Could new regulatory guidelines in Bangladesh turn MFS into “nobody’s baby”?

With the recent release of new draft guidelines for mobile financial services (MFS) in Bangladesh, I caught up with payments expert Raihan to get his views on the state of play of the market, possible outcomes from the guidelines and how we may see Bangladesh consumer financial needs better addressed over the next 5 years.


Raihan, to set the scene could you please share a bit about your role in the Bangladesh payments scene?

When I joined Grameenphone in 2006 on completing my studies in the US, these were early days for mCommerce in Bangladesh. We designed it all from scratch - processes for financial operations, reconciliation, the channel commission, payments, fund management and more. Seeing our BillPay service so popular in Bangladesh made it all worthwhile. I then moved to airtel where even in a bank led model we have built an award-winning mCommerce portfolio with specialized products such as micro credit disbursement together DBBL, our banking partner and 13 MFS partners including bKash.

What is the current state of play of the Bangladesh MFS market?

Bangladesh MFS market is now 5 years old. The top 2 operators bKash and DBBL together accounts for an estimated 74% of the market, with bKash leading since launch in 2011. A recent cGAP study estimates that 30% of Bangladeshi adults have used bKash while 4% have used the DBBL service. bKash users are more likely to be active, with 81% account holders active, compared with 67% for DBBL users. DBBL users are more likely to be registered users with 44% registered as compared to 23% for bKash.

As of June 2016, there are 36.2 million mobile banking registered accounts but only 13.3 million are active users. However, this data does not represent the number of unique users of MFS.

What’s behind this success of bKash?

I think this is due to the awareness that bKash was able to create ever since their launch and also their extensive retail reach. In terms of transactions, bKash still leads with over 80% market share although their annual growth in revenue has come down to 50% in 2015 from 81% in 2014.

What challenges do you face regarding user identification, AML and KYC?

OTC (Over-the-counter) continues to be hugely popular in Bangladesh, with 2.5 times more users than registered mobile wallet users. Retailers often transact on behalf of customers and this could create AML/KYC issues.

In 2016 we have started National ID verification process for mobile subscribers as Instructed by our regulators. Fortunately, as 90% or more of the active users of Telecom Services registered their SIMs, this may not impact the revenue and transaction volume of MFS.

Regarding usage pattern, I notice that unregistered users are more likely to use basic money transfer services while registered users also use advanced services including bill payment and mobile top-up. Today an estimated 8% to 15% of mobile top-up is done through MFS.

How is sticking with OTC a drawback to poorer users who only need basic services?

Today almost everyone has access to a mobile phone. Hence a poor person living in the remotest corner of the country can get registered through MFS and enjoy proper financial inclusion with the kind of services that are normally only available over a banking counter. Transacting through someone else’s wallet rather than your own is almost like a “Digital Hundi” or Sending money through the courier service which was actually one of the ways to send money in Bangladesh prior to the launch of MFS.

What was the motivation for new regulatory guidelines for MFS in Bangladesh?

MFS has always been a key focus for the regulators, specially Bangladesh Bank. Despite the rapid development of MFS and the huge potential to grow and reach the remotest corners of Bangladesh to boost financial inclusion, complete financial inclusion via mobile banking has yet to reach its full potential. OTC or unregistered use of MFS is one of the biggest drawbacks of the service.

This is why the Bangladesh Bank has been working towards a revised guideline that can encourage appropriate business models that help the market reach its potential and create a win-win situation for all the entities in terms of equity shareholding. I believe that with a few minor changes, this new guideline could help boost MFS growth and ensure financial inclusion in Bangladesh

So what are the new guidelines, and do they help address the issues?

Here I’d like to discuss two of the major clauses included in the new Draft Guideline:


Clause 4.1

BB shall permit delivery of the following broad categories of financial services by scheduled commercial bank-led Mobile phone based Financial Service (MFS) platforms in Bangladesh.


The scheduled commercial bank-led MFS platforms may have both banks and non-bank entities including Mobile Network Operators (MNOs) as equity holders, subject to banks holding majority beneficial ownership in total equity, no bank or non-bank entity holding more than fifteen percent beneficial ownership in equity, and Beneficial ownership of MNOs in an MFS platform not exceeding thirty percent of its total equity.


