Post Office’s Nagad will create ‘uneven’ competition, MFS providers fear

Mobile financial service or MFS providers in Bangladesh will face an ‘uneven’ competition once the Post Office’s mobile banking service Nagad is launched, people related to the business fear.

They also apprehend that the new digital money service, with higher limits and numbers of transaction than those of the existing MFS providers, poses ‘serious risk’ of money laundering and terrorist financing.  

Through ‘Nagad’, a customer will be able to make a single transaction of Tk 50,000 and maximum Tk 250,000 in 10 transactions per day and withdraw the same amount through same number of transactions per day in the mobile wallet.

A customer can submit maximum Tk 15,000 via two transactions and withdraw maximum Tk 10,000 via same number of transactions a day through existing MFS providers like bKash, Rocket, and UCash.

It means Nagad will allow 25 times more money for transfer and 17 times more for withdrawal than the current MFS providers do.

The Post Office has already started appointing agents for Nagad.

In a circular in January last year, the Bangladesh Bank lowered the limits on the number of transactions and the maximum amount that can be transacted through mobile payment in a day or a month.

It observed that the mobile financial service was a rapidly growing system which had become popular among a wide section of society, especially the low-income group.

"However, allegations of its misuse by unscrupulous individuals have been received which is detrimental to the nation and the people," it added.

When contacted about the MFS providers’ fear, Bangladesh Bank spokesman Serajul Islam said the central bank was in no way involved with Nagad because it was being launched by the Post Office, unlike the existing MFS providers that were launched by banks.

The central bank has permitted 18 banks to launch mobile services until now, according to him.

It denied the Post Office permission to launch the service some days ago, citing that it regulates banks only and the MFS providers were given permission under the Bank Company Act. 

Post Office then decided to go ahead with the Nagad project under the Post Office Act. A private firm has already been appointed to run Nagad.

Post Office is launching Nagad as part of its expansion, its Director General Sushanto Kumar Mondal told bdnews24.com. “It’s in the initial stages now,” he said.

Shamsuddin Haider Dalim, head of corporate communications and public relations at BRAC Bank’s subsidiary bKash, said the central bank has been trying to bring order to mobile banking for eight years.

“Providing the service with two types of limits but same type of agents will destroy the order in this sector,” he said.

He also expressed fear of an ‘uneven competition’ due to the differences in the limits.