend in geographical and demographic penetration indicates that access to banking is increasing overtime in Bangladesh. 3 Islam and Mamun (2009), Financial Inclusion: The Role of Bangladesh Bank


Source: Islam and Mamun (2011), Financial Inclusion: The Role of Bangladesh Bank, Research Department Bangladesh Bank. Access to banking in rural areas in terms of bank branch expansion, number of deposit a/c, number of credit a/c was quite impressive during 2005-2010. Recent data show that in rural areas total rural bank branch grew, on average, about 3.39 percent during 2005-2010 as against the 4.75 percent growth in urban areas during the same period. Number of deposit account grew by 11.91 percent in rural areas between 2005 and 2010 while the same was 7.82 percent in urban areas during the same period. Number of credit account during the same period increased, on an average of 0.54 percent in rural areas as against 4.41 percent in urban areas during 2005-2010.

Source: Islam and Mamun (2011), Financial Inclusion: The Role of Bangladesh Bank, Research Department Bangladesh Bank.


In the rural areas, number of deposit account per 1,000 persons was 126.45 in 2005 which grew to 189.17 in 2010, while number of loan account decreased from 52.77 in 2005 to 50.82 in 2010 (Chart 3 and 4).

Source: Islam and Mamun (2011), Financial Inclusion: The Role of Bangladesh Bank, Research Department Bangladesh Bank.

Number of deposit and loan account per 1000 population were 241.52 and 61.57 respectively in 2005 which increased to 333.19 and 63.29 respectively in 2010 (Chart 7). The ratio of depositGDP increased from 42 percent in 2005 to 53 percent in 2010 while loan-GDP ratio increased from 32 percent in 2005 to 43 percent in 2010 (Chart 5 and 6).


Source: Islam and Mamun (2011), Financial Inclusion: The Role of Bangladesh Bank, Research Department Bangladesh Bank. 2.2. Outreach by Micro Finance Institutions Access to finance by MFIs is remarkable in Bangladesh. Latest data provided by MRA indicate that 550 MFIs operated 17 863 branch throughout the country (mostly in rural area) in June 2011. In June 2011, MFIs have 25.81 million clients of whom 18.45 million clients are women. Total outstanding savings mobilized by MFIs went to Taka 2011 which was Taka 27.53 billion in June 2007. Total

62.86 billion at the end of June

loan disbursement stood at Taka 174.91

billion at the end of June 2011 which was Taka 86.95 billion at the end of June 2007 (Chart 8).


Source: Islam and Mamun (2011), Financial Inclusion: The Role of Bangladesh Bank, Research Department Bangladesh Bank. Geographical penetration measured by branch per 1000 square kilometer stood at 123.56 branches at the end of June 2011 up from 93.43 at end June 2007. Population penetration indicates that 9.61 branches served per 100,000 populations in June 2007 which increased to 12.08 branches in June 2011 (Chart 9). 2.3. Overall Financial Inclusion Rate of overall financial inclusion is increasing in modest pace. The overall financial rate is given in Table-1. It is observed that financial inclusion as percentage of total population increased from 39.76 percent in 2004 to 56.42 percent in 2010. In terms of adult population, it increased from 65.33 percent in 2004 to 87.23 percent in 2010 due to opening a significant number of 10 Taka account in the last two years. Table 1 : Status of Financial Inclusion in Bangladesh4

Adult Year Populati on (million s)

Total populati on (million s)

Populati on per bank branch (in number)

Number Deposit Number MFI Number of bank A/Cs as of member of deposit % of member s as % members A/Cs adult s in of adult in (million populati MFIs populati cooperati s) on (million on ves

4Islam and Mamun (2009), Financial Inclusion: The Role of Bangladesh Bank

Cooperat ive members as % of adult populati

Financ ial inclusi on as % of adult

Financ ial inclusi on as % of total


1999

73.16

111.46

18669

27.30

37.32

2000

75.16

111.46

18347

28.40

37.79

2001

77.18

123.15

19886

30.10

39.00

2002

79.59

129.25

20753

30.90

38.82

2003

80.80

133.40

21406

31.30

38.73

2004

82.25

135.20

21443

31.60

38.42

2005

83.80

137.00

21420

33.10

39.50

2006

84.60

138.80

21171

34.50

40.78

2007

87.08

140.60

20320

35.70

42.02

2008

89.62

142.40

20566

37.60

43.83

14.63

18.11

14.40

17.51

18.82

22.46

22.89

26.95

20.83

24.52

23.53

24.36

24.90

26.99

7.6 5

9.9 1

7.6 7

9.6 4

66.21

40.10

65.36

39.76

7.5 7

9.3 7

71.41

43.68

7.7 6

9.4 3

77.33

47.13

74.36

46.05

7.9 2

9.4 5

77.63

48.86

78.61

50.28

Source: Rahman (2009b), Microcredit Regulatory Authority, Bangladesh Bureau of Statistics, and Scheduled Bank Statistics, Bangladesh Bank. Trend in technology adoption in banking services In order to provide banking service at lower cost and at shorter time to remote area, Banks have adopted various modern technology viz. installation of ATM, POS, introducing credit card and debit card, uses of mobile phone, internet banking, on line banking and tele-banking. It is observed that mobile banking is the potent instrument for increasing outreach and mobile phone is

