MOBILE WALLET FUTURE IN BANGLADESH

PREPARED BYHASIBUR RAHMANMOBILE COMMERCE, CITYCELL

WHAT IS MOBILE WALLETMobile wallets are essentially digital versions of traditional wallets that someone would carry in their pocket. While there are many variations, usually they can hold digital information about credit and debit cards for making payments, store coupons and loyalty programs, specific information about personal identity and more.

Many Mobile wallets offer convenience and rewards

A customer can utilize all of their stored information simply by opening an app on their phone, entering in a PIN, password or fingerprint and then selecting the information they need to access. The app then utilizes information transfer technology such as Near-Field Communications (NFC) to interact with a mobile wallet ready payment terminals.

Steps Download the mobile wallet app (or it may be already built into

your mobile device). Add your credit card or debit card information to the mobile

wallet. When you check out at participating merchants, access the

mobile wallet and choose your card. If you’re making an in-store purchase, just hold your mobile device at the terminal.

HOW MOBILE WALLET WORK

BENEFITS OF MOBILE WALLETIncreased customer use of mobile wallet technology has benefits for businesses of all sizes.

Reduced fraud - mobile wallets are harder to steal or duplicate than cards or cash

Decreased payment time - especially important for high-volume businesses

Lower fees - processing fees are expected to decrease over time relative to traditional cards

Better customer loyalty - built through sales and incentives sent directly to smartphones

MOBILE WALLET IN BANGLADESHBangladesh is witnessing an exponential growth in the area of digital payment in recent times. With ever-increasing internet and mobile penetration, the country is all set to witness a massive surge in the adoption of digital payments in the coming years. Furthermore, flagship government initiatives such as Digital Bangladesh will act as key catalysts and enablers of this transformation.

Mobile wallet is a very young concept in Bangladesh that has taken on consumer psyche rapidly. In our neighbor country, India, everyone is loving mobile wallets and embracing them with open arms. Mobile wallet has surpassed credit cards in terms of the number of users in just a fraction of time.

Vijay Shekar Sharma’s venture Paytm alone has 20 million active users. The number is higher than the cumulative number of credit cards in India. At present, there are 10-12 mobile wallet companies operating in the country.

MOBILE WALLET IN BANGLADESHbKash is one of the oldest players in the payment market while the company jumped into the mobile wallet space. bKash customers can enjoy up to 20 percent cash back if they make payments through bKash account to buy products from 441 outlets of 56 reputed brands across the country.

Major brands like, Aarong, Yellow, Cat’s Eye, Lotto, Menz Klub, ajkerdeal.com, iferi.com, chaldal.com, etc. participating in the campaign.

In order to make payments via bKash,  customer needs to  dial *247# to access the bKash menu,  select ‘3’ for  ‘Payment ’ option and then follow the simple interactive steps to avail the payment service.

Customers do not need to pay any charge while making payment through bKash and the cash back.

IT STARTS WITH THE CONSUMER

Consumers have made their preferences clear — they want a shopping companion. Mobile wallets eliminate the need for paper items (such as coupons and boarding passes), organize bulky items (such as loyalty cards), and expedite the check-out process at their favorite retailers. This desire and the fast-adoption reveal untapped potential, not necessarily in payments but in the non-payment side of the mobile wallet.

We are still in the early days of the mobile wallet transformation. The main landscape today is comprised of Apple’s Passbook, launched in September 2012, and Google Wallet, launched in 2013.

An independent research conducted on 100 smartphone users (18+ age group) recently showed that 70 percent of consumers believe they will be more comfortable with mobile wallets rather than conventional credit or debit cards.

WILL SMARTPHONE (MOBILE WALLET) REPLACE CASH AND CREDIT/DEBIT CARDS ?

In less than 3 years

in 3 to 5 years

In 5 to 10 years

In more than 10 years

Never0

10

20

30

40

50Respondents

RESPONDENTS FEEDBACK ON FAMILIARITY AND USAGE OF MOBILE WALLET

Familiarit...0%

20%

40%

60%

80%

100%

Very familiarSomewhat familiarUnfamiliar

Use of Mo...0%

20%

40%

60%

80%

100%

Will use itMaybe use itNot in-terested

CONCERN ARISES AMONG RESPONDENTS REGARDING MOBILE WALLET

Concerns Points Respondent

I am worried about security 55I don’t want to pay any fees 2I don’t want the store to have my mobile wallet info

3

Not as convenient as using cash or a credit card

3

Credit cards have better facilities 3Credit cards have better securities 5It will not be available at stores, I would want to use it

10

Mobile screens are too small 4I don’t trust any app for bill payment 5Technology doesn’t always work properly 10

KEY TAKEAWAYS While mobile payment growth has not lived up to the hype,

most believe we are entering a phase of significant growth in acceptance and usage.

The key to success of mobile wallets will be the ability to integrate payment, loyalty and contextual engagement functionality while addressing security concerns.

While tech companies have a significant head start in the race for mobile wallet supremacy, many major banks will develop their own mobile wallets to acquire and serve digital consumers.

It is still unclear if mobile wallets will become an integrated function within the mobile banking app or be a separate tool primarily for payments.

MOBILE WALLETS: A GLOBAL PERSPECTIVE

While consumers in the U.S. and many other developed economies are taking to mobile payments in slow but steady numbers, in developing countries – or countries with much newer banking systems that exist without legacy technology and processes – using a mobile device to pay for goods and services comes much more naturally.

In a 2013 study, India and China had the highest percentage of consumers who indicated they have made purchases through a mobile device of all the countries studied. Eighteen percent of respondents in China, and fifteen percent of those in India, indicated they had purchased items via a mobile device. The global average for all countries studied, by comparison, was 8%.

INTERNET USERS IN DIFFERENT COUNTRIES WHO PURCHASE ITEMS VIA MOBILE DEVICE

ChinaIndia

UKAustralia

USAGermany

SwedenCanada

ItalyNetherlands

FranceTotal

0 2 4 6 8 10 12 14 16 18 20

% of respondents

MOBILE WALLETS: A GLOBAL PERSPECTIVE

In countries such as India, mobile payments are seen as a prime way to bring the unbanked into the formal financial system. Many African markets have also seen sky-high adoption of mobile payments and wallet solutions. According to a report from EdgarDunn Company, M-PESA, Kenya’s mobile money system, is the leading example of how this can rapidly be achieved.

It’s clear that mobile payments in many parts of the globe are adopted at far higher rates than in more developed economies, such as North America and western Europe. Much of that has to do with the fact many citizens in these countries are not part of the formal banking system, and thus don’t have to be “weaned off” of traditional payment methods.

PREPARING FOR THE FUTURE

When examining the current state of the mobile wallet, it seems Barriers to mobile wallet adoption will fade overall. Security concerns remain the number one barrier to mobile wallet adoption— however just 60% of respondents list security as the number one barrier, where 74% even didn’t knew this concept. The near ubiquity of online shopping may be acclimating consumers to perceived security risks like identity theft.

Some big banks may have the resources to develop something in house, while the vast majority of others will partner with existing solutions.

It’s always much better to be at the forefront of innovation – or at least to be a fast follower – than to be left behind in the dust.

RESOURCES An independent research

conducted on 100 smartphone users.

The Financial Brand(http://thefinancialbrand.com/)

CGAP (http://www.cgap.org/)

Bangladesh Bank (https://www.bb.org.bd/)

The Business Line(http://www.thehindubusinessline.com/)