Demands a consumer association
A consumer association on Saturday urged the Bangladesh Bank to introduce the significant market power (SMP) policy in the mobile financial service industry, following the lead of the telecom regulator that had slapped Grameenphone with the title, with the view to enhancing competition in the market.
Although the exact figures of the market share of the four main MFS players are not available, it is believed that bKash, the pioneer in this the industry, leads by quite some margin, according to industry insiders.
“The telecom regulator has already introduced the SMP policy to control the market-dominating mobile phone carrier,” said Mohiuddin Ahmed, president of the Bangladesh Mobile Phone Consumers Association (BMPCA), in a discussion styled ‘Fixing logical charge on mobile banking, charge-free interoperability and users' security’ at the Dhaka Reports Unity.
In February last year, the Bangladesh Telecommunication Regulatory Commission declared Grameenphone, which holds about 45 per cent share of the subscriber base and more than 50 per cent revenue share, an SMP, and as part of the process, slapped three restrictions on the operator in July this year.
“We think with that decision competition in the telecom market has been enhanced and a balance has been created. But in the MFS segment, a single operator is controlling about 70 per cent of the market in terms of customers and about 85 per cent in terms of revenue. Then why is the Bangladesh Bank not imposing an SMP on that player?”
Ahmed also called for a slash in the cash-out charge, which is the rate that operators charge consumers for converting their balance into cash, lowering of the value-added tax to 5 per cent from 15 per cent, ensuring cost-free interoperability facility and improving the security of all kinds of transaction.
MFS has been introduced in the country a decade ago and has increased in popularity by leaps and bounds but the withdrawal charge remains the same at Tk 18.50 for every Tk 1,000. In practice, the agents charge the customers Tk 20 for every thousand taka withdrawn.
He went on cite Nagad, a financial arm of the Bangladesh Post Office, as an example. The new entrant to the industry has reduced the charge to Tk 9.99 recently.
“If the state-owned venture can reduce the cash-out charge drastically then why can’t the banking regulator take initiative to reduce the cost for this service?” Ahmed questioned.
If Nagad could do it, the other can too, said Subrata Roy Maitra, vice-chairman of the BTRC.
“Nagad has opened everyone’s eyes when it comes to cash-out charge.”
Maitra went on to recommend the central bank to go for cost-modelling for fixing any charge.
Thanks to the higher charges some of the MFS carriers are earning hundreds of crores of taka every year, said Mohammad Azizur Rahman Siddiqui, a director of the BTRC.
A lower cash-out charge would be beneficial to the poor, who mostly use the platform to send money back to their villages, said Sayema Haque Bidisha, a professor of the Department of Economics at Dhaka University.
She went on to urge the BB to sit with all stakeholders and fix a rational withdrawal charge.
“To enhance competition, the Bangladesh Bank needs to take a measure to enact the SMP,” said Khaled Mahmood, an associate professor at the Institute of Business Administration.
Last month, the central bank announced introducing interoperability among the MFS players and banks, a long pending demand of the industry.
But the BB had fixed a huge charge for the facility, much to the criticism of stakeholders. This promoted the BB to put the planned roll-out on hold.
BMPCA President Ahmed said: “As there is no charge for interoperable banking transactions, then why should there be an unbearable charge for MFS carriers?”
He urged for ensuring interoperability without any charge. Otherwise, it will increase the costs for using MFS and that will help the largest operator to grow even more.
Speakers also raised concern about the security and the fraudulent activities on the platform and said the carriers and the regulator need to take action to crack down on the miscreants.
Transactions through the MFS platform soared 38.6 per cent year-on-year to Tk 49,121.1 crore in September, which is the second-highest yet.