an ideal platform to increase of outreach of

financial services to the rural population as their penetration is already large and growing (Mehrota, et. al, 2009). Recent survey data show that adoption of modern technology in banking services is impressive (Chart 10 and 11). Number of ATM booth increased from 118 in 2005 to 2855 at end June 2011. Number of POS also increased immensely from 3121 in 2005 to 17183 in June 2011. Number of debit and credit card clients increased from 0.11 million and 0.15 million in 2005 to 6.0 million and 0.61 million in June 2011 respectively. Number of mobile banking clients grew by about 62.0 percent to 0.21 million in June 2011. Out of 47 banks, 38 banks use modern facilities i.e., internet banking, online banking and telebanking.


Source: Islam and Mamun (2011), Financial Inclusion: The Role of Bangladesh Bank, Research Department Bangladesh Bank. Recent trend of mobile banking indicates that financial inclusion is scaling up in Bangladesh especially in rural area where no bank branch is available. Recent data show that number of mobile phone subscribers and tele-density have been increasing substantially overtime creating an opportunity for banks and MFIs to use the mobile technology in the financial services and serve unbanked people with lower costs specially in the rural areas (Chart 12 and13).


Source: Islam and Mamun (2011), Financial Inclusion: The Role of Bangladesh Bank, Research Department Bangladesh Bank.

2.4. Recent survey findings Institute of Microfinance (InM) conducted a survey on “Access to financial services in Bangladesh� in 2011 covering nearly 9000 households in 63 districts except Rangamati. The main findings of the survey are that the aggregate access to any financial services stood at 76.77 percent of which access to formal services is about 37 percent and access to quasi formal ( MFIs and co-operatives) is about 43 percent (Chart 14). Another finding of the survey shows that there is a s

significant market overlapping both in formal and quasi formal market.


Source: Islam and Mamun (2011), Financial Inclusion: The Role of Bangladesh Bank, Research Department Bangladesh Bank. Chapter 3 Barriers to Financial Inclusion in Bangladesh Barriers to financial inclusion 3.1

Identifying the barriers that prevent the lower income people in the country in accessing

to the financial services provide hints as to which policies could be supportive in removing the barriers and broadening access. Measures for accessibility, affordability and eligibility can indicate the extent of barriers to the financial services in terms of deposits, loans, payments, locations, technology etc. 3.2

Poor b a n k i n g i n f r a s t r u c t u r e : Keeping in view the number of financially

excluded people, in Bangladesh, about half of the adult population is unbanked (48.49 percent) in terms of deposit accounts in the banks. The major barrier is geographical or physical access measuring the average distance from household to bank branch; however, the branches per 1,000 square kilometers could be used as crude indicator for providing an initial idea to the barriers of inclusion. For example, Spain has 96 branches per 100,000 people and 790 branches per 1,000 square kilometer, while Bangladesh has less than 7 branches (or ATM) per 100,000 population and about 67 branches (or ATM) per 1,000 square kilometer. A large section of the population who do not have any physical access to the banking services are in rural and remote areas in the country. 3.3

Lack of proper documentation: Another barrier is lack of proper documentation

including ID, proof of domicile and reference letter required to open a checking or savings account in Bangladesh, where many people do not have such documentation. 3.4

Inadequate financial literacy or education: Financial literacy and awareness are very

low in the country, particularly in rural areas; it makes a large segment of household difficult to get financial services from the banking system in terms of savings, credit and payments. 3.5 balance

High requirement of minimum balance: Many institutions have a minimum account requirement

or

fee

for

opening

checking

or

savings

account; consequently,

many lower income people faces difficulty to maintain such balance enforcing to exclude themselves from the financial services. Though minimum amount to open a checking or savings account (2.28 and 0.89 percent of GDP per capita respectively) is lower in Bangladesh, it could be free for the poor people for broadening the extent of financial inclusion.


3.6

Poor level of technological infrastructure: As a competitive and cost effective

strategy, major banks focuses on large scale of loans instead of providing services for small size of loan; as a result, rational business decisions prevent a major portion of people from accessing loan services including SME and agriculture loan. Promoting technological and institutional innovations as a means could expand the financial system access and usage; however, less than 4 people per 1,000 populations in the country are using credit cards indentifying the technological and infrastructural weaknesses. 3.7

Low income: There is still a large section of household in the country,

particularly in rural areas, having extremely low level of income; therefore, those people are un-served from any financial institutions. 3.8

Lack of suitable product structure of banks and MFIs: Appropriate financial

products need to develop in reaching the unbanked population to the formal financial system. 3.9

High cost of product: The cost of product of MFIs compared to that of banks

(Interest rate) is still high indicating another important barrier for financial inclusion. 3.10

