Page 1 of 14

Findings and Learning on MPayment for RMG workers in
Bangladesh

Prepared By
Md. Majidul Haque
Linkedin Prof...
Page 2 of 14

Introduction of the project
The history of Readymade Garments (RMG) sector in Bangladesh spans for
decades. ...
Page 3 of 14

1. Viyellatex Group:
a. Target: 350 workers
b. Account opened:350
c. First Month Salary Disbursement: 288
2....
Page 4 of 14

b. Cash availability at the agent points or at the cash out points i.e.
ATM, Bank Branch, etc. in the disbur...
Page 5 of 14

e. And the last but not the least, management is agreed if the workers
are agreed. We offered to start the s...
Page 6 of 14

e. Some ancillary services like Send Money (P2P), Airtime Top-Up,
etc. which will allow them to avail those ...
Page 7 of 14

a. Dedicated agent arrangement in order to open account at the
garments premises as management didn’t allow ...
Page 8 of 14

4. Mobile Banking Account verification by the management
After the account opening process, we shared the ac...
Page 9 of 14

a. Learning of salary withdrawal process at agent point, ATM, Bank
branch.
b. Service charge at different ca...
Page 10 of 14

e. Workers want to have a kind of savings focused product (it could
be Deposit Pension Scheme/Monthly Savin...
Page 11 of 14

service through mobile banking they started to use it considering
the convenience and use their salary to T...
Page 12 of 14

availability at ATM booths, Network down, Load shedding, no
cash less than BDT 500, etc. They also figured ...
Page 13 of 14

- Tracking of fund through mobile banking.
- Ensure centralized control over disbursement since salary disb...
Page 14 of 14

c. First Month Salary Disbursement: 1,400
After the successful Pilot, many other Garments company showed th...
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Findings and Learning on Mobile Payment for RMG workers in Bangladesh

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The history of Readymade Garments (RMG) sector in Bangladesh spans for decades. RMG that is a $16 billion industry in Bangladesh and employing about three (3) million people and contributing significantly to social inclusion. But among them only 14% has access to financial services and rest 86% don’t have any sort of connection with financial institution. To ensure ease in the salary disbursement process as well as to ensure solid financial inclusion; We, DBBL mobile banking planned to introduce such a payment disbursement solution through which “Automated Salary through mobile banking account” could be provided for the RMG workers. RMG plays a super positive role in freeing the people from poverty and empowering the women in the society.

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Findings and Learning on Mobile Payment for RMG workers in Bangladesh

