'Cashless Dhaka' still a far cry
The ‘Cashless Bangladesh’ project undertaken by Bangladesh Bank is faced with a big challenge: both the customers and the sellers are too comfortable with cash
You will be taken aback by an unusual scene right at the entrance of Gulshan-1 DNCC Market. Not every day you can see a 'chaawalah' receiving Mobile Financial Services (MFS) and online bank payments.
Mohammad Abdul Khaleque has been selling tea in this market for the last eight years, and recently he started taking digital payment, as part of the market's project of going cashless. Khaleque offered us a satisfactory report.
The DNCC market became the first-ever cashless market in the country on 7 March 2023 after being incorporated into a completely cashless payment system under the initiative of 'Cashless Bangladesh' by Bangladesh Bank.
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Merchants of the market have been provided with Bangla QR (Quick Response), a common platform for app-based transaction settlement of all banks and MFS of the country. Customers of any bank or MFS connected to this platform can make transactions using any other QR.
However, there's a catch.
Though Khaleque has cashless payment options available in his tea stall, most customers tend to pay him with hard cash. And that's the case with nearly all of the 242 shops in the market, according to Kamrul Islam, office manager of the Gulshan-1 DNCC Market.
What do sellers, stakeholders and customers say
"It's true that the market was announced cashless by the mayor [of Dhaka North], but it's up to the shop owners how they would receive payments," Kamrul said.
Khalil Molla, a staff at Sunny Trading, revealed that though they keep the options open for customers to make digital payments, they don't really go for it. Hence, cash is very much visible in the market in spite of being labelled as 'cashless.'
Junaidur Rahman of Ahnaf Enterprise and Ismail of Lamia Enterprise further explained that withdrawing the money received as digital payment seems a very complicated process to them, so they don't want to take the extra hassle.
Many shopkeepers even claimed that they are not quite aware of the market being cashless, and advised us to speak to the Babshahi (traders) Somity and Dokan Malik (shop owners) Somity.
When asked, SM Khairul Alam Chopol, president of Gulshan-1 DNCC Paka Market Babshahi Somity, also the vice-president of Dhaka Mohanogor Dokan Malik Society, why traders aren't going completely cashless yet, he gave a straightforward answer: "Because we don't need it."
Interestingly, Cologne and Cotton, owned by the market's Dokan Malik Somity president Akhtaruzzaman Khalashi, is among the shops that do not even have a digital payment option. "Currently our business is very slow. There are hardly any customers, and even if they come, they don't want to pay digitally. So, what's the point of making the option available?" he reasoned sarcastically.
When Mokbul Hossain, public relations officer at DNCC, was contacted for a comment in this regard, he couldn't provide any.
Meanwhile, Gulshan-1 DNCC Market is not the first 'Cashless Bangladesh' project undertaken by Bangladesh Bank. Earlier in January this year, it also started the 'Cashless Motijheel' project by providing 1,200 merchants, including street vendors, with the QR code-based universal payment system.
Since Bangladesh Bank undertook the project, Master Card along with other stakeholders has been heavily involved. The payment-processing corporation is coordinating with banks and other financial bodies.
Syed Mohammad Kamal, Country Manager of Mastercard in Bangladesh, said, "The outcome is not quite up to the mark yet but there is an upward trend; the use of digital payment is increasing, though slightly." He also added that they are planning to reach all the districts and also some university campuses soon.
They are also targeting spots where transaction flow is heavy, a popular tea stall in Motijheel, for example. But evidently, this initiative too has not been fruitful yet.
Md Sadek Hossain, who has a tea stall in Motijheel, said his customers don't want to pay digitally. "Suppose one person is due Tk20. He can easily give me a Tk20 note, or two Tk10 notes for that matter. Why would he pay me digitally even if he has that option?"
Another such merchant is Md Shapon, a fruit vendor in Pir Jangi Mazar. "I need instant money, I cannot wait for later to withdraw my hard-earned money. I need to buy and take things home for my family," he said, explaining why he discourages customers from making digital payments.