In Clause 4.1 we see that it remains a bank-led model as specified by the previous guidelines published in 2011. However, Clause 5.2 requires that no bank or non-bank entity hold equity share more than 15% individually. Banks must have majority ownership and Telcos may not collectively hold more than 30%. This means MFS projects will become nobody’s baby! This potentially creates a huge issue in regards to ownership.

What is the alternative you recommend?

In my view, we should first study what’s happening worldwide and learn from that. We should deploy a model which will be beneficial for the people of the country and will be owned by both Telecom and Banks. Telcos are good at things like branding, marketing campaigns, product management, agent management. Banks are expected to safeguard funds. Hence a model in which each of these players can execute to the best of their capability will be a successful one. My proposal would be that there should not be any restriction on the ownership of MNOs or any other equity holders. We should follow the good examples available across the globe.

Apart from equity participation, in what other ways are Telcos held back due to the guidelines?

There are several other areas where Telcos are not allowed to participate in the current MFS services. For example, Telcos are not allowed to promote the product, brand the product or launch different campaigns to promote MFS services. Telcos are only allowed to offer Telecom Data or talk time) for MFS promotions.

How do you see the market developing as we move towards 2020?

In the next 5 years, I expect the MFS market to be more mature and more compliant. SIM verification and re-registration will be imposed on MFS as well which will eventually limit the OTC usage and encourage use of mobile wallets. More advanced services will be launched so that people start to use MFS for services other than the basic money transfer.

Government already disburses payments (G2P) through MFS. In 5 years from now, I expect P2G to increase in a big way, so that payments including fees and taxes reach the government through MFS. Mobile Top Up usage will increase even more and may reach approximately 50% of total Telecom Top Up value.

MFS providers will further pursue Omni channel strategies, with some already providing the service through apps and the web. MFS services will be offered through other mediums such as NFC and it will not be only limited to USSD, apps or web and launch of 4G services will further boost usage.

Mobile Number Portability will be introduced in the country and, the need of having more than one MFS account with different Telecom operators will gradually decrease.

As stated by Bangladesh Bank, over the last couple of years, we have found that people at the “bottom of the pyramid” have been able to greatly increase their economic activities and that volume is increasing significantly each day. This contribution directly impacts the transactions volume in mobile banking.

Overall I look forward to MFS playing a major role in the growth of GDP of our country.



Ruhullah Raihan Alhusain is a payments professional with over 12 years of work experience in Mobile Banking Field. He graduated from the University of Texas at Arlington with Honors as Bachelor in Business Administration and led the Grameenphone mCommerce Operation Finance team before moving to airtel where he is Head of mCommerce Operations

Mobile Money Canada 2013 – Retail and Payments Experience of the Future


Karena de Souza, Shift Thought distributor in Canada shares her thoughts on the payments scene in Canada having recently attended Mobile Money Canada 2013. Mobile technology is starting to go mainstream. Learn how Canadian innovations such as Mintchip are developing shoulder-to-shoulder with new offers from global players such as PayPal and MasterCard.

The most recent Mobile Money Canada conference, chaired by Brent Ho-Young took place on November 13, 2013. It brought together thought leaders across commerce, mobile, retail and technology in a discussion on the challenges in accelerating the acceptance of Mobile Commerce into mainstream Canada. A well designed agenda included a number of TedX sized presentations, interspersed with themed panel discussions.

Canada offers technologists and business a unique playground in which to experiment and fast-track consumer acceptance. With Canadians being an unusually tech-savvy population, platforms such as Interac launched and became mainstream ahead of their adoption in other countries. An enabling yet protective regulatory environment provides an umbrella within which local businesses, Telcos, payment processors and banks are free to partner and innovate.