  1. 1. Page 1 of 14 Findings and Learning on MPayment for RMG workers in Bangladesh Prepared By Md. Majidul Haque Linkedin Profile: bd.linkedin.com/pub/majidul-haque/44/602/74b/ Skype ID: mohammadmajidulhaque Date: 28th October, 2013 Salary Disbursement for RMG workers through DBBL Mobile Banking in Bangladesh
  2. 2. Page 2 of 14 Introduction of the project The history of Readymade Garments (RMG) sector in Bangladesh spans for decades. RMG that is a $16 billion industry in Bangladesh and employing about three (3) million people and contributing significantly to social inclusion. But among them only 14% has access to financial services and rest 86% don’t have any sort of connection with financial institution. To ensure ease in the salary disbursement process as well as to ensure solid financial inclusion; We, DBBL mobile banking planned to introduce such a payment disbursement solution through which “Automated Salary through mobile banking account” could be provided for the RMG workers. RMG plays a super positive role in freeing the people from poverty and empowering the women in the society. Project profile The project has two parts. The first part consists of a Pilot Phase where approx 600 workers in 3 garment companies and the duration of Pilot is 6 months. The second phase will start by deciding from all parties’ right after the successful execution of the Pilot Phase where all of the workers of the selected 3 companies’ salary will be disbursed through Mobile Banking account. We gave a name for our project i.e. “Salary Disbursement through DBBL Mobile Banking for RMG workers” as Pilot with three (3) major Garments company i.e. Viyellatex Group, Mohammadi Group & Crystal Martin. We started our discussion with the management of several renowned garments companies for accepting the automated disbursement solution and to start the Pilot. But only 3 of them (above mentioned) agreed to do so. Date: 28th October, 2013 Salary Disbursement for RMG workers through DBBL Mobile Banking in Bangladesh
  3. 3. Page 3 of 14 1. Viyellatex Group: a. Target: 350 workers b. Account opened:350 c. First Month Salary Disbursement: 288 2. Mohammadi Group: a. Target: 150 workers b. Account opened:150 c. First Month Salary Disbursement: 75 3. Crystal Martin Bangladesh Limited: a. Target: 100 workers b. Account opened:100 c. First Month Salary Disbursement: 55 Findings 1. Garments’ owners/management is ready to accept the change but…: When we approached for the salary disbursement solution instead of the existing hazardous cash handling, all were appreciated the solution but ensuring some issues that has to be addressed before accepting the change, these are illustrated as below: a. Free of charge for salary withdrawal which will ensure of total salary amount to the workers without deducting any amount. Date: 28th October, 2013 Salary Disbursement for RMG workers through DBBL Mobile Banking in Bangladesh
  4. 4. Page 4 of 14 b. Cash availability at the agent points or at the cash out points i.e. ATM, Bank Branch, etc. in the disbursement day. c. No technical problem which may cause the failure of salary withdrawal as workers are very much sensitive about their payment. It is to be noted that owners or management of Garments Company are so much aware of the full payment on workers’ hand since the average salary figure of each worker is BDT 5000-6000 only and no worker is ready to do lose even a tiny part of it. d. Garments owner and management were likely to accept the service considering the existing hazardous cash handling which ultimately hampered the production, risking asset & life, cash carrying cost, and also human resource cost involved with the process. Picture of a salary disbursement day in cash Date: 28th October, 2013 Salary Disbursement for RMG workers through DBBL Mobile Banking in Bangladesh
  5. 5. Page 5 of 14 e. And the last but not the least, management is agreed if the workers are agreed. We offered to start the service from the supervisor level so that it will be an example for their subordinates to accept the service as their leaders has already experienced and it’s supposed to be a better experience of course. 2. Workers are agreed to accept the change but….: After approaching to the management of the garments company, they arranged an open discussion session with their workers for convincing them for accepting the salary disbursement to mobile banking account. After doing so many session in so many different garments company the following are some key points which can briefly express the need or say of the workers: a. The workers are ready to accept the service if they get the full payment without deducting a single taka. b. Availability of cash out points nearest to their work premises as they don’t get any leisure time for going somewhere else and to do the salary withdrawal. c. They also want those cash out points to be opened even in the evening or at night as it eventually turn to night or dusk when they return to home after finishing their daily work. d. Safety & reliability of the account. If they lose their mobile so the account goes also? It should not be. Date: 28th October, 2013 Salary Disbursement for RMG workers through DBBL Mobile Banking in Bangladesh