Absence of credit bureau and insurance of MFI borrowers: Spreading of

outreach by MFI is quite impressive in rural areas. But, there is no credit bureau for identifying overlapping borrowers and their indebtedness. At the same time, there is no micro insurance for credit borrowers. Chapter 4 Mobile Payment System in Bangladesh bKash 4.1. About bKash bKash Limited (a subsidiary of BRAC Bank) is a joint venture between BRAC Bank Ltd., Bangladesh, and Money in Motion LLC, USA. The ultimate objective of bKash is to ensure access to a broader range of financial services for the people of Bangladesh. It has a special focus to serve the low income masses of the country to achieve broader financial inclusion by providing services that are convenient, affordable and reliable. More than 70% of the population of Bangladesh lives in rural areas where access to formal financial services is difficult. Yet these are the people who are in most need of such services, either for receiving funds from loved ones in distant locations, or to access financial tools to improve their economic condition. Less than 15% of Bangladeshis are connected to the formal banking system whereas over 50% has mobile phones. These phones are not merely devices for talking, but can be used for more useful and sophisticated processing tasks.


bKash was conceived primarily to utilize these mobile devices and the omnipresent telecom networks to extend financial services in a secure manner to the under-served remote population of Bangladesh. bKash is dedicated to provide financial services through an extensive network of community-based agents and existing technology, including mobile phones. The overall value proposition is simple: a safe, fast & convenient way to send and receive money, make payments anytime anywhere and store or safekeeping of your hard earned money. bKash is a Payment System Operator (PSO) License holder, and is regulated by the Bangladesh Bank. bKash maintains proper documentation to follow Money Laundering Prevention Act 2009, Anti Terrorism Act 2009 and Bangladesh Bank’s Guidelines on Mobile Financial Services (MFS) for Banks 2011, where applicable5. 4.2.

Company mission

By providing financial services that are convenient, affordable and reliable, bKash aims to widen the net of financial inclusion. bKash wants to provide a solution for mobile financial services, built on a highly scalable mobile money platform, allowing people of Bangladesh to safely send and receive money via mobile devices. 4.3.

Partners banglalink

Banglalink (Orascom Telecom Bangladesh Limited) is fully owne Telecom Ventures Limited (OTV); the ultimate parent company vimpel.com, the 6th largest mobile phone operator in the world. B second largest GSM mobile operator of Bangladesh, commenced operation in February 2005 . It has already surpassed the 25 m landmark within only seven years of operation. Banglalink entered a vision of bringing mobile telephony to the masses. Accordin strives to understand consumers’ needs best and provides reliabl communication solutions that make a difference in people’s lives.

BRAC

BRAC is currently the world's largest non-governmental organization. BRAC is currently present in all 64 districts of Bangla 8 million microfinance group members, 37,500 non-formal prima more than 70,000 health volunteers. BRAC provides its massive fo

5 http://www.bkash.com/about/company-profile, retrieved on 25 th December 2012


Bangladesh to bKash to deliver financial services at the v beneficiaries.

Bill & Melinda Gates Foundation

Guided by the belief that every life has equal value, the Bill & Foundation works to help all people lead healthy, productive lives countries, it focuses on improving people’s health with vaccines saving tools and giving them the chance to lift themselves out extreme poverty. In the United States, it seeks to significantly imp so that all young people have the opportunity to reach their full pot Seattle, Washington, the foundation is led by CEO Jeff Raikes William H. Gates Sr., under the direction of Bill and Melinda Ga Buffett.

Fundamo, a Visa company

Fundamo is a wholly owned subsidiary of Visa Inc. and a le provider of mobile financial services for mobile network operator institutions. Fundamo's Enterprise Mobile Financial Services plat deployed in more than 40 countries across Africa, Asia, and th offering mobile financial services for person-to-person payments, wireless airtime top-up, and ticketing. Fundamo is headquartered South Africa.

Grameenphone

Grameenphone is the leading telecommunications service provider with more than 36 million subscribers (November 2011). It is between Grameen Telecom Corporation and Telenor of Norw operations in 12 other countries. Grameenphone was the first compa GSM technology in Bangladesh in 1997.

Robi Robi Axiata Limited is a joint venture company between Axiata


Malaysia and NTT DOCOMO INC, Japan. It was formerly know Malaysia International (Bangladesh) which commenced operations in 1997 with the brand name AKTEL. On 28th March 2010, the se rebranded as ‘Robi’ and the company came to be known as Robi A Robi has over 12 million users in Bangladesh.

ShoreBank International

ShoreBank International delivers a broad range of financial servi institutions and their funders globally, dedicated to expanding acce small businesses, entrepreneurs and households. The international SBI partners with bKash to provide services at a large scale that income people in Bangladesh access to Financial Services. SBI million grant from Bill and Melinda Gates Foundation to support bK

4.4.

