MFS transactions slump in August

Transactions through the mobile financial service (MFS) platform, which hit a record high in July this year, fell drastically by 34% month-on-month in August.

Market insiders find this drop in monthly transaction usual, as the sharp rise in July transactions was attributable to the Eid-ul-Adha festival and salary disbursement among garment workers from government-announced Covid-19 incentive package.

The total monthly transaction through the country's MFS providers stood at Tk41,403 crore in August, which was Tk62,999 crore in the previous month, according to the Bangladesh Bank.

The July transaction was up by a staggering 68.1% compared to the same period of the previous year, 40.5% higher than that of the previous month.

Even though down on a month-on-month count, transaction through MFS services saw a 16.58% jump in August this year when compared to the same month a year ago.

That MFS transactions plummeted in August after hitting an all-time high is quite natural, said Kamal Quadir, CEO of bKash – the largest MFS provider in the country.

"The Eid festival, salary and bonus disbursement among garment workers, and disbursement of other stimulus packages announced by the government during the pandemic pushed the July transaction to the peak," he said, adding that there were no such transactions in August that caused the slump.

The Bangladesh Bank's data show salary disbursement through MFS declined by 77% to Tk1,063 crore in August from Tk4,586 crore in July.

Inward remittance which also contributed to increased MFS transactions in July ahead of Eid, slowed down in August.

The remittance disbursement through MFS fell by 38% to Tk104 crore in August from the previous month, the central bank's data show.

The Eid-ul-Adha was celebrated on 1 August.

"In the month following any Eid, transactions remain a little less than normal. And this is what is happening all the time and the MFS is no exception in this regard," said Tanvir A Mishuk, managing director of Nagad – the mobile financial service of the postal department.

He said, "In the month of July before Eid, there were large transactions in the field of salary, bonus, and other allowances. Naturally, that came down by a big margin in August.

"Moreover, government transactions were also very low during this time. Similarly, the rate of sending money by people living in urban areas to their relatives in the villages using mobile financial services was also higher in the previous month."

Even sacrificial animals were bought through Nagad in July, he continued, including all this, the figure of transactions was much higher in July.

He, however, hoped when the September report comes out, it will be seen that many things have become normal.

"In September, we launched many new facilities for customers. Moreover, at the beginning of October, the cash-out charge for Nagad customers was brought down to Tk9.99 for Tk1,000 cash-out for the first time in the country. As a result, the number of transactions through MFS will surly accelerate in October," he explained.

The government's move to only provide garment workers' salaries from the bailout package through the MFS providers provided a further boost to the platform.

Exporters received concessional loan facilities of Tk10,500 crore to pay workers' salaries during the pandemic situation.

Between April and July, the amount was disbursed as salaries for garment workers from the package.

At the end of August, the total number of registered MFS accounts stood at 9.3 crore. However, the number of active clients fell by 5% to 4 crore in August from 4.25 crore in July.

As per the existing rules, if an account does not make a transaction for 90 days it will be struck off from the list of the active accounts. However, the account holder will still be on the list of registered users.