BB working on mobile interoperability to boost digital transactions: Governor

Highlights

• The new system will enable seamless fund transfers between MFS and banks
• The Gates Foundation has shown interest in supporting the initiative
• Nikash-BEFTN replaced BEFTN for electronic fund transfers in 2023
• RTGS was upgraded in 2024 for 24/7 real-time transactions

The Bangladesh Bank is working to introduce a platform for mobile interoperability shortly to boost digital transactions, Governor Ahsan H Mansur said today (25 February). 

"Certainly, once we do that, we will see a significant uplift in transaction volume across different types of financial sector providers," he said at an event celebrating a decade of progress in transforming the payments landscape in Bangladesh. 

At the event, organised by the central bank at a city hotel and attended by officials from commercial banks yesterday, the governor mentioned that the Bangladesh Bank is working on it very seriously and is already in touch with some development partners to get help in the process. 

He hoped that they would be able to start the operation very shortly. 

Mobile interoperability enables users to transfer money between different mobile networks and bank accounts. It allows users to store, send, and receive funds through electronic accounts linked to their phone numbers. 

Ghana introduced this system in 2018, while India is still working to make mobile interoperability fully operational. 

At present, bKash, the largest mobile financial service provider in Bangladesh, has agreements with 18 banks for mobile interoperability. 

The Bangladesh Bank will develop a central platform, like the National Payment Switch Bangladesh (NPSB) and Bangladesh Real-Time Gross Settlement (BD-RTGS), through which financial sector providers will be connected to operate mobile interoperability. 

The Gates Foundation has expressed interest in helping to develop the centralised system, said central bank sources. 

Beginning of digital payment era  

The Bangladesh Automated Clearing House (BACH), introduced in 2010, comprises two components: the Bangladesh Automated Cheque Processing System (BACPS) and the Bangladesh Electronic Funds Transfer Network (BEFTN). BACPS uses the Cheque Truncation System (CTS) to convert physical cheques into digital images for faster, more efficient, and secure electronic processing.  

Launched in 2011, BEFTN is the country's first paperless interbank funds transfer system, used by all scheduled banks. Since 12 November 2023, electronic fund transfers have been conducted through Nikash-BEFTN, software developed by the Bangladesh Bank, replacing the original BEFTN system. 

Nikash-BEFTN facilitates credit transfers such as G2P payments, payroll, remittances, social security benefits, dividends, bill and corporate payments, taxes, and person-to-person transactions. It also handles debit transactions, including insurance premiums, club fees, and EMI payments. 

Operational since 2012, the National Payment Switch Bangladesh (NPSB) ensures interoperability among banks for account and card-based transactions. 

It enables seamless interbank transfers, ATM withdrawals, POS payments, QR code payments, and instant fund transfers via internet banking. NPSB promotes a cashless economy, enhances security, reduces reliance on international networks, and fosters financial inclusion. 

Real-Time Gross Settlement  

Launched on 29 October 2015, Bangladesh Bank's RTGS system enables safe, secure, and efficient real-time settlement of large-value and time-critical interbank payments. It facilitates instant fund transfers between bank accounts on a gross basis, enhancing the country's payment ecosystem. 

Real-time refers to transactions that do not require any waiting period. 

RTGS facilitates financial institution transactions, inland foreign currency transfers (USD, EUR, GBP, CNY, JPY, CAD), customs duty e-payments, and key government payments. The minimum transaction limit is Tk100,000, with no limit for government payments or foreign currency transfers. 

RTGS eliminates the cost, time, and paperwork associated with foreign currency transactions, enabling instant settlements. It allows financial institutions to transfer funds immediately to other institutions and their customers. 

To enhance the customer experience, the Bangladesh Bank upgraded the RTGS system in November 2024. 

The next-generation system features an improved user interface, separate operations for local and foreign currencies, a dedicated government transaction window, 24/7 availability, and automatic customer credit confirmation, ensuring transaction finality without requiring receiver acknowledgment. 

Currently, a total of 11,470 online branches of 60 scheduled commercial banks and 19 non-bank financial institutions are connected to this system.