How to register with bKash

Registration is an easy one time process. Once you are registered, you can use all bKash services. At the moment, registration is open to Robi and Grameenphone and banglalink subscribers. Soon, subscribers from other operators will also be able to use bKash. To register in bKash, please do the following 01. Go to any of your nearby bKash agent along with a. Your mobile phone b. A copy of your Photo ID (National ID/Passport/Driving License) c. 2 copies of Passport size photographs

02. After registration, you need to activate your wallet. Please see below -

6 http://www.bkash.com/about/partners, retrieved on 25 th December 2012


4.5. How to cash in bKash wallet You need to have money stored in your bKash Account to avail the bKash services. So, before doing any transaction, make sure you have sufficient balance in your account. For putting money in your bKash Account, follow the steps below 01. Go to any bKash Agent 02. Let the agent know the amount you want to Cash In 03. Write down your bKash Account Number and the Cash In amount in Agent Register 04. Pay the amount of money you want to Cash In 05. In exchange, the agent will send electronic money to your bKash Account. Cash In done! You and the Agent both will get confirmation message from bKash. Remember to put your signature in the Agent Register before leaving the counter. 4.6. How to send Money to others wallet Send Money enables you to transfer money to other's wallet. Follow the steps below 01. Go to bKash Menu by dialing *247#


02. Choose 'Send Money' 03. Enter the wallet number you want to send money to 04. Enter the amount you want to send 05.

Enter a reference about the transaction. Do not use more than one word, avoid space or special characters

06. Now enter your wallet PIN to confirm the transaction 07. Done! You and the Receiver both will receive confirmation message 4.7. How to receive cash from agent If you have sufficient credit in your bKash Account, you can withdraw cash anytime from any Cash Out from your bKash Account -

bKash Agent. To

01. Go to any bKash Agent 02. Let the agent know the amount you want to Cash Out 03. Write down your bKash Account Number and the amount in Agent Register 04. Dial *247# on your mobile for bKash Mobile Menu 05. Choose "Cash Out" 06. Choose "From Agent" 07. Enter Agent's bKash Account Number (ask the agent) 08. Enter the amount 09. Enter your bKash Mobile Menu PIN Done! You and the Agent both will receive confirmation message. Count the amount and put your signature in Agent Register before leaving the counter 4.8. How to cash out from ATM You can withdraw cash anytime from any bKash enabled BRAC Bank ATM. ATM Cash Out Service Activation - To avail the ATM Cash Out service, you need to activate this feature from your bKash Mobile Menu. This is a one time action. To activate ATM Cash Out service, follow the steps below -


Go to your “bKash Mobile Menu” by dialin

Choose “Activate ATM”

Enter a 5 digit new PIN. This PIN will be your “bKash ATM Cash Out PIN” and is better to than your “Mobile Menu PIN” Enter the PIN again to confirm

You will see a confirmation message on your mobile that you have successfully activated the servic ATM Cash Out Request Generation When the service activation is done, for each ATM Cash Out you will need to generate a “Security Dial *247# to access “bKash Mobile Menu”

Enter your “bKash Mobile Menu PIN” to request ATM Cash Out


You will receive a Security Code on your mobile through SMS. This code will remain valid for one

Withdraw Cash from ATM To withdraw cash from any bKash enabled BRAC Bank ATM, follow the steps below Press the “bKash Cash Out” button at the left-bottom corner of the ATM Screen Select your language Enter your bKash Account Number Enter the amount you want to Cash Out (Minimum BDT 2,000 to Maximum BDT 20,000) Enter the “Security Code” you received through SMS Enter “bKash ATM Cash Out PIN” Check the information you entered and confirm Collect your cash and receipt

You will receive a confirmation message in your mobile with the details of the ATM Cash Out trans


No charge applicable No charge applicable Tk. 2.00 (for any amount) 1.85% of Cash Out amount 2% of Cash Out amount No charge applicable

Minimum Amount Maximum Amount Maximum per transaction per transaction Amount (Tk.) (Tk.) per day (Tk.)

2,000

125,000

125,000

10,000

10,000

125,000

125,000

20,000

125,000

NA

NA

4.10. Payment Customer can make payment from his own wallet to any small or big business entity who accepts bKash. For example, if you want to pay after shopping, use the following steps01. Go to bKash Menu by dialing *247# 02. Choose 'Payment' 03. Enter the business wallet number you want to pay to 04. Enter the amount you want to pay


05. Enter a reference against your payment (you can mention the purpose of the transaction in one word. Ex: Bill) 06. Enter the counter number (the salesperson at the counter will tell you the number) 07. Now enter your PIN to confirm 08. Done! You will get a confirmation SMS

4.11. bKash International Remittance bKash brings you the easiest and most convenient way of sending and receiving International Remittance. To send International Remittance from abroad to a bKash Account in Bangladesh: • Go to a participating Exchange House branch • Let the agent know that you want to send money to Bangladesh through bKash • Fill out the bKash related fields properly on the remittance request form available at the Exchange House • The Exchange House agent will help you complete rest of the process While sending remittance through bKash, please ensure that: • Recipient’s number is a bKash Account number and belongs to one of the operators who is partnered with

bKash

(currently

GP,

Robi

or

Banglalink

ie

017,

018

or

019).

• The destination bKash Account number is entered as the 11 digit Bangladeshi mobile number starting with 017, 018 or 019 e.g. 01XXXXXXXXX. The international dialing and country code should • •

not

be

Recipient’s The

number

included bKash

has

been

written

i.e.

there

account clearly

is

number &

correctly

no is

in

the

correct. correct

• The BDT Value of sent remittance does not exceed bKash standard transaction limits. Countries and Exchange Houses from which you can send Remittance to Bangladesh: • UAE - Al Rostamani International Exchange (ARIE) - Al Ahalia Money Exchange Bureau - Orient Exchange

“+88”. field.


