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RESPONSIBLE
DIGITAL WAGES IN IN
RMG SECTOR OF
BANGLADESH
January 2021
A post pandemic stock take &
preparation for the Post Covid-19
Digital Payments Roadmap 2021
Bangladesh Development Goals & Priorities
2
Growth
trajectory
towards
a
developed
economy
LDC Graduation
Digital Bangladesh &
Middle Income Country
Developed Country
Both these goals form part of the
Vision 2021 of the government.
Digital Bangladesh aims at
effective use of technology to
enhance people’s lives and access
to services. The Middle Income
country agenda aims at poverty
reduction and consistent GDP
growth Bangladesh aims at elevation
from the least developed
country status after a
revaluation in 2021 after an
initial meeting of the criteria in
2018
The government is working
and planning meticulously in
meeting the standards for
the country to meet the
qualification of the status to
a developed economy. This
is being planned through
setting short & long term
goals, digitization as the
backbone of the economy
and overall inclusion of the
country’s citizens
2021
Bangladesh has well defined medium and long term policy
approaches to elevate to the status of a developed
economy
2024 2030 2041
SDG achievement
Bangladesh achieved the
MDGs and is on a consistent
path to achieving the SDGs
by 2030 through constant
tracking and improvement
To understand the challenges in wage digitization in garments sector, in the midst of a global pandemic,
the principal conveners of the Digital Wages Summit 2019 under the leadership of the Government of
Bangladesh strived to understand the challenges of wage digitization in the garments sector during a
global pandemic.The rapid assessment considers the following as key stakeholders of the digital wages
ecosystem in Bangladesh.
3
Analyzing the roadblocks and enablers towards responsible
digital wages
RMG Workers Financial Service
Provider
Buyers Government Regulator
Factories
As merchants and agents contribute to workers’ experience of using digital wages,
they views have also been considered.
Key Milestones
4
Government, manufacturers, brands, associations
commit to digitizing 90% RMG workers’ wages in
Bangladesh by 2021
Stimulus package worth BDT50 billion was announced
by Government of Bangladesh for the export-oriented
sector, mainly targeting the RMG sector
November’ 19
Bangladesh Bank mandated all RMG factories to digitize
wages through a circular from Bangladesh Bank
April’ 20
In less than two weeks, 1.92m new MFS wallets were
created.The digital wages agenda got a major boost. It
is a tremendous achievement for the industry!
During the peak of Covid-19 crisis, 77% workers were
getting paid digitally.
5
About a year into the pandemic
2020 was a difficult year for RMG sector
• about 70,000 workers lost their jobs
(BGMEA)
• Eventually 90% orders were reinstated
• However, prices of apparel exported from
Bangladesh dropped by 2.87%
By Q4, many factories went back to
cash payments
• In November, just about half of the
workers (54% )received digital wages
• Workers are not complaining about cash
wages either
During 2020, challenges that emerged as a result of rapid
digitization
6
Limited Incentive
The stimulus package
incentivized factories to shift to
digital. Some factories found it
very challenging to digitize,
therefore had to switch back to
cash. Many factories that went
digital did not do so fully.The
cash payments infrastructure
remained in place, making it
easier to revert to cash.
On a positive note, the initial
investment has already been
made (workers have wallets)
and majority of factories have
gone through a few cycles of
digital payments.The stimulus
program was a boost for the
industry that was already
gearing towards maximum
digitization.
LimitedUseCase
Workers have limited use
cases for which they wish to
be paid digitally and/or lack
awareness of use cases that
are available such as
sending payments or
topping up airtime. The
ecosystem around the
worker (merchants,
landlords) do not support
digital payments. Workers
need more training to drive
usage of financial services,
especially women.
Regulations need to allow
innovations around product
development for low-
income segment.
Cost Burden
Rushed Onboarding
As onboarding happened in
a rush – the factories and
MFS providers relaxed the
requirements. For
example, many used birth
certificates instead of NID.
If they want to receive
wages digitally, workers
must re-register their
accounts with ID proof..
Many would rather get paid
in cash. Many also did not
use their own SIM card
while they were registering
in April 2020.