  6. 6. Page 6 of 14 e. Some ancillary services like Send Money (P2P), Airtime Top-Up, etc. which will allow them to avail those services without any hassle as they are facing in the existing process. f. Face to face friendly customer service as they are not much literate and don’t feel so comfortable to call at call center by going through an IVR tree and talking with an automated voice. g. We convinced the management to disburse the salary into mobile banking account at least 2 or 3 days before the existing salary disbursement i.e. cash. Our intention was to impress workers towards this service. 3. Joyful day (Mobile Banking Account opening of the workers) It was another challenge to address as management of the garments usually does not allow mobile phone at the workstation. The restriction is because to prevent quick spreading of violence if any. As it’s a great step towards financial inclusion and also considering the security of the workers’ salary, management agreed to allow bringing the mobile handset only for those targeted workers and only for particular account opening days. It is to be noted that most of the garments workers live in slum area or somewhere which is unsafe (as they can’t afford more than this) for keeping the money with them. There are so many incident can be recalled in the day of salary disbursement for the garments workers where the amount taken by the goons while returning to home. However below some key points on account opening session: Date: 28th October, 2013 Salary Disbursement for RMG workers through DBBL Mobile Banking in Bangladesh
  7. 7. Page 7 of 14 a. Dedicated agent arrangement in order to open account at the garments premises as management didn’t allow giving any additional day off for the workers. b. Though the workers are not so much literate but they are very much well known to operate a mobile handset as Bangladesh is enjoying a very strong penetration rate in terms of mobile phone using. We faced very minimal challenge for opening individual’s mobile banking account. We found male were easy going then female in the account opening process. In the Pilot 70% were male and 30% were female. c. Necessary documents were not available to all workers though it has been informed earlier. But we somehow managed it by contacting with them and collecting the same. d. We had to take some steps to prevent from using the same and easy PIN for the workers. At the very first moment all of them were submitting PIN as 1234 which was easier to identify. We tried to convince them to use separate PIN for each individual workers and asked them to change the PIN later on for security reason. e. Some hands on mobile banking menu training was also in the account opening session. We did the account opening for each individual by ensuring as less disturbance as possible and ensuring without hampering the production. Date: 28th October, 2013 Salary Disbursement for RMG workers through DBBL Mobile Banking in Bangladesh
  8. 8. Page 8 of 14 4. Mobile Banking Account verification by the management After the account opening process, we shared the account list with worker name, ID and other related information with the concern department of the company. After going through their internal checking they share the final list with us. 5. The Judgment day (Disbursement Day) We ensured disbursement within half an hour of receiving the advice sheet from the concerned personnel of the company via email. It’s a bulk disbursement and less time consuming. But the disbursement day is very much crucial as it’s a new service introduction to the workers and to understand the meaning of notification message in each individual’s mobile phone. Below are some preparations that we have addressed before disbursing the amount: a. Cash availability at cash out points b. Bank personnel availability at those cash-out points where most of the workers might visit c. Addressing any A/C block, activation issue d. Fully functional system 6. Acceptance of new Salary Withdrawal process: This is the highest challenge we faced while implementing this disbursement service for the workers. Below are some facts which we had to address for first couple of months: Date: 28th October, 2013 Salary Disbursement for RMG workers through DBBL Mobile Banking in Bangladesh
  9. 9. Page 9 of 14 a. Learning of salary withdrawal process at agent point, ATM, Bank branch. b. Service charge at different cash out points. c. PIN reset of workers as they usually forget this for not using frequently. d. No system disruption at the time of withdrawal 7. Savings habit grows At the first couple of months workers usually did the full amount withdrawal as they were not quite sure about the storage capability of these accounts. They thought it’s a mobile and I might lose my money if I lose my mobile and even if I don’t withdraw salary just after receiving it might be vanished. Below are some findings we noticed during the Pilot: a. Full salary amount withdrawal in the first couple of months b. Keeping some amount in the mobile banking account like BDT 500 or BDT 1000 as they have already understood it’s a bank account c. Savings become habituated with time d. Now most of the workers keep balance in their account and withdraw only that much which is required as and when basis. We found about 60% of the workers do have this habits in the final implementation for those companies. Date: 28th October, 2013 Salary Disbursement for RMG workers through DBBL Mobile Banking in Bangladesh
