Interoperable payment did not work well for lack of participation: Governor
The Bangladesh Bank introduced the long-awaited interoperable payment system on 1 November, but most institutions have not adopted it.
The interoperable platform did not work well due to limited participation from financial institutions in the country, Bangladesh Bank Governor Ahsan H Mansur has said.
Speaking at an event titled "Instant Payment in Bangladesh: Unveiling Inclusion Opportunities" held at a hotel in Dhaka today (24 November), the governor said that the interoperable payment system has not been successful so far. At the programme, the central bank announced plans to introduce a new Instant Payment Platform in collaboration with the Gates Foundation.
Bangladesh Bank is set to develop this interoperable payment system with support from the Gates Foundation, enabling seamless transactions of money, goods and services anytime, anywhere in the country.
Keep updated, follow The Business Standard's Google news channel
The central bank launched the interoperable payment system on 1 November without the two market-leading MFS operators, bKash and Nagad. bKash announced it would not conduct interoperable transactions due to security concerns, while Bangladesh Bank has not granted Nagad approval for interoperability.
The governor said, "Bangladesh Bank is going to introduce another new Instant Payment Platform in collaboration with the Gates Foundation. Through this platform, all transactions can be made cashless."
"We must transform our entire transaction ecosystem into a cashless one. Banks, MFS operators, agent banking and financial institutions must all be brought under a single channel. The plan is to launch it by July 2027," he added.
He said digital payments will significantly increase tax potential and enhance transparency in financial transactions. The Gates Foundation will assist in operating the system, enabling all institutions to transact through a cashless platform. The Foundation is becoming involved in Bangladesh's financial inclusion efforts, he said.
"Our objective is clear, which emphasises financial inclusion in the financial sector," the governor added.
The event was attended by Md Sharafat Ullah Khan, Director (PSD), Payment Systems Department, Bangladesh Bank; Syed Mahbubur Rahman, CEO & MD of Mutual Trust Bank PLC and ABB member; Mohammad Muslim Chowdhury, Chairman of Sonali Bank; and Md Zakir Hossain Chowdhury, Deputy Governor of Bangladesh Bank. Snigdha Ali, Bangladesh Country Lead for Inclusive Financial Systems (IFS), Gates Foundation, and Michael Wiegand, Director, IFS, Gates Foundation, joined virtually.
When asked why bKash is not yet ready to join the interoperable platform despite being a Gates Foundation partner, Snigdha Ali said, "We do not tie any condition with our funding or financial support. We partnered with bKash, but that does not mean we control bKash's decisions."
She added, "If bKash is saying they are not ready for whatever reasons, it is between bKash, the regulators, the government of Bangladesh, and bKash's own business interests – whether they want to be excluded or participate in this journey, which will eventually benefit everyone, including customers in remote villages and business providers."
"It is their decision to assess their business plan and then participate or not," she said.
Citing India as an example, Midland Bank Managing Director and CEO Md Ahsan-uz Zaman said interoperability there is free because of government subsidies. He suggested Bangladesh Bank introduce a similar subsidy to help make interoperability successful.
Responding to the suggestion, Sharafat Ullah Khan said they are planning to raise funds to incentivise service providers and minimise customer costs.
When asked why Nagad was excluded from the platform, Sharafat said discussions are underway to bring them onboard.
Although Nagad was initially excluded because it does not have a licence, the governor, in his speech, mentioned that both bKash and Nagad must join the system for the platform to succeed.
