MFS platform is seeing a drop in active users of late

The number of active users of mobile financial services platform dropped to its lowest in 2020 in November, in what can be viewed as a worrying development for the highly promising platform.

At the end of November, of the 9.8 crore registered accounts, about 3.8 crore had made a transaction over the previous 90 days, according to data from the Bangladesh Bank.

“This is worrying,” said Tanvir Ahmed Mishuk, managing director of Nagad, the MFS arm of the Bangladesh Post Office.

The decline comes at a time when another new MFS player just stepped into the ring: Trust Axiata Pay (TAP), a venture of Trust Bank and Malaysian telecommunications conglomerate Axiata Group that began its journey last month.

Trust Bank holds 51 per cent stake and Axiata the remaining 49 per cent in TAP, whose main focus would be wallet-based services.

The active customer number had hit a high in July, when it stood at 4.3 crore.

The spike could be because of the need to pay for coronavirus tests with government institutions with MFS, according to Mishuk.

“There was no scope to pay with cash, so many people dusted off their MFS accounts or opened one.”

He went on to state the high charge for taking out cash from the platform for people shying away from the mode of digital payment.

Recently, Nagad has brought down the cash-out charge to Tk 11.49 including the value-added tax for every Tk 1,000 withdrawn.

The other MFS providers’ customers have to pay Tk 18.5 for every Tk 1,000 withdrawn.

People are using the platform more and more, which is a good sign, according to Kamal Quadir, chief executive officer of bKash, the leading MFS player.

In November, person-to-person (P2P) transfers on the platformsurpassed the Tk 16,000 crore-mark for the second straight month. It stood at Tk 16,108.8 crore, accounting for the second-biggest share of the total transactions made during the month.

November’s P2P transfers were an increase of 63.5 per cent from a year earlier.

Deposits accounted for the biggest share of MFS transactions in November: Tk 16,353 crore, the second-highest amount after July, which was a record-setting month for the platform by all accounts.

While the platform has always been popular among the unbanked population for sending and receiving money, it has turned out to be particularly handy in making payment at a point-of-sale terminal, salary disbursement and utility bill payment during the pandemic.

In November, merchant payment through the channel stood at Tk 1,879.2 crore -- the highest yet. It hovered below Tk 600 crore until June, when the economy was reopened. 

The platform, which allows contactless payment by way of QR code, then particularly became convenient to make payment at POS terminals in the time of coronavirus, which lingers on surfaces for hours. 

From July, merchant payment through MFS has been exceeding the Tk 1,000 crore-mark.

“It demonstrates that customers are increasingly doing less cash-out transactions. This helps in capturing multiple benefits for customers,” Quadir said.

One, customers avoid cash-out cost; two, customers find convenience in not carrying cash to enhance security; three, during a pandemic, customers act intelligently by avoiding to use cash. 

“The more customers capture the values of digital transactions, the better it is for all,” he added.

In November, Tk 14,826.2 crore was withdrawn through the platform.

Merchant payment holds much potential for the platform, according to Mishuk.

“It is still very much limited to Dhaka and Chittagong, whereas there is a much bigger customer base outside of the two cities.” 

The majority of the MFS users in Bangladesh still use a feature phone and the merchant payment by way of QR code can only be done by those who have a smartphone, Mishuk added. 

About Tk 2,023.6 crore of salary was disbursed by way of MFS during the month, which is more than double that from a year earlier and an increase of about 5.5 per cent from the previous month.

Utility bill payment transactions amounted to Tk 831.4 crore in November, up 78.6 per cent from a year earlier.

In total, Tk 53,598.3 crore was transacted through the platform in November, which is the second-highest amount in the platform’s nearly decade-long history. On an average, Tk 1,786.6 crore was transacted in a day, again the second-highest yet.

Some 14.2 lakh accounts were opened to take the tally to 9.8 crore -- the highest yet.