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in the way of
a regulatory framework, by operating independently of banks. But thats where the similarity ends. Whereas Mpesa was
launched as a product owned by a telecommunications network company to leverage the strength of network subscriptions,
bKash started as a mobile transfer platform operated as a subsidiary of a bank but run independently from the bank.
The strength of Mpesas approach has been in the readily available market access of Safaricom existing network subscribers.
bKash, on the other hand, has approached the market from a position of independence from any mobile network provider,
which has considerably widened its reach by not being limited to a single mobile network.
Both services have been accused of abusing this market strength to charge exorbitant fees to their clients. Secondly, the general
populace is yet to understand the intricate workings of each of these platforms which have expanded significantly from simple
money transfer platforms to incorporating functions such as savings, small loans, payments of bills, e-payment services among
others and with due time, international remittance.
There is an urgent need to educate the general populace of the role played by all stakeholders in the sector to avoid
misunderstandings, which are more often than not, directed at agents providing services to the customers, as opposed to the
related company which is best suited to handle any issues.
One great disappointment with the Mpesa story is its failure to replicate the same level of success experienced in Kenya when
applied in other countries. While bKash allows international remittances, it is also yet to export its success beyond the
boundaries of Bangladesh. This had raised serious questions about the viability of both mobile money models, given that their
performance is not predictable even when applied in countries with similar demographics and market dynamics, as is the case
of Mpesas failure to gain traction in Kenyas neighbour, Tanzania.
Checking out the tariff details also gave me the sense that bKash is quite affordable cash-ins are
free, transfers to another bKash client costs Tk. 5 (USD 0.06), cash-outs cost 1.85% at the agent
and and 2% at the ATM. Is being cheap enough, then, another reason for its prolific growth?
We will be looking at three modes of engagement transferring to another user registered on the
same network, to an unregistered user, and cashing out at an agent. As far as I can tell, bKash
does not allow transfers to unregistered users, but I included that anyway for these graphs
because there one point that is interesting to note, irrespective.
bKash charges a flat of USD 0.06, which is by far the lowest registered P2P transfer amongst all
six providers, except for the lowest rungs of M-PESA and Vodacom TZ.
bKash charges at a proportional rate of 1.85% to withdraw at an agent. MTN Uganda, Vodacom
TZ and GCash all charge proportional or almost proportional rates, while easypaisa charges at a
somewhat regressive rate, where the fee does not increase as much as it would if it were
charged proportionally. M-PESA has a very regressive rate, where the fee stays more or less
the same for large sections of funds transfer ranges.
In so far as none of the providers have a very well developed e-payments ecosystem, other than
M-PESA, one has to consider both the cost of transferring funds to other users but also the cost of
cashing out. Since bKashs promotional material strongly emphasizes remittances, it stands to
reason to keep the charge at a nominal US 0.06, while making most of the returns at cash-out.
This encourages increased velocity of e-money in their system.
We now look at the fee as a percentage of the amount cashed out. In cases where the fee is a flat
amount for a range of values, we take the fee as a percentage of the average of the min and max
of that range.
The graph is truncated to the USD 10 to USD 200 range because for any value below that, bKash
(the magenta line) is the cheapest option by far. However, by the USD 100 mark, bKash has
become the most expensive option, bar GCash, which is just 0.15% higher at 2% of cash-out. M-
PESA reaches the cheaper than 1.85% mark fastest, at USD 16.51.
Is bKash cheap, then, when it comes to cash outs? The numbers tell us that for small amounts, its
much, much cheaper than any other comparable services around the world. However, because of
regressive fee rates, the services catch up somewhere in the USD 15 100 range. From the
financial inclusion point of view, we often take USD 100 to be a small balance threshold. Going by
that, bKash is also pretty financial inclusion friendly.
From the point of view of the universe of clients served by these companies, we would need to
know what band most of the clients transact in to be able to say which is relatively cheaper. If
most clients operate around the USD 10 band, bKash is the cheapest, while is they operate more
in the USD 200 band, then it is the most expensive.
bKash is the cheapest P2P money transfer option amongst the peer providers we looked at. It is
the cheapest cash-out option till about USD 16, and then becomes the most expensive one after
about USD 100-200, depending.
Can Bangladeshs mobile
money service repeat M-
Pesas boom?
bKash has vast scope to grow in a populous nation
and parent looks like a good investment
Business Day28 Aug 2017FLORIS STEENKAMP