Materialising the dream of cashless society

AKM Rabiul Islam | Published: October 07, 2018 20:50:10 | Updated: October 11, 2018 21:20:47

Around the world, the use of cash has been steadily declining, and some experts predict that cash payments will fall by as much as 50 per cent over the next 10 years. Denmark, Sweden, and Thailand have passed laws that allow businesses to ban cash payments, and in some cases require payments by mobile applications or credit cards. Businesses in the United Kingdom are also jumping on board. In Seattle, Amazon recently introduced its "Just Walk Out" shopping experience; customers simply use the Amazon Go app to enter the store, take the products they want, and go!

Banning cash saves employee time and payroll costs by eliminating cash registers and visits to the bank. There is no need of guards for armoured cars.

In the last couple of decades, we were introduced to a new way to conduct business, without using cash or checks. Enter the Credit or Debit card. Convenient, and more secure than cash, the Credit or Debit card quickly gained acceptance with many. Most of the people already habituated with the modern digital communications systems, purchases may be made quickly and conveniently using credit or debit card. We can make purchases from almost any business in the world using a credit or debit card.

The popularity of credit and debit cards is a testimony to the fact that we are being habituated with the idea of virtual money. Electronic "money" is truly the most portable, secure, and convenient currency yet. The advent of "e-money" has brought us to the place where we are in the midst of a fundamental change in the way we pay for goods and services. We are very near the completion of a transformation from the old system of coins, paper notes and checks, to the new digital electronic cashless monetary system. We are witnessing the birth of a totally new economic system called Cashless Society.

Most of the people have become very comfortable with the new world of electronic commerce and are accustomed to frequent changes in the way we do business, including changes in the design of money. These changes may also serve another not so apparent purpose. These frequent changes in the appearance of money are being used to make us accustomed to the idea of currency being changed so we will be prepared to accept a change in the very nature of our currency. These changes are paving the way for acceptance of the cashless monetary system. While many are taking the next step in the transition voluntarily, the final step into the cashless system will not be voluntary but mandatory.

SWEDEN - THE FIRST CASHLESS SOCIETY: Eighty per cent of all transactions in Sweden are made by cards. Digital payments via card or apps are so widely accepted that many Swedes no longer carry cash. Even children pay with debit cards.

Ask a Swedish citizen, when he/she last paid for something in cash. The probable answer is last month or week. Digital payments via card or mobile apps are so common and trusted that many Swedes no longer carry cash. They even let their children pay with cards. The Swedish Trade Federation explains why.

CASHLESS INDIA: India's Prime Minister Narendra Modi said in New Delhi "Our dream is that there should be cashless society. This is correct that 100 per cent cashless society is never possible. But we can make a start with less-cash society - then cashless society will not be a far-off destination," Modi said in his monthly 'Mann Ki Baat' address, appealing to youth to teach 10 families daily on how they could do cashless transactions through mobile apps, mobile banking and debit/credit cards.

The Digital India programme is a flagship programme of the Government of India with a vision to transform the country into a digitally empowered society and knowledge economy. "Faceless, Paperless, Cashless" is one of professed role of Digital India.

BECKON FOR CASHLESS SOCIETY -- THE ROAD MAP OF DIGITAL BANGLADESH:  When we talk about the digital payment system in Bangladesh, we should not anyway forget the name of Dutch-Bangla Bank Limited (DBBL). It was eight years ago, when online schemes in Bangladesh were few and far between, that Dutch-Bangla Bank had the vision to set-up a digital payment system. DBBL ATM network makes more than 90 per cent of total ATM network. 

"We did it because we had the foresight that e-commerce and online transactions will flourish in the country and for that our payment system will act as the enabler," said Abul Kashem Md. Shirin, Managing Director and Chief Executive Officer of Dutch-Bangla Bank. At present, Dutch-Bangla has 1,500 merchants out of the total of 2,500 connected to its network. "The market is full of potential but somehow e-commerce vendors are not succeeding in winning the customers' trust fully," he said, adding that the status will change if global companies enter the fray.

At present, the country's e-commerce business is worth about Tk 20 billion a year and at best 25 per cent of the amount is transacted using either a bank's digital payment gateway or mobile financial service (MFS), said Syed Mohammad Kamal, country manager of MasterCard.

For greater usage, the government needs to give some incentive. "Without financial sector's digitisation, real digitisation will not be possible," said Kamal.

Most of the banks are trying hard to enter the digital currency movement by investing more money in established digital payment system. Some banks  have already started their operation through mobile apps.

bKash and DBBL Rocket are the lion shareholders of total individual financial transactions through mobile under MFS. In June 2017, there were some 17 providers but the two largest, bKash and Rocket, had a combined market share of over 99 per cent.  Their major areas are money transfer, mobile flexi load, small payment to the merchants. bKash and Rocket are the better substitute of transaction through banks. Their transactions help reduce counter transactions of banks. According to Better Than Cash Alliance, Bangladesh's total transactions through the digital channels is less than one per cent and only 2.5 per cent of individual payments and 3.0 per cent of business transactions are made digitally.

To uphold the slogan "Digital Bangladesh", e-Commerce Association of Bangladesh (e-CAB) is working restlessly for many years. Razib Ahmed, a director of the association, said they are still struggling to collect their payments. Ahmed said "If the banks take a lead, digital commerce will definitely flourish. This year their target is to expand their market up to Tk 30 billion".

Other than banks, some fintech startups are taking the initiative.

Take for instance, iPay, a mobile application-based payment system functions like Paypal, which operates a worldwide online payments system, and Paytm in India.

In lockstep with the national theme slogan of 'Digital Bangladesh', United Commercial Bank (UCB) launched Upay, a mobile app-based payment solution in 2017. UCB customers can use Upay to make payments for goods and services from physical and online merchants. They can also do mobile recharge, bill payment, money transfer, ticketing, inward remittance, insurance premium and so on. The mobile financial service platform is also coming in to good use in this mission for financial digitisation. For instance, in February transactions through the platform hit Tk 10.16 billion or Tk  1,016 crore.

The central bank is also taking different initiatives. For instance, the Bangladesh Bank (BB) has permitted online fund transfer of up to Tk 0.5 million.

As of December, last year, there were 16.4 million debit cards, 0.9 million credit cards and another 0.13 million prepaid cards in circulation, according to data from the BB.

SCOPE OF HIGHEST COVERAGE THROUGH MOBILE PHONE: The total number of mobile phone subscribers has reached to 150.28 million at the end of March, 2018 under the four mobile operators. About 83 per cent of total population of the country is using mobile phone. Digitisation of financial transactions, thus, depends, substantially, on suitable mobile apps. So, there is a huge scope and potential to make Bangladesh a Cashless Society by educating people in remote areas.

AKM Rabiul Islam is EVP and Head of NRB Commercial Bank Ltd Gulshan Branch.

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