Even the 'Voggoponno' shop, recreation corner and canteen of Bangladesh Bank itself have yet to become 100% cashless. Most customers – employees and workers of the central bank – prefer hard cash for payment.
More recently, for instance, on 27 June, Ashraful Islam, a customer, encountered difficulties while attempting to withdraw money from the ATM booth using his City Bank card installed at the Sagarika Animal Market located in Chittagong. In an earlier story by The Business Standard, Ashraful said "I came to the market with the card along with cash, as I was supposed to get the benefits. Now I need some extra money to buy a cow, but my card is not working in the ATM booth set up here. Officials are also not able to provide any solution."
The Chittagong City Corporation and Bangladesh Bank had initially announced the establishment of two 'Smart Haats,' namely Sagarika and Noor Nagar cow markets, to facilitate cashless transactions for Qurbani's animals.
But despite the promises made, none of the cashless services was implemented properly. When asked about these issues, the Chief Executive Officer of Chittagong City Corporation Sheikh Muhammad Touhidul Islam said, "Bangladesh Bank was supposed to ensure all the benefits of customers in cashless transactions. But we don't know why it didn't happen."
A change from within?
However, Rashidul Hassan Khan (Karib), joint director of the Financial Integrity and Customer Services Department of Bangladesh Bank, informed that their employees are slowly shifting towards digital payments.
"We want the practice to start right from our own people. If they keep using digital payment systems, hopefully, the mass people too will become interested soon," Karib said.
To keep the system active, Bangladesh Bank employees are often offered special discounts to make digital payments. On the day of our visit to the bank premise, we found out that customers could get up to a 5% discount on mangoes if they made the payment through Bangla QR.
Dr Suborna Barua, a professor of International Business at Dhaka University, "Our sellers have to be informed and educated first on why they should embrace digital transactions. They should also be provided with special incentives so that they would play a bigger role in establishing a cashless society."
Kamal also believes the same, that to break through the primary challenge of not being habituated with hard cash and the pertaining reluctance on the seller's part as well as the customer's incentive can work. Master Card is proposing the government create an incentive pool. "If we can create a 5% incentive pool from which 3% will go to the customers and 2% to the sellers, we will have a leap in number. Otherwise, we might grow the number but that will be too slow" added Kamal.
Plans in motion
In March this year, the services of Bangla QR were expanded to a total of eight upazilas of Gopalganj, Rangpur, Natore and Gazipur, while all the dormitories of Dhaka University were also brought under this network.
Several students of Dhaka University, however, confirmed that digital payment systems are not yet visible inside their dormitories.
According to Bangladesh Bank data, 2,500-3,000 interbank transactions are being made using the Bangla QR system inside Dhaka every day.
Md Jasim Uddin, information officer at the government's Press Information Department, hailed the ongoing cashless projects in Dhaka as 'revolutionary,' but claimed the lack of awareness among general people for its slow growth.
"We don't yet have any statistics to determine whether the cashless projects are successful or not. But if we can spread awareness about it, and educate the merchants, we will definitely succeed in the long run," he said.
According to him, most of the ongoing projects could really become 100% cashless by the end of this year.
Earlier in February this year, Bangladesh Bank Governor Abdur Rauf Talukdar had said that efforts would be made so that 75% of the country's transactions go cashless within the next four years.
Finance Minister AHM Mustafa Kamal also emphasised the government's ambition to establish a cashless society in the country during the budget proposal for the fiscal year 2023-2024.
Ten banks, four MFS and three international payment schemes like Mastercard are working together to realise Bangladesh Bank's 'Cashless' plan. However, any visible change is yet to be seen.
Dr Suborna Barua believes it's too early to make a verdict about the prospects of Cashless Dhaka, and "one can't expect a change overnight." He added that the people of Bangladesh are so used to making payments through hard cash that it will take a lot of time for them to adapt to new methods.
"In foreign countries, it's the sellers who encourage customers to make payments digitally. But in our country, sellers rather try to discourage them, because they find this process complicated," he concluded.
