Bangladesh on the way to becoming a major payments market

Bangladesh’s payment ecosystem is poised to become a very large, substantial payment market in the South Asia and Asia-Pacific region over the next few years, said Vikas Varma, Director of operating for South Asia at Mastercard.

“The signs of economic growth and prosperity, especially in urban areas, are very visible. I can see a lot of organization and the presence of a lot of new purchasing power in the country now.”

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Young people have always been very vibrant in Bangladesh, he said.

The emergence of large infrastructure, rising public spending and a stable government over the past 10 years have led to a continuum of very strong economic and social policies, which have allowed the economy to take a giant leap forward in terms of development, he said.

In the payment industry, where Mastercard operates, the effects are no less dramatic, Varma recently told the Daily Star in an interview.

Global trends are changing the way people pay and get paid and some naturally have a positive impact on Bangladesh. With smartphones and data, everyone connects and connects with others in many ways

He said Mastercard has been here in Bangladesh for over 31 years and the country office was established 9 years ago with local staff.

“We started with a few thousand cards and now we have millions.”

Over the years, Mastercard has introduced a wide variety of payment tools, including debit, credit, prepaid, SME, dual-currency and single-currency cards, he said.

“What I also see is a very dramatic and very significant opportunity for future growth.”

He said global trends are changing the way people pay and get paid and some are naturally having a positive impact on Bangladesh.

With smartphones and data, everyone connects and connects with others in many ways.

Smartphone and data penetration is also very high in Bangladesh and the quality of telecom infrastructure also appears to be good, he added.

“The benefits of connectivity, from Bangladesh as well as from the outside world, are very dramatic. It leads to real-time exchange of information, data, payment and commerce movements as well,” said Varma, who is responsible for business development management for the South Asia Division.

At the same time, consumers, as their lifestyles change, need to find safer and more convenient ways to pay, he said.

Consumers should have confidence in future payment solutions, he said.

“Innovation and finding a balance between safety, security and convenience are very important to us.”

He believes consumers want to feel safe and need to know how safe they will feel and how they can make payments online.

They must be educated to take care of certain do’s and don’ts such as not sharing passwords, not letting the mobile phone stray from their reach, and not handing cards to random people .

The risks to the ecosystem are also increasing every day, he said.

The good guys are advancing, but the bad guys aren’t far behind as there are hackers and people targeting phones with malware, he added.

Therefore, a lot of work needs to be done by ecosystem players like banks to ensure that the security of the entire transaction ecosystem is maintained, Varma said.

Over time, innovations will introduce new use cases and payment methods, but this will also require focused efforts on cybersecurity and customer knowledge on how to use the tools more securely.

Mastercard does not normally share its market data nationally.

The company has been doing business here in Bangladesh longer than other networks, especially with physical capacity, and Mastercard has built very strong relationships with financial institutions, banks and regulators, he said.

Varma said he believes Mastercard is very well positioned as a network to become a dominant player in the market.

He said Mastercard will primarily focus on growing the debit and prepaid segments, as the country has more than 110 million adults and not all of them are banked yet.

Promoting financial inclusion with regulators and other influencers in government will help the company win more debit and prepaid customers, he added.

According to him, another priority sector for Mastercard would be the SME sector, the backbone of Bangladesh’s economy, where 25% of its gross domestic product comes from.

“In general, SMEs are the least served from the perspective of the capacity of financial solutions. Thus, SMEs need more attention.”

There are some areas where banks can help SMEs run their businesses more efficiently and get capital and payments easily, he said.

E-commerce is another sector that needs more attention, progressive policy and investment from ecosystem players, he said.

He said Bangladesh has plenty of room for growth as only 10% of the eligible population currently owns a card, compared to one person owning at least one card in most other countries.

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