  10. 10. Page 10 of 14 e. Workers want to have a kind of savings focused product (it could be Deposit Pension Scheme/Monthly Savings Scheme) where some periodic installment will be automatically debited from workers’ salary account and will be matured the scheme after some specific period. 8. Using of Send Money or Top-Up to build the eco system First 2 or 3 months workers only used the mobile banking for salary withdrawal but they started to avail Send Money (P2P) and Airtime TopUp service as they need most in their daily life. Reasons of using these two services are mentioned below: a. Most of the workers are migrated from some other districts or remote area to Dhaka, the capital of Bangladesh. But their family members still lives in that district or village and they need to send money to their dearest one. Before introducing with mobile banking workers used to send money through courier or handover money to someone known person who take the responsibility for transferring. After introducing with the Send Money (P2P) service, they gradually fond of this service considering the convenience, reliability, low cost, fast, etc. About 68% workers use this service to address their need. b. As all of the workers using mobile banking account are having mobile phone and Airtime Top-Up is a regular service they receive from Telco retail points. But after the introduction of Top-Up Date: 28th October, 2013 Salary Disbursement for RMG workers through DBBL Mobile Banking in Bangladesh
  11. 11. Page 11 of 14 service through mobile banking they started to use it considering the convenience and use their salary to Top-Up. 9. Service charge and choosing of Cash-Out points From the very beginning of this Pilot, Service charge was the key factor to accept the disbursement service. Below are some facts about service charge which ultimately played a vital role to make this Pilot a successful one: a. Both the garments owner and workers don’t want to deduct a single penny from the salary amount as withdrawal charge while withdrawing. We asked the management to bear the service charge of withdrawal if anyone visits agent points i.e. 1% or BDT 5 whichever is higher per transaction but they were not agreed. b. To mitigate the above issue, we introduced 3 cash-out channel i.e. Bank Branch at Service charge of BDT 10 per transaction irrespective to any amount, Free of Charge from ATMs, and Agent points at 1% or BDT 5 whichever is higher per transaction. c. First couple of months everyone visited ATM booths to withdraw their salary as it was at free of charge. Nobody visited any agent points d. After 4 or 5 months workers started to visit agent points considering the convenience. They usually wanted a friendly environment and expected some human involvement while doing the transaction. The other reasons behind moving towards agent points are banking hour issue at bank branches, cash unDate: 28th October, 2013 Salary Disbursement for RMG workers through DBBL Mobile Banking in Bangladesh
  12. 12. Page 12 of 14 availability at ATM booths, Network down, Load shedding, no cash less than BDT 500, etc. They also figured out some positive sides about agent points like familiar faces at those points, multiple agent points within a small territory, any amount even BDT 10 can be withdrawn, anytime anywhere, etc. Benefits from the project The concept brought convenience and became a necessity. The proposed solution also released numerous services and possibilities. The enabled services have a lot of potential in the RMG sector of Bangladesh as well as the unbanked population of Bangladesh, are in need of an inexpensive, secured, easy & convenient medium banking facility such as fund disbursement, fund transfer, and savings, etc. The core benefit for the workers availed: - Fast, easy and secured fund disbursement; no chances of robbery on the way back home with physical cash. - Tracking of fund through mobile banking. - Workers can transfer funds to their friends and family or they can avail prepaid top up service through mobile banking. - Virtual cash is more secured than physical cash so security of fund can be ensured through this. The core benefit for the Garments Company: - Fast, easy and secured fund disbursement; no chances of error that may cause by the manual disbursement process. Date: 28th October, 2013 Salary Disbursement for RMG workers through DBBL Mobile Banking in Bangladesh
  13. 13. Page 13 of 14 - Tracking of fund through mobile banking. - Ensure centralized control over disbursement since salary disbursement will be managed through center office. - Save man hour, movement of physical fund and thereby ensure security of Fund. Conclusion Finally, it was a successful Pilot and those 3 big groups of company agreed to avail the service for all of their workers. The below are some figures for the second phase implementation: 1. Viyellatex Group: a. Target: 18,000 workers b. Account opened so far: 1,000 c. Regular Salary Disbursement: 500+ 2. Mohammadi Group: a. Target: 12,000 workers b. Account opened: 1,700 c. First Month Salary Disbursement: 1500 3. Crystal Martin: a. Target: 4,500 workers b. Account opened:1,600 Date: 28th October, 2013 Salary Disbursement for RMG workers through DBBL Mobile Banking in Bangladesh
  14. 14. Page 14 of 14 c. First Month Salary Disbursement: 1,400 After the successful Pilot, many other Garments company showed their interest to avail the service for their workers and among them Shanta Group, Noman Group, Prophecy Company Limited, Hamilton Corporation Limited, Fakir Fashion, A Plus Industries Limited, etc. are mentionable. Our objective is to ensure the solid financial inclusion in Bangladesh as well as to bring the unbanked community in the banking umbrella. Date: 28th October, 2013 Salary Disbursement for RMG workers through DBBL Mobile Banking in Bangladesh

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