Money transfer by mobile

The electronic transaction project will take off in six months

Money transfer is about to go digital in six months, as Bangladesh Bank has approved the launch of an electronic prepaid card system that will have a mobile payment option.

The central bank permitted Trust Bank Ltd to act as a settlement bank for digital money transfer.
“The Electronic Prepaid Card System will be a multiple bank, multiple channel platform, where Trust Bank will act as the settlement bank,” BB said in a recent notice.

With the card, a customer will be able to deposit and withdraw cash directly from ATMs and all other channels. A card will have a secret PIN to access the service. Also, the system allows an authorised user to transact by mobile.

In case of foreign remittance, any amount could be withdrawn by prepaid card, but the amount is limited to a maximum of Tk 10,000 for now, Bangladesh Bank officials said.

In line with the central bank directive, any bank having Q-cash or a similar platform can issue prepaid cards for customers to transact money. Presently, 23 banks are linked with the Q-cash network.

Besides the prepaid card system, Eastern Bank received approval to handle international and domestic remittance transfers. Dhaka Bank is allowed to disburse foreign remittance through mobile operator Banglalink’s outlets.

Neither of the new systems allows cross-border money transfer.

Industry insiders said people would be able to easily transfer money to their loved ones at a fifth of the cost under the present system.

According to BB statistics, remittance inflows soared by 30 percent from $721.92 million in August 2008 to $937.91 million in August 2009 -- a contribution of 60 lakh Bangladeshis living in parts of the world.

In a letter on September 1, the central bank approved Trust Bank to introduce the Digital Money Prepaid Card System with mobile payment facilities within the next six months, in association with Digital Technologies Ltd and Information Technology Consultant Ltd.

Under the digital money transfer system, intra- and inter-bank account-to-account transfers, transactions at ATMs through Q-cash and other similar platforms will be settled.

A digital wallet is an electronic prepaid card with mobile banking (M-banking) that utilises the ATM (automated teller machine) and all kinds of electronic communication technologies, including mobile phone.

To obtain the digital prepaid card, customers will have to fill out an application form at banks or agents.

The bank will verify the customer under its ‘know your customer’ (KYC) process to issue a digital money prepaid card.

The customer’s information must match the information with the bank and the information he or she provided to telecom companies, through host-to-host connectivity.

The Q-cash host will tag the cardholder’s cellphone upon getting confirmation from the telecom host, and then the customer will be notified immediately upon successful digital money tagging.

Since the customer owns the card, he or she can transfer money and carry out transactions at a point of service (POS) at bank-approved merchant stores and service points, like gas stations, hospitals and cinema halls.

In the case of person to business payments, like utility bills, insurance premiums, loan instalments, E-top-up for mobile phones, and e-ticketing, the prepaid card will be used.

In the case of government to person payments, like agriculture subsidies, widow allowances, freedom fighters allowances, payment will be transferred through the card.

Trust Bank will have to submit contract agreements between its partners before launching the project. The pay points must be accredited by Trust Bank under an approved accreditation policy and the bank shall undertake all responsibilities of pay points.

Trust Bank will be responsible for mitigating of all kind of risks, including credit risks, liquidity risks, operational risks, fraud risks and technical risks associated with the digital money system.

Kazi Saifuddin Munir, managing director of Information Technology (IT) Consultants Ltd, said, “We are ready to initiate the prepaid card system for money transferring by December on a pilot basis.”

IT Consultants Ltd, the lone payment service operator in Bangladesh providing the Q-Cash inter-bank switching platform and connectivity, thinks that if all the banks come under a single network, remittance or any other transaction would be easier.

Munir said through a designated short mobile code number, a customer can transact money. However all transactions would be settled through the banking channel.

“The mobile application will be used to just enter the system,” he said. Banking and mobile application systems will be merged in a sense to settle the transaction.

As per the central bank notification, Eastern Bank Ltd (EBL) will conduct both international and domestic remittance by introducing three products—EBL Smart Remit Card, Smart Cash Point and Smart m-wallet.

The EBL Smart Remit Card will be a card based payment system, where senders can send money to receivers prepaid VISA card and the cash can be withdrawn using any VISA, ATM or point of service, at any appointed merchant.

EBL has not been approved transferring money from one m-wallet to another m-wallet holder.
Dhaka Bank Ltd has been approved to use Banglalink outlets for disbursement of foreign remittance. Under the approval, the bank can disburse foreign remittance through designated Banglalink outlets, which must be approved by the bank’s board.

In the remittance disbursement process, EBL and Dhaka Bank accredited cash points will be used only for delivery in local currency for inward remittance credited in Nostro accounts of the banks and not for any other inland or cross border transfer.

Source: The Daily Star, October 06, 2009