Question

Consider different types of payment systems and analyze their feasibility within the context of Bangladesh.

Answer 1

Ans-Payment systems are the means by which funds are transferred among financial institutions, businesses, and individuals and are considered to be the critical factor for proper functioning of country's financial system.

The different types of payment systems in Bangladesh are mentioned below:-

1) Bangladesh Automated Cheque Processing Systems (BACPS)-Since inception in October, 2010 BACPS is the only state-of-the art cheque clearing facility. It uses the Cheque Imaging and Truncation (CIT) technology for electronic presentment and payment of paper-based instruments (i.e. cheque, pay order, dividend & refund warrants, etc). Transactions received from the banks during the day are processed and settled at a pre-fixed time.

2)Bangladesh Electronic Funds Transfer Network (BEFTN)- It was Incepted in February 2011and was country's first paperless electronic inter-bank funds transfer system. It facilitates both credit and debit transactions, as a lead over cheque clearing system. This network can handle credit transfers such as payroll, foreign and domestic remittances, social security payments, company dividends, bill payments, corporate payments, government tax payments, social security payments and person to person payments.

3) National Payment Switch Bangladesh (NPSB)- NPSB is meant for establishing interoperability among participating banks for their account and card based transactions. Currently, it caters interbank Automated Teller Machines (ATM), Point of Sales (POS) and Internet Banking Fund Transfer (IBFT) transactions while the Mobile Financial Services interoperability is under active consideration.

4)Mobile Financial Services (MFS)-Bangladesh Bank has introduced efficient off-branch Mobile Financial Services (MFS) during 2011 in Bangladesh as the country acquired an omnipresent mobile phone network experienced, large number of mobile phone users and improved IT infrastructure. Within seven years, this exponentially growing Bank-Led model of MFS has become the largest MFS market in the world.

Bangladesh Bank permits Cash in, Cash out, Person to Person (P2P), Person to Business (P2B), Business to Person (B2P), Person to Government (P2G) and Government to Person (G2P) payment services through MFS domestically.