Presentations built on recent announcements:


Rogers David Robinson presented the next generation of suretap wallet, offering Rogers customers an all-in-one branded Telco-based mobile money experience – from branded NFC enabled handset containing a secure SIM, with payment made from a Rogers’ branded prepaid MasterCard or retail gift card.

imageWe also heard about Ugo’s latest plans. A few days ago Loblaw, Canada’s largest retailer, joined Ugo as their first retail partner. Ugo claims to be Canada’s first open mobile wallet that offers multiple payment and loyalty as a single package. Two major banks are involved: PC Financial and TD Bank Group. Both MasterCard and Visa cards will be loaded.


imagePayPal showcased their cloud based app – a first aimed at masking ‘payment’ within the greater transaction ‘experience’. The use of BLE allows a new proposition – customers check-IN instead of checking out.


imageMintchip is an innovative offering from the Canadian Mint. We heard about  the MintChip Challenge: MintChip now in R&D stage has developers participating in a challenge to develop what aims to be the evolution of currency.


The panel on Mobile Commerce & Payments for Retailers chaired by Pierre Roberge engaged Tanbir Grover from Lowe’s, Nurez Khimji from Urban Barn, PC Financial’s Jimmy Dinh and SecureKey’s Christian Ali. Retail is embracing the reality of a connected customer base and extending ways to offer them a more complete shopping experience. A big challenge in this sector is how to cost-effectively integrate the various existing technologies and legacy infrastructures to present a seamless environment for the customer. Also, in a consumer culture that is getting used to ‘want it now’, virtual stores pose a challenge to physical delivery in a country the size of Canada, given the transportation infrastructure.

An engaging panel that included Blackberry, Visa and MasterCard – and a very entertaining Timothy Grayson from Canada Post – discussed the components necessary to achieve that tipping point in the Canadian market that will encourage consumers to gravitate towards mobile as their main choice for payment.

A number of initiatives appear to be aiming to break the Tap&Go resistance barrier by cajoling the client to park their many loyalty cards conveniently within one mobile wallet.

The evening was packed with presentations filled with interest, intellect and innovation. “3 Ways to Launder Mobile Money” caught my attention. Others were informative – the Kili POS and Vince Kadar’s review of Telepin’s global timeline.

But for me, the most compelling presentation of the evening was by Nicolas Dinh for MasterCard. It spoke to the spirit of innovation present in Canada, in the best traditions of a nation that has given the world technologies such as Interac and Blackberry.


The N>XT challenge sponsored by MasterCard resulted in many innovative ideas. Watching the presentation of a $10,000 check by Kevin Faragher of CIBC to the  Crescent School Coyotes was inspirational. These five 11th and 12th graders won the CIBC People’s Choice award. They had a waiter use his/her smartphone as a POS to calculate the tab, split it between the customers and then process the split payment from 4 different patrons using NFC technology.

I came away with 3 main impressions:

  • Mobile technology is seeping into the mainstream. Mobile operators and financial services providers have established good building blocks and infrastructure and are ready to partner with retail to extend the mobile experience into many areas of our lives.
  • Retailers are now on board to engage a customer base that is technically connected as they walk into the virtual and bricks & mortar stores. They have to work on joining the older vertical infrastructures behind the scenes so that the customer is presented with an integrated seamless shopping engagement – from the point of browsing, through shopping, payment to final physical delivery.
  • Canadian innovations such as the Mintchip and the Kili POS are well-poised to be potential enablers for a new shopping experience.


Karena de Souza is a forward thinking and entrepreneurial professional with a special interest in payment streams for small business. Karena’s focus on mobile finance blends the challenges and opportunites she faced as a small business owner in Canada with her experience using technology to facilitate financial services while at Morgan Stanley in New York. She graduated from the University of Westminster with a BSc (Hons) Mathematics and Computing.

Q&A from our “Disruptions in Digital Payments in China” webinar

Thanks very much to all of you who helped us to make this live webinar (our first!) a great success. With representation from over 20 countries, we received a number of questions and were not able to answer all of them in the time available. The post below addresses these and we hope you will find this useful. There is never just one point of view, and we would love to hear your comments and your unique ways of approaching the questions. If you missed it, catch the free replay here.


Q1: Is it advisable to partner with a Chinese company when seeking to enter this market?

A1: In general you may not have a choice in this. The question is with whom to partner and how to set it up so as to remain in control. An example is Yahoo China and Alipay. In Jack Ma’s speech at Stanford on May 14, 2013 he mentioned that Alipay digested Yahoo – they simply ate Yahoo and would not have been able to do their P-2-P advertisement platform without that.

