Silver lining of Covid-19: Dawn of the MFS industry

Despite business difficulties amid the pandemic, there was a silver lining in the country's mobile financial services (MFS) sector, which grew manifolds during the period.

From business payment to personal money transfer, all witnessed a boom during the pandemic as people have become more inclined to make payments without physical contact.

According to Bangladesh Bank data, merchant payments through MFS grew 279 percent between January and October of 2020.

At the same time, person-to-person payment rose 164 percent and salary disbursement rose 177 percent through MFS.

In October, merchant payment through the channel stood at Tk1,746 crore and person-to-person (P2P) transfers on the platform stood at Tk16,566 crore.

Salary disbursement through the channel rose to Tk1,918 crore till October.

Industry operators said the trend in transaction growth via MFS is a sign of economic recovery.

Shamsuddin Haider Dalim, head of Corporate Communications and PR at bKash, said the Covid-19 situation is strengthening the foundation of digital financial services all over the world and causing a huge paradigm shift.

“Bangladesh is also in that highway of development where the enthusiastic people have confidently adopted digital services to enhance their lifestyle,” he told Business Insider Bangladesh.

Tanvir A Mishuk, managing director of Nagad, said, "We are observing more than a 100 percent yearly growth rate in different segments of our channel in recent time. Person-to-person transaction is free on Nagad, while it is chargeable in other carriers.”

He said merchant payments saw the highest growth rate while bill payments and transactions also boomed quite surprisingly amid Covid-19.

According to LightCastle Partners, a local research firm, the pandemic has brought a wind of change in modes of money transactions and MFS providers can make the right use of this opportunity to take the country forward towards a cash-lite society.

The firm also came up with a suggestion that to establish ubiquitous acceptance of MFS, omnichannel payment solutions should be introduced. While doing this, MFS providers must ensure protection mechanisms for the safety of their agents, it said.

It hoped that MFS in Bangladesh will certainly grow into a significant mode of transaction in post-pandemic Bangladesh.

“To sustain the growth of the MFS providers and accelerate e-wallet adoption, a new model of collaboration between the payments sector and regulators should be framed focusing on innovation in payments and promoting healthy cooperative competition,” it said.