More than 32 million people, mostly unbanked and living in rural areas, are making formal transactions through mobile financial services (MFS) or, what we call, in general, mobile banking. They are charged around 1.85 per cent for each transactions. This amounts to around Tk 20 for every transaction of Tk 1000. Under the current rate, clients are paying a disproportionate amount of money to the service providers.
Take the case of Fatema Khatun, who works in a garment at Gazipur. Every month, she sends her mother an amount of Tk 5,000 through MFS services and pays Tk 92.50 for cash-out purpose.
She questions herself, why does she pay such a high amount for the money transfer? Mobile network is the main ingredient of the MFS service through which she transfers money. Then why do a service by the MFS providers that requires a maximum rate of Tk 4.0, involving three different steps -- person-to-person, cash-in and cash-out -- using the telecom resources and entail ultimately a charge of Tk 92.50 for her?
As a mobile phone user, Fatima may not be aware that an SMS costs her Tk.20 and a USSD (Unstructured Supplementary Service Data) session costs, at best, Tk 1.5. This, in total, translates into Tk 1.70. USSD run-structured supplementary serial data is a telecom resource and pretty similar to voice service pricing.
MFS service-takers in Bangladesh face a number of challenges. The MFS charging process here lacks transparency. We don't know why we are paying such exorbitant amounts of money as service charges. Are we having transparency in terms of resource use and relevant charging? Transfer of any amount of money whether Tk 100 or Tk 10,000 uses the same resources, at least for telecom. Then why is the service charge applied, based on the value of the transaction in the case of cash-out? It should be a fixed amount consisting of the cost components and margin of the service providers.
Then, as consumers we don't know the rationality of the service charge. For instance, when we earlier used to sending money through courier services, they charged Tk 20 for per Tk 1,000 transfer. That service included the freight charge, human labour involved, etc. The same service has now been replaced by mobile phone-based USSD service. The telecom resource that is being used for this particular MFS service, is similar to other telecom utility services. This should particularly be clearly made known to the customers so that they can get a clear picture about the pricing method.
Telecom industry is the most expensive in nature since the relevant companies have to spend billions of dollars to build the network. It is the Mobile Network Operators (MNOs) who have furnished the much-required technology infrastructure through such high investments. This is functioning as the main enabling channel for providing a range of services to the previously unserved poor segments of the population. If the MNOs can provide the service within the range of Tk 1.0 - Tk 2.0 per session, why are then the mobile financial services, meant for such segments of the population, so expensive?
Furthermore, if we look at the same kinds of services around some other countries, what do we find? In India, Airtel money charges 0.65 per cent for cash-out. In African countries including Kenya, Tanzania and Zimbabwe, the rate is applicable to different slabs -- the higher the amount, the lower is the service charge; that is a regressive rate. In both cases, the cash-in is free. Those countries clearly mention the pricing of USSD or telecom resource as well. For example, the Indians pay Tk 0.65 for a session that goes up to a maximum of 90 seconds.
Our national goal of ensuring financial inclusion has got a push through MFS. But the hard fact remains that there are only 10 per cent active mobile walled users and the rest of the transactions are carried out over-the-counter through agents. This makes it clear why a vast segment of unbanked population is still deprived of the positive benefits of MFS.
Then again, why do we, in Bangladesh, pay around 2.0 per cent as service charge in total? If we take into consideration the variable costs of operation (including USSD price), MFS rates in Bangladesh are not rational. Appropriate tariff modelling is necessary for both the growth of MFS and financial inclusion of the poor segments of the population.
The service providers and regulators should make public announcement about the pricing modality of both MFS and relevant telecom service usage. Bangladesh Telecommunications Regulatory Commission (BTRC) should clearly spell out its position on pricing for each of the telecom sessions. Bangladesh Bank should also clarify or set or define the pricing mechanism.
The writer is Secretary General, AMTOB and a technology and socio-economic analyst.