Note: To find your nearest exchange house branch, please click on the name of the respective participating exchange house above. To receive International Remittance on your bKash Account: • To receive International Remittance through bKash, first you need to have a bKash Account. To open a bKash Account, photographs,

a

your

copy

go to your nearby bKash Agent along with 2 copies of Passport size of

your

Photo

mobile

ID

(National

phone

ID/Passport/Driving

License)

and

(Robi/Grameenphone/Banglalink).

• Communicate your bKash Account number to the sender. The sender will use this number for terminating

the

remittance

amount.

• When the money reaches your bKash Account, you will receive a confirmation message on your mobile

phone.

• No charge is applicable to receive International Remittance on your bKash Account. You have to pay bKash standard Cash Out Charge only when you need to withdraw money from bKash Agent or BRAC Bank ATM. Applicable Transaction Limits for sending/receiving International Remittance through bKash: Transaction Type International Remittance

Per Transaction Amounts

Maximum Transaction Amounts

Minimum

Maximum

Per Day

BDT 50

BDT 125,000 BDT 125,000

Per Month BDT 250,000

• You may send larger amounts than the above limit by sending to multiple bKash Accounts of the recipient or any other person of his/her family. • A bKash Customer can keep a maximum amount of Tk. 150,000 in his/her bKash Account at any moment. For example, if s/he has Tk. 50,000 in his/her account, you can send him/her a maximum amount of Tk. 100,000 in Bangladeshi currency at that specific account. Banglalink Mobile Remittance 4.12. Banglalink in collaboration with Dhaka bank ltd (dbl) and eastern bank ltd (ebl) jointly launched mobile remittance, the first ever for Bangladesh as well as for south Asia. This service is a highly secured, convenient, reliable, fast and cost-effective remittance system. 7 4.13. Product Details Beneficiaries with banglalink mobile connections will be able to open mobile wallet accounts either at Dhaka bank or eastern bank from selected banglalink mobile cash points by submitting necessary identity documents and account opening forms. mobile wallet account holders can receive the remittance directly in their mobile wallet account. if the beneficiaries do not have banglalink mobile 7 http://www.banglalinkgsm.com/docs.php?id=51, retrieved on 25 th December 2012


connections, they can still receive the remittance by receiving a secured and unique transaction reference number which is forwarded to them by the sender. in that case, the beneficiaries will have to go to the designated banglalink mobile cash points with proof of identification and request for the disbursement by submitting the transaction reference number, the exact amount and the bank name. 4.14. Account Registration Process 1. Fill up the registration form and put your signature (or thumb print). if a nominee is required get his/her signature as well 2. a. provide the retailer with a copy of your passport size photograph (as well as a copy of your nominee‘s passport size photograph) and a photocopy of any one of the following photo identification documents. please bring the original valid photo identification document for verification: i)

voter i.d./national i.d. ii) driving license iii) passport b. the photocopy of the photo identification document must be signed and dated by both you and the retailer

3. you will receive a pin number through sms* 4. in order to activate the mobile wallet account, you must change the pin number received through sms and create a pin number of your own 4.15. Encashment Process 1. Fill up the money encashment form 2. Provide the retailer with a copy of any one of the valid photo identification documents. please bring

the

original

valid

photo

identification

document

for

verification:

i) voter i.d./national i.d. ii) driving license iii) passport 3. a.

if

you

have

a

registered

mobile

wallet

account:

i) mention your registered banglalink number and the amount you wish to withdraw in the encashment form ii) verify your pin number for safe transaction ii)

you will receive a confirmation sms from banglalink b. if you do not have a registered mobile wallet account: i) mention the name of the bank through which remittance came, the exact amount received and the transaction reference id (obtained from the sender) in the form

4. Receive your money from the retailer


5. a. retailer will sign the money encashment form in front of you b. sign the money encashment form (or thumb print) c. the photocopy of the photo identification document and encashment form must be signed and dated by both you and the retailer Mobile cash remittance with western union Banglalink in collaboration with Dhaka bank ltd (dbl) jointly launched mobile remittance through western union, the first ever for Bangladesh as well as for south Asia. This service is a highly secured, convenient, reliable, fast and cost-effective remittance system 8. 4.16. Mobile cash remittance with western union Beneficiaries with banglalink mobile connections will be able to open mobile wallet accounts at dhaka bank or from selected banglalink mobile cash points by submitting necessary identity documents and account opening forms. mobile wallet account holders can receive the remittance directly in their mobile wallet account.

