MasterCard Drives New P2P Solution In Bangladesh

A new remittance service being rolled out by MasterCard, Western Union, bKash and BRAC aims to open up financial inclusion to 22 million Bangladeshis. Barb King, MasterCard’s SVP of P2P segment, tells PYMNTS how it works, and what might lie in the future.

In a quartet joining forces to bring mobile cross-border payments to 22 million Bangladeshis, MasterCard is linking up with Western Union, bKash and BRAC bank.

The companies said in a joint statement Sunday, April 17, that they are launching a new international remittance receiving service in the nation. The service will allow bKash’s customer base to use mobile phones to receive remittances that come from outside the country directly into their bKash accounts.

Separately, in an interview with PYMNTS before the launch, Barb King, who serves as SVP of MasterCard’s P2P segment, said that the new partnership between her firm and bKash, BRAC and Western Union “plays on the strengths of all the organizations included,” and that reception of the remittance program has been positive in the few weeks since it has gone live. The MasterCard piece of the puzzle, she added, and one that had been partly an impetus for the service’s launch, namely MasterCard Send, which debuted in the United States last year, “is brand agnostic” in its allowance for funds to be sent from one consumer to another.  The company, King stated, has also already been in partnership with Western Union.

MasterCard Remittance_1

The pact would be a furtherance of Bangladesh’s standing as the eighth largest receiver of international remittances globally.  With bKash’s installed base of 22 million Bangladeshis, built over five years since launch, family members will have a new and incremental avenue through which to send money to their loved ones within Bangladesh.  The main conduits would be mobile devices, or alternatively, physical pickup of cash remittances at Western Union agent locations, spread out across 200 countries globally.  Users registered with bKash can gather the remittances set from any location and send channel served by Western Union, and the remittances can be sent 24/7.

Though it is too early to tell what remittances have looked like thus far into the program, King stated that the rollout has been a smooth one without any unexpected events, and that future products in the area might extend to include “push and pull” services for payments across cards and mobile banking.

“The widespread adoption of mobile phones, not only in Bangladesh but around the world, presents the most exciting opportunity to enable mass adoption of financial services and facilitate financial inclusion.” – Matthew Driver, group executive at MasterCard’s Global products and solutions unit

In promoting financial inclusion, said King, fees can matter, especially for users with limited incomes. She noted that the typical remittance might charge a fee of between 7 percent to 8 percent but that the new remittance service through MasterCard and its partners charges a much lower fee of about 1.85 percent.

bKash is a joint venture of BRAC Bank, which is a commercial bank focused on SMEs in Bangladesh, Money in Motion, based in the U.S. and International Finance Corp, which is a private sector investment firm tied to both the World Bank and the Bill & Melinda Gates Foundation. One overarching aim of the bKash consortium is to bring additional financial services to the lower income, and traditionally underserved, people of Bangladesh.

BRAC Bank, in turn, has been billed as one of the fastest growing banks in Bangladesh, with 175 branches and 450 ATMs across that nation, serving more than 1.7 million customers.  In 14 years since launch, the institution has become the largest SME financier in the nation and has been branching out and expanding its presence in other segments of banking, most notably retail ad Probashi (Bengalis living outside of Bangladesh).

Detailing the remittance process, MasterCard said that it provides the real-time bank end solution that underpins the transactions by connecting the hubs of bKash, BRAC Banka and Western Union, through MasterCard Send.

A bKash customer enters the Western Union money transfer control number, the amount to send, and the bKash PIN and the request is processed using MasterCard’s secure payment technology.  The funds are then credited to the bKash account.  In terms of limits, the individual transactions have a cap of BDT 35,000, or about $500, and up to roughly $1,500 (or BST 11,500) over five transactions per customer per day, or monthly caps of $1,900 (BDT 150,000) across 20 transactions a month.

The money can then, and finally, be cashed out at one of the roughly 120,000 bKash locations that are dotted across Bangladesh. Those accounts can also be used to make additional P2P transfers or top off mobile airtime, or pay bills.  Money stored in bKash accounts earns interest.

In a statement that accompanied the announcement, Matthew Driver, group executive at MasterCard’s Global products and solutions unit said: “This relationship is another step towards achieving our global commitment to make the financial system accessible to 500 million more people by 2020.”

“The widespread adoption of mobile phones, not only in Bangladesh but around the world, presents the most exciting opportunity to enable mass adoption of financial services and facilitate financial inclusion. Working with companies such as bKash and Western Union is crucial to taking advantage of the latest technology; digitizing money transfers and supporting financial inclusion efforts in the South Asia region and worldwide,” he added.

“The choice, flexibility and convenience of this new bKash service will help to expand financial inclusion to some of the most remote parts of this thriving nation.”