This is a great question and to do full justice would probably need a session in itself. As a guideline, it depends on your industry, your ambitions and the roadmap you plan. Suffice it to say that I have seen careers made and broken largely due to the manner of handling this issue.

Q2: In your experience what is the biggest threat to successfully entering the Chinese market?

Timing and partnerships. Possibly in no other market could I say more strongly that a 360 degree understanding and a watching brief is critical. You cannot afford to walk into this blindfolded without opening yourself and your company to high risks, neither can you afford to do nothing. Understanding, anticipating and planning is highly important. It is equally important to understand Chinese culture and history as much as you deeply absorbing knowledge on the payments ecosystem and timeline.

Products and services must be made fit for the unique expectation of the market. For instance the clean streamlined experience of Amazon is not what is preferred – online shoppers want a busy, “happening” website. Similarly, there is a very different online-offline-CSR engagement in the consumer journey that one needs to learn.

There is a window of opportunity that must be well understood. We have found that players who act too soon have faced problems. On the other hand due to the need for domestic partners, it is advisable to act before all the “good partners” are taken.

Q3: How stable is the regulatory landscape in China? Is it prone to sudden changes?

In general it has taken many years so far for changes expected and talked about to actually happen. For instance I recall I first studied proposed regulations for licensing third party payment providers way back in 2006. They actually came out in 2010.

Similarly it is not uncommon to have a mass rollout, big commitments and plans in a specific direction only to see it overturned (example RF-SIM). For players who have built these products specifically for the Chinese market this can represent a serious setback.

Q4: Who are the companies to watch in this space?

I touched on the main players in the China payments ecosystem during the webinar, so for those who have not heard it, it could be useful at this point to listen to the free replay here. Of course our 295 page “Digital Money in China 2013” viewport offers you the whole list of players, partnerships and initiatives with our best understanding of their importance and traction. There is so much happening in parallel and there is a high degree of cross-over. What we tend to do is to note how the payments gatekeepers are proceeding – CUP, CM, The big 4, the big 3 large PSPs and more.

Q5: What are the best partners to work with?

This depends on who you are and what is required by the regulatory environment. If you are to apply for a license there is a lead time involved.

A good example is Western Union’s recent thrust into China in partnership with ICBC and CUP.

Q6: How should we interpret Digital Payments in Hong Kong? How does the Chinese government and market incorporate the progress and regulation of that market?

The webinar only dealt with Mainland China. We plan a separate webinar that will address Hong Kong, China as also other countries in the region. In general the approach is One Country- Two Systems. This is why Hong Kong, China has a critical role to play in digital payments relating to Mainland China. More when we tackle this topic. Please register to our website (registration is free, takes seconds, only requires email address and provides you a much greater access to the overall content on our portal) so we can send on an invite to you once plans are in place.

Q7: Would you clarify your definitions for "digital wallet" and "digital money", thanks!

The Digital Money domain has been described by Shift Thought™ as a way to understand the ecosystem, products, services and infrastructure involved in the digitisation and transfer of value. We use this term to refer to a host of financial services that use innovative alternative channels, technologies, providers and payment instruments.

For a full definition and understanding of our approach please see Blog #3: What is digital money?

The Digital Wallet domain has been described by Shift Thought™ as a means of understanding the whole range of stored value products aimed at digitising value and enabling the owner to utilise it in a way that offers a superior experience as compared to traditional payment methods. Services utilise an account and stored value or e-money that may be utilised across various channels and services. This includes prepaid cards, vouchers, mobile wallets, e-wallets and more.

Q8: Is there any real digital money in China (I mean digital money that is not dependent on bank account or credit card)? All mobile payments solution are NOT based on digital money.

This is a good point. Please look at my response to Q7 on what is Digital Money earlier. We track an extended set of initiatives to do justice to our definition. However, specifically to answer yours, there is E-money that has been around for a while now. Prepaid cards, both open and close loop exist as discussed in our Webinar and covered in detail in our Viewport. More importantly, digital wallets and mobile wallets are very much in use.

