The Bangladesh Bank’s Taka Pay card expected to cut loss by 6%
Source：The Financial Express
From：Taiwan Trade Center, Dhaka
Update Time：2023/11/06
The Bangladesh Bank is going to launch a national debit card called Taka Pay on November 1st that is expected to reduce currency conversion loss by 6% and can be used to make purchases within the country.
The initiative is aimed at reducing the dependence on foreign card and payment companies as well as the pressure on foreign exchange reserves.
Taka Pay will be initially piloted in collaboration with eight banks – BRAC Bank, United Commercial Bank, City Bank, Sonali Bank, Eastern Bank, Islami Bank Bangladesh, Dutch-Bangla Bank, and Mutual Trust Bank.
Sources at the central bank said Taka Pay would initially be launched for domestic use while transactions in Indian rupee and other currencies would be available later. At present, most local banks offer debit and credit card and payment services via foreign companies, such as Visa, American Express, and Mastercard.
Spokesperson for the Bangladesh Bank Md Mezbaul Haque told the Daily Sun the process of introducing Indian rupee transactions in Taka Pay is going on.
“One is entitled to carry $12,000 while travelling to India. By using Taka Pay, he can make purchases in rupee and does not have to incur the currency conversion loss. The card will reduce currency conversion loss by 6%,” said Mezbaul, also the executive director of the central bank.
Sources at the Bangladesh Bank said two committees headed by the central bank governor have been formed for launching Taka Pay. The card can be used in ATM booths of all banks and also point of sale (POS) machines.
Selim RF Hussain, chairman of the Association of Bankers Bangladesh and managing director of BRAC Bank, told the Daily Sun, “We will not get any big benefits right now, but it will reduce customer fees in the future.”
He said Visa and Mastercard services come with very high fees, which affects clients. “Therefore, if the Bangladesh Bank can start this service, the costs borne by clients will decrease.”
Selim said such a service was launched in India 14 years ago. He further said it would take time for the service to become fully established in Bangladesh but it is a good initiative nonetheless.
“Now we have to pay fees to international payment platforms for settling transactions. As a result, a large amount of foreign currency goes to them. If we can introduce a local card, foreign currency could be saved,” he added.
Benefits
Officials of the eight banks that will initially pilot the card said various features, including dual currency use, will be offered to clients.
Commercial banks will encourage their clients to use the card. The card will work as an alternative to the ones that depend on foreign payment processing systems.
This will give the card holders a competitive advantage. At present, clients must accept the rules of international card and payment companies due to lack of alternatives.
Banks in Bangladesh have to pay overseas card and payment companies huge fees to avail their services. It is the clients who ultimately bear this cost as annual card charges.
Currently, banks offer various categories of debit cards, such as classic, platinum, signature (regular), and signature priority. These cards come with different annual charges. Tk500-600 is charged for classic cards, Tk700-800 for platinum, Tk800-900 for signature (regular), and Tk1,000-1,500 for signature priority. Bankers believe launching Taka Pay will reduce banks’ operation costs as well as clients’ card fees.
To implement the initiative, Paris-based global consultancy firm Fime signed a six-year partnership with the Bangladesh Bank. To prepare the card, they will provide consulting and testing services as well as set up a certification body framework.
To provide essential customer services, including handling and settling debit and credit card transactions, banks in Bangladesh currently rely on international card and payment companies, such as Amex, Visa, Mastercard, JCB, Discover, and UnionPay.
Currently, India’s RuPay, Pakistan's PaPak, Sri Lanka’s LankaPay, and Saudi Arabia’s Mada are national card and payment systems.
Drawbacks
Bankers say the risk of digital fraud is ever-present. Until clients are properly educated or habituated, there will be some issues.
For example, they might fall prey to fraud or lose interest in using it due to ignorance. There is also the risk of more sophisticated frauds, such as card cloning.
Source: https://www.daily-sun.com/printversion/details/719445