4.17. Account registration process 1. Fill up the registration form and put your signature (or thumb print). if a nominee is required get his/her signature as well 2. a. provide the retailer with a copy of your passport size photograph (as well as a copy of your nominee’s passport size photograph) and a photocopy of any one of the following photo identification documents. please bring the original valid photo identification document for verification: i) voter i.d./national i.d. ii) driving license iii) passport b. the photocopy of the photo identification document must be signed and dated by both you and the retailer 3. you will receive a pin number through sms* 4. in order to activate the mobile wallet account, you must change the pin number received through sms and create a pin number of your own 8 http://www.banglalinkgsm.com/docs.php?id=51, retrieved on 25 th December 2012


Customers can pick-up money through Banglalink mobile in the following way: i.

dial *777#

ii.

press the reply button & enter pin and press the send button

iii.

from the main menu select the mobile remittance option by presing the reply button and type 6 and press the send button


iv.

press the reply button, type 1 and press the send button to select western union

v.

press the reply button, type 1 and press the send button to pick up money

vi.

you will be asked to enter the mtcn number. press the reply button and enter the mtcn number (10 digits) provided to you by the sender and press the send button

vii.

the screen will show the details of the transaction and ask for confirmation. press the reply button, type 1 and press the send button to confirm the pick up transaction.

viii.

the screen will show "transaction successful" with the amount received in your wallet

* in special cases the additional info may be required and it will be prompted in the screen for pick up transactions and the transaction may also be queued due to mismatch of information for a time period until western union verifies and make the transaction either successful or fail. 3. Transaction enquiry •

registered wallet holders(beneficiaries) can access their ussd menu to find about the status of their transaction by inputting: a) mtcn b) sender first name c) sender last name

•

in reply beneficiary will get the status of the transaction ((ex: paid/not paid/not available/on hold/no matching records found/money transaction locked).

i.

dial *777#

ii.

press the reply button & enter pin and press the send button

iii.

from the main menu select the mobile remittance option by pressing the reply button and type 6 and press the send button

iv.

press the reply button, type 1 and press the send button to select western union

v.

press the reply button, type 2 and press the send button for transaction enquiry

vi.

you will be asked to enter the mtcn number. press the reply button and enter the mtcn number (10 digits) provided to you by the sender and press the send button

vii.

you will be asked to enter the senders first name. press the reply button, type the senders first name and press the send button

viii.

you will be asked to enter the senders last name. press the reply button, type the senders last name and press the send button

ix.

the screen will ask you for confirmation. press the reply button, type 1 and press the send button

x.

the screen will show the status of the transaction

* all the above mentioned services can only be performed from banglalink number


4.18. How to take money out of your wallet 1. Fill up the money encashment form 2. Provide the retailer with a copy of any one of the valid photo identification documents. please bring the original valid photo identification document for verification: i) voter i.d./national i.d. ii) driving license iii) passport 3. if you have a registered mobile wallet account: i)

mention your registered banglalink number and the amount you wish to withdraw in the encashment form

ii)

verify your pin number for safe transaction iii) you will receive a confirmation sms from banglalink

b.

if

you

do

not

have

a

registered

mobile

wallet

account:

i) mention the name of the bank through which remittance came, the exact amount received and the transaction reference id (obtained from the sender) in the form 4. receive your money from the retailer 5. a.

retailer

b.

sign

will the

sign

the

money

money

encashment

encashment

form

form

in (or

front thumb

of

you print)

c. the photocopy of the photo identification document and encashment form must be signed and dated by both you and the retailer the following items are not acceptable: a) photo i.d. that is past its expiration date b) photo i.d. that does not resemble the applicant c) student i.d. Chapter 5 Prospect of Mobile Payment System 5.1. Advantage of Mobile Payment System One of the major problems of providing financial service to rural people is in Rural areas maximum people don’t have any formal bank account so thy can not get the facility of transferring and receiving money through banking channel. In the rural areas, number of deposit account per 1,000 persons was 126.45 in 2005 which grew to 189.17 in 2010. On the other hand maintaining a mobile phone is much easier because of low call rates low price of Handset and connections. More than 50% of total population in Bangladesh has a mobile phone. Almost all family in the Rural areas also has some with a mobile phone connection. This mobile phone can be used to take advantage of transferring money through bKash.


Person with formal Bank Account

Person with a mobile phone

15%-19%

More than 50%

Another problem of transferring money through bank in Rural areas is there are very few branch of Bank in Rural areas. On the other hand number of retail outlet of bKash is much higher number of Banks in a region. For example if we check the number of Branches of banks in Chandpur Sadar Upazila and number of bKash outlet in Chandpur Sadar Upazila we find that where the Brach of bank is only 19 the number of bKash outlet is 469. Banks ♣ Agrani Bank Ltd Natun Bazar Chandpur ♣ Agrani Bank Ltd Puran Bazar Chandpur ♣ Agrani Bank Ltd Station road Chandpur ♣ Agrani Bank Ltd Sreeramdee Chandpur Chandpur-3601 ♣ Agrani Bank Ltd Kallandi Union Baburhat-3602 Chandpur ♣ Agrani Bank Ltd Chandra Bazar Chandra Union Bathorpur-3600 Chandpur ♣AB Bank Limited- Chandpur Branch 123/115 Kalibari Pouro New Market, Chandpur Sadar, Chandpur 9 http://www.bkash.com/support/locator/agent-locator, retrieved on 25 th December 2012


