Financial Inclusion Importance of Mobile Payment System Report

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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 indicate that a positive correlation exists between financial development and economic growth. Current development theories suggest that greater financial inclusion can have a positive impact on the lives of the poor.

Financial exclusion refers to the lack of access to financial services. It limits opportunities for employment and enterprise development and imposes a premium on the cost of basic services. Financial exclusion thus makes it difficult to reduce inequalities and alleviate poverty. Financial exclusion is a barrier to economic development. Financially excluded populations include marginal farmers, landless labors, unorganized enterprises, urban slum dwellers, migrants, 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 growth.

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 refers to a broader concept.

1.1.2 United Nations (2006), in its blue book titled “Building Inclusive Financial Sectors for Development”, defines financial inclusion as the “access to the range of 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 of 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.<href=”#_ftn2″ name=”_ftnref2″ title=””>[2]

1.1.5 Thus, the definitions of financial inclusion indicate that appropriate financial inclusion is 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 Various criteria to measure the status of financial inclusion

1.2.1 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 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. Demirgüc-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. The measurement of financial inclusion 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 comprehensive primary measure of financial inclusion is, 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.

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 of demographic penetration, 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.

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 deposit-GDP 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 62.86 billion at the end of June 2011 which was Taka 27.53 billion in June 2007. Total 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 Bangladesh<href=”#_ftn4″ name=”_ftnref4″ title=””>[4]

Year Adult Population (millions) Total population (millions) Population per bank branch (in number) Number of bank deposit A/Cs (millions) Deposit A/Cs as % of adult population Number of members in MFIs (millions) MFI members as % of adult population Number of members in cooperatives (millions) Cooperative members as

% of adult population

Financial inclusion as % of adult

Population

Financial inclusion as % of total

Population

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

73.16

75.16

77.18

79.59

80.80

82.25

83.80

84.60

87.08

89.62

92.24

94.50

111.46

111.46

123.15

129.25

133.40

135.20

137.00

138.80

140.60

142.40

144.20

146.10

18669

18347

19886

20753

21406

21443

21420

21171

20320

20566

19681

18947

27.30

28.40

30.10

30.90

31.30

31.60

33.10

34.50

35.70

37.60

38.97

48.68

37.32

37.79

39.00

38.82

38.73

38.42

39.50

40.78

42.02

43.83

42.25

51.51

14.63

14.40

18.82

22.89

20.83

23.53

24.90

24.94

18.11

17.51

22.46

26.95

24.52

24.36

26.99

26.39

7.65

7.67

7.57

7.76

7.92

8.03

8.22

8.44

8.64

8.81

9.91

9.64

9.37

9.43

9.45

9.45

9.68

9.84

9.37

9.32

66.21

65.36

71.41

77.33

74.36

77.63

78.61

87.23

40.10

39.76

43.68

47.13

46.05

48.86

50.28

56.42

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 tele-banking.

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 banking infrastructure: 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 High requirement of minimum balance: Many institutions have a minimum account balance 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 capital 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 applicable<href=”#_ftn5″ name=”_ftnref5″ title=””>[5].

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 owned by Orascom Telecom Ventures Limited (OTV); the ultimate parent company of the group is vimpel.com, the 6th largest mobile phone operator in the world. Banglalink- the second largest GSM mobile operator of Bangladesh, commenced its commercial operation in February 2005 . It has already surpassed the 25 million customer landmark within only seven years of operation. Banglalink entered the market with a vision of bringing mobile telephony to the masses. Accordingly banglalink strives to understand consumers’ needs best and provides reliable & affordable communication solutions that make a difference in people’s lives.
BRAC
BRAC is currently the world’s largest non-governmental development organization. BRAC is currently present in all 64 districts of Bangladesh, with over 8 million microfinance group members, 37,500 non-formal primary schools and more than 70,000 health volunteers. BRAC provides its massive footprint all over Bangladesh to bKash to deliver financial services at the vicinity of the beneficiaries.
Bill & Melinda Gates Foundation
Guided by the belief that every life has equal value, the Bill & Melinda Gates Foundation works to help all people lead healthy, productive lives. In developing countries, it focuses on improving people’s health with vaccines and other life-saving tools and giving them the chance to lift themselves out of hunger and extreme poverty. In the United States, it seeks to significantly improve education so that all young people have the opportunity to reach their full potential. Based in Seattle, Washington, the foundation is led by CEO Jeff Raikes and Co-chair William H. Gates Sr., under the direction of Bill and Melinda Gates and Warren Buffett.
Fundamo, a Visa company
Fundamo is a wholly owned subsidiary of Visa Inc. and a leading platform provider of mobile financial services for mobile network operators and financial institutions. Fundamo’s Enterprise Mobile Financial Services platform has been deployed in more than 40 countries across Africa, Asia, and the Middle East, offering mobile financial services for person-to-person payments, bill payments, wireless airtime top-up, and ticketing. Fundamo is headquartered in Cape Town, South Africa.
Grameenphone
Grameenphone is the leading telecommunications service provider in Bangladesh with more than 36 million subscribers (November 2011). It is a joint venture between Grameen Telecom Corporation and Telenor of Norway which has operations in 12 other countries. Grameenphone was the first company to introduce GSM technology in Bangladesh in 1997.
Robi
Robi Axiata Limited is a joint venture company between Axiata Group Berhad, Malaysia and NTT DOCOMO INC, Japan. It was formerly known as Telekom Malaysia International (Bangladesh) which commenced operations in Bangladesh in 1997 with the brand name AKTEL. On 28th March 2010, the service name was rebranded as ‘Robi’ and the company came to be known as Robi Axiata Limited. Robi has over 12 million users in Bangladesh.
ShoreBank International
ShoreBank International delivers a broad range of financial services to financial institutions and their funders globally, dedicated to expanding access to capital for small businesses, entrepreneurs and households. The international consulting firm SBI partners with bKash to provide services at a large scale that will allow low income people in Bangladesh access to Financial Services. SBI received a $10 million grant from Bill and Melinda Gates Foundation to support bKash<href=”#_ftn6″ name=”_ftnref6″ title=””>[6].

