MFS transactions hit all-time high in April

Transactions through mobile financial services (MFS) reached an all-time high of Tk63,478 crore in April this year as a large number of people now prefer digital financial channels at this pandemic time.

Per day Tk2,116 crore on an average was transacted during the month.

The previous highest monthly transactions hit Tk63,000 crore in July last year and the average daily transactions amounted to Tk2,032 crore, according to the central bank's updated report on mobile banking. 

April's figure was 6.4% higher than that of March and the daily transactions increased by 10% month-on-month. 

Besides, the number of active accounts increased by 6% to 3.67 crore.

The number of MFS transactions has increased during the ongoing lockdown that came into force in April following the second wave of Covid-19 hit because more people have turned to mobile banking to avoid infections. Besides, an increased government transactions coupled with the onset of Ramadan gave a rise in the overall digital transactions in April, said the people concerned.

Tanvir A Mishuk, managing director of Nagad, the second-largest and fastest-growing MFS provider in the country, told The Business Standard, "We are observing that people have become more interested in cashless transactions than ever before. Its reflection is being noticed on our network as well. Every day this kind of payment is getting popular and we are witnessing transitions of phenomenal amounts. Definitely, it will accelerate the growth rate of the digital process, especially the financial sector."

"We are on the right track to be graduated as a cashless nation, where MFS will lead from the front. Now the MFS transition crossed Tk63,000 crore a month and it will double within the next few more quarters as people love to use this service and enjoy transaction facilities at their fingertips," he added.

Syed Masudul Bari, deputy managing director of Al-Arafah Islami Bank, told The Business Standard that a surge in online shopping in April led to a rise in transactions as people mainly use mobile banking services to make such payments.

According to the central bank, MFS transactions increased by 41% in April month-on-month, while the month-on-month growth in March was only 4.4%. 

Meanwhile, government transactions using MFS increased by 520% to Tk734 crore in April.

Shamsuddin Haider Dalim, chief public relations officer of bKash, said government transactions also played a role in boosting mobile banking transactions in April. Apart from this, the scope of availing mobile banking services is increasing as MFS providers are offering new services and signing contracts with various organisations, which in turn increases the volume of transactions.

But, the proposal for increasing the corporate tax rate of MFS providers in the new budget might hamper the growth, the people concerned said.

In this context, Syed Masudul said if corporate tax increases, the thriving industry may come to a halt. Especially small companies that are thinking of competing in the market will not be able to move forward. Costs may also increase for customers.

In the proposed budget for FY22, the finance minister proposed increasing corporate tax of MFS up to 40% from the existing 32.5%. But those listed on stock exchanges will get a 2.5% exemption. At present, no MFS providers are listed on the capital market, so the actual tax rate will be 40%.