The largest mobile financial services (MFS) provider in the country, bKash, has been playing a role in generating income for its users and leading them to spend more on consumption, which is ultimately contributing to the nation’s economic growth, stated by a recent survey done by BIDS.
Titled “Impact of Mobile Financial Services in Bangladesh – The case of bKash”, the survey was conducted by the Bangladesh Institute of Development Studies (BIDS) in 2018. It discovered that the customers’ net benefit from using bKash services was 4 per cent.
The survey stated, “Mobile financial services can assist in the transfer of finances through rapid, secure, and efficient money transfers, which therefore has a positive impact on income, expenditure, and other household well-being factors.”
Based on the survey, if the amount of money received through bKash rises by 10 per cent income, excluding food-related sources, may increase 0.5 per cent, with per capita income’s possible increase by 0,3 per cent while income from fish farming may rise by 3.3 per cent.
BKash’s total transaction was Tk 431,060 crore in 2020 when it reached the historic 5-crore landmark in terms of its customer base. The number of registered clients of the MFS platform stood at 10.27 crore at the of March 2021, based on the Bangladesh Bank data.
The day-to-day average transaction through bKash was approximately Tk 2,000 crore in March when its market share was around 49 per cent.
Transactions were made by bKash involving small amounts free from March 2021 to support the low-income people. It does not charge any fees for sending up to Tk 25,000 or less per month to 5 favourite members.
The survey found that though MFS services have been gaining popularity fast across the country, a significant portion of the population still remains financially excluded. It was observed that even though 98 per cent of households in Bangladesh had at least one mobile phone, 38.4 per cent of them had an MFS account. Also, 24 per cent of that 38.4 per cent had bKash accounts.
The survey also tracked the monthly expenditure of families to assess the impact at the household level. It also discovered that the monthly expenditure of the families using bKash was around Tk 3,126 while it was Tk 2,589 for families using other MFS platforms.
On the other hand, the monthly income of families that do not use any MFS platform was Tk 2,887.
One of the reasons why families that use bKash have higher expenditure could be because of the higher non-agricultural income and higher expenditure on non-food products in comparison to other groups, based on the report.
The usage of bKash had a significant impact on women’s ownership of resources as well. It was found that women’s ownership of wealth has risen by 14 per cent and their participation in income-generating activities by 9 per cent.
On top of that, using a different model of study, it was discovered that a 10 per cent increase in the amount of transactions through bKash increased women’s wealth by 2.1 per cent and increased their participation in income-generating activities by 1.1 per cent.
The study found that bKash agents were satisfied with their incentive structure. For bKash cash-in and cash-out transactions of Tk 100, agents can charge each customer Tk 1.75. Out of the Tk 1.75, the agent’s share is Tk 0.57, the distributor receives Tk 0.2, the mobile operator receives Tk 0.07 and bKash gets Tk 0.16.
Agents of bKash earn more than other MFS agents. It is important to note that people work as MFS agents together with other businesses. The MFS agents points are usually located in marketplaces, as stated by the report.
The report stated that since the beginning of its operation, the bKash has been utilising the agent network to bring more people under financial inclusion. The gradual growth of mobile money transactions and bKash is related to that of the high amount of customers and agents.
According to the company, the number of bKash agents stood at 271,900 at the end of 2020.
The company stated that the research has stated that the cost of remittances sent through services such as bKash is low due to the availability of other conventional ways, such as sending money through courier services, friends, and families. The number of total remittance transactions through bKash wallet was 5.15 lakh in 2020.
Based on the survey, in excess of 14 per cent of the people in rural Bangladesh use bKash to receive and disburse money. Most of the recipients are wives, parents (mainly fathers), and siblings (mainly brothers).
Among the remittance recipients, fathers tend to receive the highest (28.1 per cent), followed by other male relatives outside the immediate family, with males accounting for 19.1 per cent and cousins 12.9 per cent.
A large part of the money sent and received through bKash is spent on education and household. 74 per cent of the recipients said they spend the money on consumption.
According to the report, the use of bKash is popular among people of both upper and lower classes. Due to the use of bKash money for consumption, the company is contributing to the poverty alleviation of the underprivileged classes of the society.