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 –

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 bKash Agent. To Cash Out from your bKash Account –
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 –
01. Go to your “bKash Mobile Menu” by dialing *247#
02. Go to “My bKash”
03. Choose “Activate ATM”
04. Enter a 5 digit new PIN. This PIN will be your “bKash ATM Cash Out PIN” and is better to be different than your “Mobile Menu PIN”
05. Enter the PIN again to confirm
You will see a confirmation message on your mobile that you have successfully activated the service.
ATM Cash Out Request Generation –
When the service activation is done, for each ATM Cash Out you will need to generate a “Security Code”. Here is how you do it-
01. Dial *247# to access “bKash Mobile Menu”
02. Choose “Cash Out”
03. Choose “From ATM”
04. 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 hour and can be used only once.
Withdraw Cash from ATM –
To withdraw cash from any bKash enabled BRAC Bank ATM, follow the steps below –
01. Press the “bKash Cash Out” button at the left-bottom corner of the ATM Screen
02. Select your language
03. Enter your bKash Account Number
04. Enter the amount you want to Cash Out (Minimum BDT 2,000 to Maximum BDT 20,000)
05. Enter the “Security Code” you received through SMS
06. Enter “bKash ATM Cash Out PIN”
07. Check the information you entered and confirm
08. Collect your cash and receipt
You will receive a confirmation message in your mobile with the details of the ATM Cash Out transaction.

4.9. Tariff

Service Charges
Registration No charge applicable
Cash In No charge applicable
Send Money (individual) Tk. 2.00 (for any amount)
Cash Out from Agent 1.85% of Cash Out amount
Cash Out from ATM 2% of Cash Out amount
Payment (merchant) No charge applicable
Transaction Limits
Transaction Type Minimum Amount

per transaction (Tk.)

Maximum Amount

per transaction (Tk.)

Maximum Amount

per day (Tk.)

Maximum Amount

per month (Tk.)

Cash In 50 125,000 125,000 250,000
Send Money 10 10,000 10,000 25,000
Cash Out from Agent 50 125,000 125,000 250,000
Cash Out from ATM 2,000 20,000 125,000 250,000
Payment * NA NA 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 steps-
01. 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 included i.e. there is no “+88”.

• Recipient’s bKash account number is correct.

• The number has been written clearly & correctly in the correct field.

• 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

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, go to your nearby bKash Agent along with 2 copies of Passport size photographs, a copy of your Photo ID (National ID/Passport/Driving License) and

your mobile phone (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 Per Transaction Amounts Maximum Transaction Amounts
International Remittance Minimum Maximum Per Day Per Month
BDT 50 BDT 125,000 BDT 125,000 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.

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 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

  1. you will receive a pin number through sms*
  2. 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

  1. Receive your money from the retailer
  2. 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

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

  1. you will receive a pin number through sms*
  2. 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

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

  1. dial *777#
  2. press the reply button & enter pin and press the send button
  3. from the main menu select the mobile remittance option by presing the reply button and type 6 and press the send button
  4. press the reply button, type 1 and press the send button to select western union
  5. press the reply button, type 1 and press the send button to pick up money
  6. 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
  7. 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.
  8. 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).
  1. dial *777#
  2. press the reply button & enter pin and press the send button
  3. from the main menu select the mobile remittance option by pressing the reply button and type 6 and press the send button
  4. press the reply button, type 1 and press the send button to select western union
  5. press the reply button, type 2 and press the send button for transaction enquiry
  6. 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
  7. you will be asked to enter the senders first name. press the reply button, type the senders first name and press the send button
  8. you will be asked to enter the senders last name. press the reply button, type the senders last name and press the send button
  9. the screen will ask you for confirmation. press the reply button, type 1 and press the send button
  10. 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

  1. receive your money from the retailer
  2. a. retailer will sign the money encashment form in front of youb. 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

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