Bangla QR – cashless payment made easy for small traders

Infograph: TBS

Has it ever happened to you that you have had fuchka at a food cart at a tourist spot only to discover you forgot your bag or wallet? Or you took a rickshaw ride home but you have a Tk500 or Tk1,000 note and the paddler does not have change for it?

It is hard to find anyone who has not landed in an odd situation like this sometimes. Well, worry no more, the Bangladesh Bank has initiated a Bangla QR payment system to offer you a safe and affordable solution.

Vendors can easily avail a Bangla QR unique code if they have a bank account or a mobile financial service (MFS) personal retail account.

They do not even have to have a smartphone to accept payments through this mode of transactions but customers need to have a compatible MFS application or bank app installed on their smartphone with an Internet connection to make a payment.

A QR (Quick Response) code is a type of matrix barcode. It is a machine-readable optical label that contains information about the item to which it is attached,

To speed up the countries' financial inclusion, the central bank's Payment Systems Department has recently come up with this interoperable "scan to pay" initiative. 

This alternative to expensive Point of Sales (POS) devices, the payment acceptance solution focuses on bringing more micro-merchants under the digital payment ecosystem, with a view to advancing the nation's progress towards becoming a "less cash society".

Md Serajul Islam, executive director and spokesperson at the Bangladesh Bank, told The Business Standard, "It will strengthen digital business presence in the micro-merchant arena, where most sellers are out of the formal banking system. We are trying to accommodate them in the formal channel through this initiative."

"We are working not only on the payment system but also on easing other banking activities through digital services countrywide and are also looking forward to the comprehensive development of financial inclusion at the rural level," he added.

The Bangladesh Bank strictly advised Bangla QR adopters to make sure that the cost of Merchant Discount Rate (MDR) shall not be passed on to customers. 

The MDR is charged to a merchant for the payment processing transactions through credit and debit cards and MFS. 

Fees and charges for transactions processed through Bangladesh Bank's network will be as per its directives, while the fees for other processors will be based on their policy. 

However, processors are encouraged to reshuffle their fee structure in line with the fees of Bangladesh Bank's network as much as possible, which is still under negotiation. 

Infograph: TBS

Chairperson of SME foundation Prof Dr Md Masudur Rahman told TBS, "If this system is realised, our financial ecosystem will benefit a lot. But for this, stakeholders such as banks and MFS service providers have to come up with initial investments to popularise the code-based payment method."

The regulator should also oversee it regularly to ensure security of such micro-level vendors' money, he said, adding that banks can also initially relieve merchants of processing charges to attract them to the digital payment system. 

Earlier, on 6 January this year, the central bank published guidelines on Bangla QR for building a safe, affordable, and efficient payment and settlement system at the retail level.

According to the guidelines, an individual can transact up to Tk20,000 daily in case of static Bangla QR based transactions. 

Merchants will be able to accept funds by using this method from various payment instruments, including all types of cards and bank, MFS and e-wallet accounts.

Central bank sources said all banks and MFS providers will be under the transaction channel and 8-10 financial institutions, which will facilitate QR payments from its customers' accounts, are already working on issuing Bangla QR, while another 4-5 institutions are acquiring merchant accounts.

Islami Bank Bangladesh Limited and Pubali Bank Limited have already completed piloting Bangla QR usability. Mutual Trust Bank Limited and Eastern Bank limited have also incorporated Bangla QR in skybanking apps.

Managing Director and CEO of Pubali Bank Limited Safiul Alam Khan Chowdhury said, "We are thrilled to collaborate with the Bangladesh Bank on this revolutionary initiative."

Shamsuddin Haider Dalim, head of Corporate Communications at bKash, said, "bKash has already deployed QR code for customer convenience. Now, we are working on the feasibility of technological integration to bring commonality with Bangla QR code for the convenience of our customers." 

SSLCOMMERZ, a payment gateway aggregator, is working to acquire merchant accounts for Bangla QR in collaboration with banks and card network partners after taking approval from the central bank. SSL has already acquired more than 50,000 merchant accounts.   

At a virtual programme held recently, SSLCOMMERZ Managing Director Sayeeful Islam said, "The QR payment service will directly benefit millions of small and medium entrepreneurs, suppliers, distributors, and factory owners from all across the country. We hope to turn this dream into reality, not just in Dhaka but across the entire country very soon."

Mastercard Bangladesh is also giving access to Bangla QR to make payments in collaboration with banks such as Mutual Trust Bank Limited.  

At a virtual launching ceremony held recently, Syed Mohammad Kamal, country manager of Mastercard Bangladesh, said, "Mastercard will continue to introduce technology-driven solutions and simple, smart and secure contactless payment options. We would like to incorporate this service for foreign Mastercard holders in the future."

Experts said it would be tough to convince a micro-merchant to open an account with Bangla QR access. This is because, they said, they are not used to such activities. Many of them are also apprehensive of the taxation regime under formal banking channels.

It is also very important to ensure merchants that they will get other banking facilities, such as loans, in the future if they register for Bangla QR, they added. 

In this connection, BB spokesperson Md Serajul Islam said the banking system will offer more exclusive products in the future. Time will determine whether micro-merchants will get a loan opportunity against Bangla QR or not.  

However, stakeholders are also expecting a positive impression from small vendors as most people in the country have smartphones.

People are also preferring contactless digital payment modes during the pandemic where Bangla QR can be a game-changer in the country's digital transaction system.  

Endra Mohan Sutradhar, deputy general manager and head of Software Development Division at Pubali Bank Limited, said, "Technologically, the method is almost free of complexity and customers can access it through the app easily. So no need to carry cards in the future." 

If the code-based payment is accepted by all, it will reduce banking costs to a great extent, he added.

"We have initially incorporated this system into our PIbanking app and are looking forward to working in a greater aspect within two weeks or more," he also said.

The BB guidelines on Bangla QR mentioned that some banks, payment schemes, MFSs, PSPs, and PSOs have already prepared their own standards and infrastructures for facilitating closed-loop QR code-based payments. This, however, has increased inefficiency in the overall payment systems. 

In this backdrop, the Bangladesh Bank in consultation with the stakeholders has developed a National QR Code Standard for Bangla QR for open-loop interoperable QR code-based payments. 

The central bank also instructed those who have already introduced proprietary standard QR code to replace it with Bangla QR by 31 December 2021.

In this connection, a central bank official said acquiring of merchant accounts by banks and MFS providers has just started in August after the pandemic-led delay. So, we are now not thinking about the deadline and we are in progress. Hopefully, banks and MFSs will move fast to adopt Bangla QR.   

There is no official data on the number of micro merchants in Bangladesh. The last time a survey was carried out was back in 2013 when the number of small ventures, excluding cottage and micro enterprises, was 79 lakh. However, people related to this sector say the number is more than one crore.