You are right that all mobile payments are NOT based on e-money and a number of them require a connection to a bank account or card account. In the way we cover each of the 50 key initiatives on our portal, you’ll see our icon and descriptions that exactly show what payment instruments are supported for Senders and Receivers of each kind of service.

I hope this answers your question. Please feel free to reach out for a quick chat to discuss further. Also, this is not set in stone. We found an absence of accurate definitions in the marketplace and in those cases provided our own. Where possible we comply with the way in which CGAP, GSMA, Mobey Forum, NFC Forum and other key bodies and thought leaders already use these terms.

Q9: After utilising your China 2013 viewport, I also obtained your comprehensive Indonesia 2013 report. I noticed how in each country, both APAC members have approached and regulated differently - How would Shift Thought help a potential customer navigate these different markets?

That is a great question and thank you for the compliments on our viewports. Shift Thought is fortunate to have compared 19 different APAC countries in terms of regulatory approach as well as the predictor framework we use to project the growth of each of the 32 services we class as Digital Money.

We maintain a highly comprehensive knowledge base of regulations that impact on all these services, and understand how they may apply from each perspective. This, along with our deep understanding of player competencies puts us in a great place when we consult with large mobile operator, banking and money transfer groups in search of the right partners.

We’ll talk more on this in the Indonesia webinar. If you pop me an email on which countries you want to know about first I’ll consider this as we prioritise the webinars scheduled.

Q10: Charmaine - do you see an opportunity for mobile point-of-sale devices targeting Merchants in China much the same way that Square has addressed small Merchant needs in the United States?

Absolutely, and as is always the case in China, one of these providers currently cutting their teeth in the highest populated country in the world could well become a challenger to the Square, iZettle and huge number of mPOS providers currently starting of from the East. But it’s not just China. We’ve seen very interesting and innovative approaches elsewhere in APAC. This blog is getting too large, maybe a separate post later?

Q11: Sub Saharan Africa population is forecasted to reach China's in 20 years. What similarities if any do you see between these 2 markets and what learnings can Africa derive from China now to foster further successes in the contribution of digital money to more financial inclusion of unbanked populations.

Wow, this is a biggie. Thanks for this great question and sincere apologies that I can’t do justice to all of this today. However, I put it the other way, what can China learn from Africa including sub-Saharan Africa? – That is the real question. As the access that people have differs, I’d like to do fuller justice to this in a later post.

Q12: Hi - how pervasive are contactless payments in PRC? Thank you

For all the years I’ve worked with China there has always been something planned – most were trials, pilots. The real progress is in terms of installation of POS that supports contactless payments and cards. Once that is in place and China has elected to support the NFC standard, the people who currently use smart cards for travel all across China could very quickly change their behaviour to use of a mobile device instead. So to answer your question, contactless payments by card are already surprisingly pervasive!

I hope you have found this post useful. Again, this is just my perspective and I would love to hear from you as that is when the learning process really gets enriched. Thanks for the wonderful outpouring of support to me and thanks for being a valued member of our little fledgling Shift Thought community. Together we can make things better.

Can you get one step ahead of the regulatory curve and what would this look like?


I’ve been studying with interest the European Commission’s proposed new legislative package for payments and digital commerce in general. Clarifying position with regards to mobile commerce and alternative payment systems is part of a trend we see around the world where players had so far been operating in a relatively fluid state with mobile payment services subject to reactive governance controls. This causes compliance confusion alongside both technical and strategic uncertainties.

And it will probably get worse before it gets better as no one is certain of the shape market convergence will take, how regulators around the world will react and what effect this will have on services.

Of course there is another way of looking at this. End user confidence (and therefore adoption) of new payment platforms and digital purchasing models will be dependent on the regulatory environment and many of the key issues regulators and policy makers are focusing on, including security, identity, choice, ease of use and fair pricing.

So could regulation and policy be used as a future indicator of successful business models rather than just as a compliance responsibility? And if so, how many organisations fail to look for and harness the opportunities that these standards and supervisory guidance could be highlighting for us?

