The future belongs to digital transactions

The size of the country’s economy is expanding. The quality of life is also improving. In comparison, how much has the credit card market expanded?

The demand of credit cards and the number of users have been gradually growing. Even during the Covid period, the credit card market expanded. From 2019 to 2020, the credit card market grew by 10 per cent. Then from 2020 to 2021 the market grew by 16 per cent. I remember, in 2018 the number of credit cards in the country was less than 13,00,000. Now it is 1900,000. In only our bank, there are nearly 5,50,000 active cards.

Now let’s take a look at card transactions. From 2020 to 2021, the volume of card transaction has increased by 50 per cent. Now, every year almost Tk 210 billion of transaction happens through credit cards. Out of it, Tk 40 billion of transaction took place through City Bank cards. Even in point of sales (POS) machines, transactions have increased. From 2020 to 2021, POS transactions have increased by 52 per cent. In 83,000 POS machines across the country, Tk 270 billion of transaction is taking place annually. Out of that, Tk 60 billion of transaction happened through City Bank.

Currently, QR code based transaction is also gaining popularity. As many as Tk 800 billion of online transaction take place annually in Bangladesh, out of that Tk 270 billion of transaction take place in POS machines. The remaining transaction is taking place through mobile phones using QR codes. A large amount of QR code transactions take place in merchant points during “cash out”. City Bank has QR codes in more than 20,000 shops. But Bkash is still controlling this market.

What role should banks, regulatory body, merchant and consumers play to expand the credit card market?

Unfortunately, credit card is still viewed as plastic debt for middle-class and high-earning people. It’s still not a mode of transaction for mass people. Because, to acquire a credit card you need to have a Taxpayer’s Identification Number (TIN). It’s important to relax this rule to allow low-income people get credit cards. We could use mobile financial services (MFS) transaction list or income certificates instead. Furthermore, if we could take driving license instead of national ID card and take digital nano loan into account in KYC then the landscape and history of credit cards in Bangladesh will change.

The clients also play a big role in expanding the credits card’s market. They should clear their loans in time, which would bolster the confidence of big banks. If merchants don’t withdraw cash from their credit cards and the banks start the reward points programme liberally, then the market would transform.

In Bangladesh, credit cards gained popularity through Amex. This is why City Bank is still leading this market. What is the next plan of your bank to to continue your position?

Broadly speaking, we have two plans. Firstly, We have already collaborated with Bkash to start digital nano loan initiative for the low-income people. We want to give these people credit cards. For them, the loan limit would be low. Secondly, we want to incorporate new technologies to make transaction through credit card easier. Moreover, we plan to encourage digital transaction by placing POS and QR codes in every nook and corner of the country. For that, we want to appoint card ambassadors in district and upazila level to take the card service into remote areas. We also have a dream to turn Amex card reward points into a mode of currency. We also want all cards to be contactless and operate virtually from phones.

We are also focusing on developing two special Amex credit cards. One is an Amex Islamic credit card and a women’s banking credit card called “City Alo”. After opening Amex lounge in the Dhaka airport, the demand for Amex card has increased.

What do you think the credit card market would be like in Bangladesh after five years?

In Bangladesh, 75,00,000 people have TIN but only 18-1900,000 have credit cards. I think if the banks stop being conservative in issuing cards and the government helps us with its policy the number could surpass 50,00,000 within the next year. If we can impose a rule that a certain portion of a person’s spending has to be done through cards, just imagine how much more transparency it would bring in people’s income and spending. The government’s tax collection would increase by a lot.