Bangladesh's hopes of becoming a cashless society got further momentum today thanks to City Bank, a major point-of-sales terminal provider, which announced the rollout of an interoperable QR-based payment solution – a first for the country.
The option of making payment using the quick response (QR) code, a two-dimensional code made up of black and white squares that can be read by smartphone cameras, has been around for a while in Bangladesh thanks to bKash, Dutch-Bangla Bank's NexusPay and Rocket, United Commercial Bank's Upay, among others.
The customer needs to scan the QR code display, typically found at the cash register, and the money would be transferred from his/her account to the merchant without the need to swipe one's bank card at the point-of-sale terminal.
The problem with these is that the merchant needs to display the QR code of all these vendors separately.
Then last year, the central bank came up with Bangla QR, an interoperable QR payment system. So far, only Mutual Trust Bank's Mastercard holders and Eastern Bank's Visa cardholders could pay at retail points that displayed the Bangla QR.
City Bank's move is a gamechanger in that it allows Visa, Mastercard, American Express and UnionPay cardholders of any bank to pay with its QR code.
Not just this, foreign cardholders of the four providers would also be able to pay with the City QR code.
City Bank has 30,000 POS terminals around the country out of a total of 65,000, according to the lender.
"Our QR payment solution is an example of interoperability that is also aligned with the Bangladesh Bank's vision," said Mashrur Arefin, managing director and chief executive officer of City Bank.
This will eliminate the huge investment that acquiring banks make in the deployment of POS terminals, he added.
City's interoperable QR code payment system has two-pronged benefits: customers will not need to scan separate QR codes of different payment networks, while the merchants will only need to display one QR code at the storefront.
"So there will be no cluttering of space," Arefin told The Business Standard today.
There would be no need to install the bulky, expensive POS machines, meaning the acceptance infrastructure for digital money would expand much.
"We truly believe that an interoperable QR platform will play an essential part in paving the way for Bangladesh's transition to a cashless society."
Interoperability with multiple schemes coupled with "no-contact" payments during this pandemic will drive swift adoption by smartphone users, Arefin added.
Such form of payment is almost standard in China, where the lack of payments infrastructure made the rollout of relatively inexpensive QR code payments more compelling.
The growing prevalence of smartphones in China gave consumers even more reasons to use QR codes for payments and also created an ecosystem effect, resulting in social behaviour changing and QR codes becoming a way of life.
The QR code-based payment is so popular that some vendors in China have stopped accepting notes.
Closer to home, the Reserve Bank of India is hoping to head in the same direction as China.
In July last year, a committee set up by the RBI to review QR code-based payments recommended that more payments system providers should make these codes interoperable.
As part of its recommendations, the committee said that closed-loop QR codes, which only work within the ecosystem of one payment provider, will hold back the adoption of this means of payment.
"While closed-loop systems make the customer experience more convenient, they also require customers to acquire and manage a payment app. So, if a customer wants to use a phone to pay at 10 different retailers – each with its own proprietary system – he/she would need to manage 10 separate apps," the committee report said.
City's latest move comes as part of the lender's push towards digital money and also to consolidate its position as the market leader in the card payment segment.
Last week, it announced the roll out of UnionPay debit cards, joining a growing list of lenders in Bangladesh offering cards of the world's biggest card issuer.
UnionPay cards are accepted at more than 28 million merchants and upwards of 1.7 million ATMs across 179 countries.
Earlier in August, the bank rolled out a dual-currency debit card, joining a growing list of lenders that are offering the facility to lure in the progressively global-minded customers in the country that are averse to using credit cards.
As of now, the bank has issued 12.9 lakh cards.