If you analyse diverse and recent trends, throw some original thinking into the mix, take a hard look at what is happening now in mobile payments and what the end-user experience could ultimately look like then wouldn’t this give you an edge when forming your strategy or future proofing your technology?


imageI think so and I’ll be exploring this in more detail at in November.

The France Telecom Group turns completely Orange


As the France Telecom Group completes rebranding to Orange, this post offers a snapshot on the Group’s origins in Europe and its current focus on emerging markets in Africa. This will be useful to readers seeking partnerships with large operator groups across multiple countries, or for competitor analysis.


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Get inside your competitor’s head with the Shift Thought Digital Money SAGE


Although mobiles and smartphones present an exciting new dimension for consumer payments, the Shift Thought Digital Money SAGE offers payments providers a panoramic view, so as to prepare for the eventual growth that is essential for building alternative payments services.

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Before you launch your next mobile payment service – have you checked for patents?

New entrants into Mobile Payments must be aware of the intense patent related activity in this space and their projects need to include activity to mitigate risks, better compete, obtain a negotiating position in collaborations, create assets and better identify and leverage unique capabilities.

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New mobile payments standards in China – how will they shape markets worldwide?


In China online payments took off since 2009 and reached mass markets, triggering the release of third party non-bank payments provider regulations in 2010. With digital wallets from providers such as Alipay enjoying 500 to 700 million registered users, we’re talking very large mass markets here. Now the same looks set to happen in mobile payments. This blog shares Shift Thought analysis from our recently published “Digital Money in China” viewport.

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Apple iCloud Keychain – Digital Money services take to the cloud

Soon after May 2011, when there were a flurry of digital wallet announcements, such as Google Wallet, V.Me, Amex Serve and more, Shift Thought provided analysis to show how these fitted into the trend that we predicted, and continue to rigorously track since then.

This is a move from a mobile-centric approach to a convergent, if not integrated set of offers that become a powerful foundation for a closer relationship with your customers.


In June 2013, the Apple iCloud Keychain serves to once again underline this trend. By hosting key details on the cloud and offering single access across a host of devices, payment services from Apple seem to be in the mould of one of the “personas” in the Digital Money SAGE framework that describes wallets of the future.

The Google Wallet has already moved forward on this path. By merging with the Google Checkout and later rebranding to a single service, Google has instantaneously opened the doors to a powerful way of engaging with 7 billion people around the world. This of course is the power of adopting a strategy that recognises Digital Money in all its guises.

Shift Thought will be running a workshop on Digital Money at the PayExpo 2013 on the 18th of June in London, UK. We intend to run through the timeline of Digital Money, with special case studies to underline the trends, risks, challenges and the level of competition.

We hope this will give you concise round-up on what is happening, and the new axis on which services differentiate themselves across the world today.

We look forward to seeing you there!


Contactless payments with BarclayCard PayBand at BBST Festival, UK

This summer Barclays is promoting their PayBand contactless payment in the UK through a marketing campaign that directly targets segments that are most likely to appreciate the convenience, in the ambience of the British summer festivals. This wearable prepaid device is free and available even to consumers without Barclaycards, and it will not  activate for transactions over £20.


PayBand made it’s debut at music festivals in the UK last year. It can be used to make contactless purchases of up to £20 at UK retailers accepting Mastercard PayPass contactless payments. The service neatly sidesteps issues regarding potential misuse, firstly in the manner of presentation (it may be a little obvious using a bright blue band to launder money), but also through limits - the maximum balance you can have is £200, and consumers are not able to load and spend more than £500 during the lifetime of a PayBand.

This summer it is being heavily promoted as a cool way to pay for food and drink at UK festivals at Barclaycard presents British Summer Time (BBST) in Hyde Park on 5-14 July 2013.

Considering all the firsts from Barclays: The first UK credit card on 29th June 1966, the first UK debit card in 1987, Pingit launched in February 2012 - it seems to me that Barclays is well placed to usher in this payment trend, right here in the UK. All the work put in through NFC trials since 2007, commercial roll-out of contactless cards in UK and more has prepared the stage for the bright blue band to earn its place as a favourite memory that people will look back to in years to come.

UK awareness of contactless payments has doubled as per the latest study, with over 53% having used their mobile to make a contactless payment purchase, compared to 47% last year.