♣The City Bank LimitedChandpur Branch ♣ Islami Bank Bangladesh Ltd Branch-Chandpur ♣Uttara bank Limited- Chandpur Branch ♣ National Bank Ltd- Chandpur Branch ♣ United Commercial Bank Ltd Mobile:01711-888361

♣ Sonali Bank Ltd-Chandpur br. Chandpur ♣ Sonali Bank Ltd-Farazikandi br ♣ Sonali Bank Ltd-Notun Bazar br. Chandpur ♣ Sonali Bank Ltd-Puran Bazar br. Chandpur ♣ Sonali Bank Ltd-Sachar Bazar br. ♣ Sonali Bank Ltd-Sengar Char br ♣ Sonali Bank Ltd-Sologhar br. Baburhat Number of bKash outlet: District

Thana/Area

Shop Name

Shop Address

Chandpur

Chandpur Sadar

Mazumdar Enterprize

Chairman Ghat, Sadar, Chandpur

Chandpur

Chandpur Sadar

B.M Khaza Store

Babur Ha Dhakkint Bazar, Chandpur Sadar,


Chandpur Chandpur

Chandpur Sadar

Rup Kotha Telecom & Digital Studio

Dasadi Bazar, Kallanpur, Chandpur Sadar, Chandpur

Chandpur

Chandpur Sadar

M/S Shohag Traders

Mathkhola Bazar, Sadar, Chandpur

Chandpur

Chandpur Sadar

Khan Library, Gift Bishnupur, Kazir Corner & Varieties Bazar, Chandpur Sadar, Store Chandpur

Chandpur

Chandpur Sadar

Mobile Zone

Chandkhar bazar, Ashikati, Chandpur

Chandpur

Chandpur Sadar

Naher Digital Studio & Mobile Hospital

Wareless bazar Bisho Road, Chandpur Powroshova, Chandpur

Chandpur

Chandpur Sadar

M/S. Anjuma Electric

Dayal Bari Bazar,

Chandpur

Chandpur Sadar

M/S Rakil Telecom & Shahtali Electric Chandpur

Chandpur

Chandpur Sadar

Maa Mobile Vedio & Pingra Paikasta Road Studio Service Madrasa Market, Ashikati, Chandpur

