Mohammad Polash, an owner of a food cart in Mohammadpur’s Town Hall market, opened a micro-merchant account with bKash a month ago.

The largest mobile financial service provider in Bangladesh linked a quick response (QR) code with the micro-merchant, or personal retail account (PRA), of Polash.

He sells burgers worth Tk 10,000 a day on an average. Of the amount, customers pay between Tk 1,000 and Tk 2,000 using the QR code, a type of barcode that stores information and can easily be read by smartphones.

Payment through the digital platform is on the rise and a majority of clients are students.

The benefit of the technological transformation taking place in Bangladesh does not end there, as Polash can purchase food ingredients from suppliers digitally as well.

Many street vendors and the owners of small grocery shops like him now prefer digital transactions, which were only available at shopping malls in big cities until recently. Now, it is visible everywhere from urban to rural markets.

A micro business is allowed to accept a maximum payment of Tk 30,000 per day and Tk 5 lakh per month.

Users of mobile financial services, digital payment services and debit and credit card-holders of banks all can make payments digitally using phones.

The move is expected to reduce the use of cash to a large extent and pave the way for a cashless society in Bangladesh, which is reliant on cash.

The PRA-holders of bKash received payments worth Tk 15.37 crore in November. They used Tk 12.36 lakh to purchase goods under the same payment method.

LENDERS GEARING UP FOR DIGITAL TRANSACTIONS

Ali Ahmmed, chief commercial officer of bKash, says that the MFS provider is working to onboard thousands of merchants and incentivising customers to adopt the new service.

It has 26,217 micro-merchants as of November.

Mutual Trust Bank (MTB) has opened 5,000 micro-merchant accounts to serve marginalised businesses.

The bank plans to open one lakh PRAs and bring the businesses of three large kitchen markets in the capital under its programme, said Syed Mahbubur Rahman, managing director of the bank.

Account-holders of any bank with Visa debit card can now make payments through the QR code employed by MTB.

Bank Asia, one of the pioneers in the field, has achieved tremendous success by opening more than 51,000 PRAs.

“We have focused on small businesses in the rural areas,” said Md Arfan Ali, managing director of the bank. The bank has set a target to open 2.5 lakh micro-merchant accounts in the rural areas within five years.

Dutch-Bangla Bank Ltd, which owns MFS brand Rocket as well, has taken initiatives to make its digital programme vibrant. It opened 1,350 accounts as of December, said Managing Director Abul Kashem Md Shirin.

Trust Axiata Pay, a MFS provider jointly set up by Trust Bank and Malaysia’s Axiata Digital Services, has started to open PRAs.

It initiated a pilot programme by enlisting 300 rickshaw-pullers on January 8, which will continue this month.

Dewan Nazmul Hasan, acting chief executive officer of the MFS provider, said that it had started the project with the vision of digital financial inclusion for unbanked micro-merchants.

BEYOND CASH-IN, CASH-OUT

Street vendors can now secure loans from banks by presenting their transaction profile of PRAs.

A micro-merchant is allowed to take a maximum of Tk 5 lakh in loans under a central bank refinance scheme.

Businesses usually have to submit trade licences and tax certificates to open a merchant and current account. But, the central bank has allowed clients to open PRAs without submitting any trade licence or tax certificate.

Banks verify the transaction profile of a micro-merchant to assess credit-worthiness and set limit. No current account is needed to manage loans.

The central bank has, however, imposed a ceiling on the financial transactions through PRAs. The monthly outstanding balance can’t cross Tk 10 lakh.

Clients can open accounts by filling up a simplified electronic know your customer (e-KYC) form, using national identification cards. Such accounts can be opened in five minutes.

Mutual Trust Bank has already started to disburse loans among micro-merchants, said Khalid Hossain, head of digital banking.

Forty-four small businesses have so far taken loans and the number will go up to 10,000 by this year, he said.

The micro-merchants of Bank Asia disbursed around Tk 500 crore of government subsidies among the beneficiaries last year.

“This has helped the people withdraw funds at their doorstep,” Arfan Ali said.

On top of that, clients purchased products to the tune of Tk 10 crore from the micro-merchants last year. They also topped up Tk 3.38 crore to recharge mobile phones, he said.

Bangladesh has made impressive gains in expanding mobile financial service in recent years.

There are 10.97 crore MFS users as of November, according to the central bank data. About Tk 67,966 crore were channeled through the accounts in the month. Merchant payments stood at Tk 3,050 crore.

Transactions through micro-merchant accounts are expected to explode further when the “Bangla QR” code is used widely.

Micro-merchant account-holders of banks and MFS providers are now using their respective QR code, which is not interoperable.

The uniform digital payment method – Bangla QR – will help clients pay bills and purchase goods and services through any mobile banking applications, MFS providers or payment service providers, said a BB official.

“We believe the scope of MFS is far beyond cash-in or cash-out. We want to reach every corner of Bangladesh where our customers can carry out every small transaction through Tap,” said Dewan Nazmul Hasan.