There is no clear guideline
on cash out; factory’s mid-
management feels
ultimately this cost will be
forced on factories.
Fifty percent of workers in
our survey said they want
to pay zero for cash out.
7
Workers’ Preparedness with Digital Wages
Onboarding happened in a rush, but two-thirds of workers were prepared for the shift to digital
What were the workers told about the shift from cash to digital?
33%
workers did not
have sufficient
time to open a
wallet
45%
created wallet in such a rush
that they did not realize what
they were signing up for
28%workers were already
receiving wage
digitally
23%
workers were told
that shift to digital
wages is temporary
68%
workers knew clearly
why factories were
shifting to digital wages
54%
workers have received
support with using MFS
wallets from factories
workers want to continue getting salaries via
MFS, but factories are now paying in cash
again 27%workers want to go back to cash salaries,
but factories are continuing to pay
digitally
38%
Workers’ preferences
Source: MFO | Total Sample: 1275 | Female: 961 | Male: 314
Barriers of creating MFS accounts
8
Source: MFO | Total Sample: 1275 | Female: 961 | Male: 314
Workers’ Experience with Digital Wages
9
Cost: Workers feel cash out fee is forced;
they shouldn’t pay for something they didn’t
ask for
• 50% workers said they are not willing to pay
any cash out charges
• 31% workers feel getting paid digitally robs
opportunity to use funds instantly
• 25% workers will be happy to go back to cash
• Main source of awareness is TV (53%)
while only 16% workers learned about the
package from factories
• 21% claimed they have received fund from
the stimulus package
Awareness of stimulus package: Less than
half are aware of stimulus package (39%)
More workers believe cash gives
them better control (73%) than
digital payments (57%)
• 44% believe getting paid digitally
makes it saving for future easier –
while 31% believe cash payments is
makes for a better way of saving
• When it comes to being prepared for
unexpected payments – it doesn’t
matter much whether they are paid in
cash or digitally
• Women’s digital literacy crucial for
them to gain control over mobile
money
35%workers believe move from
cash to digital wages is a
permanent change
60%workers would trust their factory
management more if they paid digital
wages
Source: MFO | Total Sample: 1275 | Female: 961 | Male: 314
Safety is not a concern with digital wages
10
Safety: Majority finds digital payments safe,
but men find digital payments safer than
women
• 74% workers feels safe withdrawing
money from agent point/ATM
• 69% workers feels safe carrying cash from
the agent point/ATM
• 95% workers never felt harassed
• 32% female workers are uncomfortable
with visit to agent point, while for 28% said
their husbands are not in support of their
visits to agents
87%
workers have their own MFS wallets.
About one third of those who do not
have wallets do not have ID proof
(NID/smart card)
Issues with PIN management remain but 48%
workers can now check balance and 19% can
make P2P transfer
Source: MFO | Total Sample: 1275 | Female: 961 | Male: 314
Gender Gap in Digital Empowerment
11
Source: MFO | Total Sample: 1275 | Female: 961 | Male: 314
12
Limited access and use case of digital payments
MERCHANTS AGENTS
Not accepting digital payments
• Limited approach by MFS providers to
create merchant account – cannot
operate properly with personal account
• Merchants’ entire supply chain is cash
driven
• Digitizing wages does not benefit them
directly. But when there are enough
digital payers – it might make a
difference.
Willing to adapt – but no one asked
them to
• If their suppliers accept digital payments
• If they notice majority of workers
request to pay digitally
Difficult onboarding, smooth servicing
• April was a tough time for agents – they had to
onboard workers amidst lockdown/restriction.
• MFS providers forecasted extra need for liquidity,
so they didn’t face much problem.
• Agents cannot explain to workers how cash out
fee is calculated or who is bearing the cost – they
want clarity to answer it
• Abundance of agent points in RMG clusters,
therefore, cash out is not a major challenge.
• 81% workers reported there is abundance of
agent points in their neighborhood
Issues are more acute for women
• Noticeably less female footfall at agent points.