Chandpur

Chandpur Sadar

Protidin General Store

Chandpur

Chandpur Sadar

Chandpur Center

Chandpur

Chandpur Sadar

Monir Variety Store

Chandpur

Chandpur Sadar

Mamun Decorator & 4 No. Chotto Sundar Telecom bazar, Algi Panch gaon, Chandpur

Chandpur

Chandpur Sadar

Mukbul Store

Algi Panch Chandpur

Chandpur

Chandpur Sadar

Mosharaf Variety Store

Badar Khola bazar, 5 no. Rampur, Chandpur

Chandpur

Chandpur Sadar

Ms Air Phone

G M Sen Gopta Road Chandpur

Chandpur

Chandpur Sadar

Ms Multimedia Gallary

Press Club Road Chandpur Kalibari

bazar,

Comill Road Chittrro Lakher Mor, Powroshova, Chandpur

Media Bora Station Railway, Powroshova, Chandpur Molla Bazar, Shahtali, Chandpur

Goan,


Chandpur Chandpur

Chandpur Sadar

Ms Miyazi Telecom

Motlob Road Hat Chandpur

Babur

Chandpur

Chandpur Sadar

Shaba Telecom

Faysal Complex, Chandpur

Chandpur

Chandpur Sadar

Shaba Telecom

Puran Bazar, Chandpur Sadar, Chandpur

Chandpur

Chandpur Sadar

M/S Fahim International

Chandpur

Chandpur Sadar

Jameya Mobile Center

Gobindia, Bazar

Horina

Chandpur

Chandpur Sadar

Alauddin Store

Bakharpur, Bazar

Bangla

Chandpur

Chandpur Sadar

M/S Noor Enterprise

House- 61/60, Noor Manshion, Mijanur Rahman Chowdhury Sarak

Chandpur

Chandpur Sadar

Mahin Telecom

House- 27/24

Chandpur

Chandpur Sadar

Khan Telecom

Bahria Bazar Bridge

Chandpur

Chandpur Sadar

Khan General Store

Bagadi

Chandpur

Chandpur Sadar

Shaha Telecom

House792/753, Tamak Potri, Puran Bazar

Chandpur

Chandpur Sadar

New Mobile Center

House- B/R, Station Road

Chandpur

Chandpur Sadar

Priti Digital Electronics

Chandpur

Chandpur Sadar

New Fashion Shipaloi

Molla Bazar

Chandpur

Chandpur Sadar

Shariat Store

Kalia Bazar

Chandpur

Chandpur Sadar

Gazi Video Telecom

Chandpur

Chandpur Sadar

M S Garments And Bakharpur, Varities Store Bazar

Chandpur

Chandpur Sadar

Hazi Enterprise

Mohamaya Bazar

Chandpur

Chandpur Sadar

Mridha Alap

Lakkhipur Bazar

Shopping Busstand,

Trade H- 319/299, Railway Fielder Road

Boro

And Modna , Janata Bazar

And House0189-00, Vangarpur, Roej Road Chandra


Chandpur

Chandpur Sadar

Riad And Brothers

Modna, Market

Madina

Chandpur

Chandpur Sadar

Milon Store

Mokam Bazar

Mohamia

Chandpur

Chandpur Sadar

Jogajog Media

Chandpur

Chandpur Sadar

Baishakhi Enterprise

Mission Road, Shahi Masjid

Chandpur

Chandpur Sadar

S M Telecom

Dokan Ghor

Chandpur

Chandpur Sadar

Sheba Health Telecom

Chandpur

Chandpur Sadar

Mobile House

Holding - 644/617, Shop1, Hockers Market, Sahid Muktijoddha Sarak

Chandpur

Chandpur Sadar

M/S Miji Enterprise

Comilla Road, Uttar

Chandpur

Chandpur Sadar

Moon Enterprise

Provati Market, Royej Road

Telecom Bohoria Bazar, Wapdar Rasta Near

And Holding740/713, Shop- New Truck Road, Bot Tola, Notun Bazar

Another disadvantage of transferring and receiving money through bank is the time issue. Bank maintains a formal time for transaction 10 a.m. to 4 p.m. And also bank do not open on Public Holidays. On the other hand retailer shops of bKash and Banglalink are open everyday from early morning to late night. Bank Service

Mobile Payment service

5 days in a week

7 days in a week

Transaction Hour 10 a.m – 4 p.m

Transaction Hour 8 a.m – 8 p.m

5.2. Prospect of Mobile Payment System in Bangladesh •

In achieving financial inclusion in Bangladesh the major problem is number of low bank account or number of people with a bank account who can access to banking service. If the


basic banking service which is transferring fund can be done by mobile through bKash and banglalink through mobile phone, more than 50% will be able to access this facility directly where only 19% will be able to access facility of banking service through bank account. •

I the rural areas farmers and other poor people become busy to earn their daily food at day time but they can also receive money after evening from bkash outlet.

Opening a formal account with bank is harder for an uneducated people where they can easily register with bKash account with a little help from others.

Sending money through bkash is very cost effective compare to sending money through other channel like with currier or by another person etc.

Sending money through bKash is much safer than sending money through currier or by any person.

Sending money through bKash is quickest way among money order, bank transfer etc.

Money can be sent and receive through bKash and banglalink in public holidays also.

The number of outlet make it easier for a person for sending or receiving money through bKash as there is sufficient number of outlet in almost every region in Bangladesh.

Chapter 6 Concluding Remarks 6.1. Concluding Remarks Micro Credit Financial Institution like Grammen bank helped Bangladesh government to achieve financial inclusion in terms of providing loan facility to rural people. But there are still some problem Bangladesh Bank is facing to provide money transferring facility to the rural area as only 19% of them have a formal bank account. The service of bKash can solve this problem immediately by giving access to money transfer facility to more than 50% of population with a mobile connection. The service is cost effective and quicker than Banks. Also it is much easier for a people with less or no education. A lot of people working in Dhaka or other major cities of Bangladesh have to send money regularly to their family members in village. This was a problem in past but now the mobile payment service made it much easier for them saving their time, cost and energy. If government takes necessary steps to promote this service in the rural areas of Bangladesh, surely it will have a very good impact in achieving of financial inclusion in Bangladesh.


Government should encourage bKash and Banglalink to increase the area of their service for example to increase the number of outlet in both home and abroad.

The cash out charge should be reduced for large amount of transaction. For example if remittances send from local or abroad is BDT 1,25,00 for 1.85% of cash out charge the receiver will have to pay BDT 2,312.5 But it should not be more than BDT 1,000 per transaction.

Government should encourage all other mobile phone operator to take mobile payment system initiative like Banglalink.

Bangladesh bank can arrange a system with which all bank have to provide money transfer facility through mobile to the customer who don’t have a formal bank account.

Bangladesh bank can open a new department which will deal only with transferring money through mobile to make it more popular, easier and more available to rural people.

6.2. Reference Islam and Mamun (2011), Financial Inclusion: The Role of Bangladesh Bank, Working Paper Series: WP1101, Research Department Bangladesh Bank. European Commission (2008). Financial services provision and prevention of financial exclusion Rahman, A. (2009b). Financial inclusion as tools for combating poverty; Joesph Mubiru Lecture. Bangladesh Bank Quarterly, Vol. VII, No. 2. United Nations (2006), Building inclusive financial sectors for development. New York: The United Nations Department of Public Information. Leaders’ Roundtable on Financial Inclusion Organized by: Alliance for Financial Inclusion (AFI) 27 September 2012. Bangladesh Bank Website. Found at : www.bkash.com, retrieved on 25 December, 2012 Found at : www.bangladesh-bank.org, retrieved on 31 December, 2012 Found at : www.banglalinkgsm.com, retrieved on 25 December, 2012 Found at : www.bbs.gov.bd, retrieved on 25 December, 2012


Financial inclusion importance of mobile payment system report