Sometimes female workers are sending male
family members/colleagues to agents
• Fraud calls have significantly increased since May
– women are victims in most cases
How can digital wages add more value?
13
Financial Service Providers
• Made infrastructural investments
following Bangladesh Bank’s circular
• The digital wages in the garments
sector needs to pose a greater business
case beyond wages
• Cost of cash out need to have a full
proof solution. Long term sustainability
requires commitment from factories to
bear the cost
• Absence of interoperable wallet is still a
barrier for digital payments adoption
Buyers
• Digital payments is an enabler for future
programs around social protection, access to
finance etc.
• Basic training on digital literacy and concerns
specific to using DFS needs to be addressed by
factories.
Factories, BGMEA
• Mandates and requirements from buyers and
regulators have to make commercial sense in
the larger scheme of things. Manufacturers are
businesses and financial viability is prerequisite
to any changes.
• Businesses are operating in an extremely
volatile and unpredictable environment –
therefore buyers should not impose demands
irresponsibly.
Scaling responsible
digital wages
14
15
RESPONSIBLE DIGITAL
PAYMENT GUIDELINES
1. Treat users fairly
• Shift from merely protecting clients from risks to promoting their agency, informed choice
and control.
2. Ensure user funds are safe and easy to use
• Ensure user funds can be accessed in times of need - especially in cases of fraud, mistaken
transactions, hidden fees, system downtimes and last mile challenges.
3. Commit to transparency, especially on pricing
• Equip clients with clear, simple and readily comparable information to encourage a more
predictable and reliable ecosystem.
4. Design for individual user needs and capabilities
• Invest in building competencies around prototyping, segmentation and market feedback to
proactively deliver relevant product choices.
5. Support user choice through interoperability
• Build on shared digital infrastructure - data registries, API-enabled information exchanges
and digital IDs, while optimizing security, speed and convenience of the user experience.
16
6. Promote accountability across the value chain
• Ensure systems and processes are in place for actors in the supply chain, such as agents,
employees and third-party service providers, to act responsibly when working with clients.
7. Safeguard client data
• Introduce reasonable measures to protect client data while leveraging information available to
understand user behaviors and preferences.
8. Make recourse clear, quick and responsive for all users
• Update design and integration of recourse systems - providing clear, quick and responsive
resolution while maintaining accountability.
9. Prioritize women
• Embed a gender lens across all responsible digital payment guidelines – ensuring women’s
voices are prioritized in the decision-making process, create products that are responsive to
their realities and commit to continuous learning built on gender-disaggregated data analysis.
RESPONSIBLE DIGITAL
PAYMENT GUIDELINES
18
Remaining challenge : Sustainability of digital wages
Driving responsible cost sharing among stakeholders
Treating clients fairly (#1) is one of the guidelines (#1) of responsible digital payments.
Reflecting on this guideline, digital wages should not add cost burden for workers. While the
journey from 1.85% to 0.8% is commendable, there is a need for transparency around cost.
Government of Bangladesh can play a stronger role to ensure that cost of cash out is absorbed by
relevant stakeholders and workers do not take the burden.
• The outcome of the effort should be a responsible cost sharing ratio that the industry can
implement. With such arrangement brands can make it a compliance requirement for every
export-oriented factory.
• Transparency regarding cost sharing is equally important – the industry needs to share its role
to ensure cost remains unambiguous to the end uers.
19
Remaining challenge : Building the ecosystem
Enhancing access to and use of digital financial services
One of the pillars of responsible digital payment guidelines suggest ‘Support user choice through
interoperability’ (#5)
• The introduction of wallet interoperability may need to be expedited before the sector witnesses
more drop-outs from digital wages.
• If workers do not see use cases beyond withdrawing the money from agent point and sometimes
remitting them to village, they will not demand/prefer digital wages from factories.
• MFS providers may consider working with FMCG companies to digitize its supply chains to build
use case for the consumer.
• Additionally, workers’ financial records can be utilized in credit and risk profiling to design financial
products beyond vanilla wallets.
• ICT Division, Ministry of Posts &Telecommunication, may invite FinTechs to work with this data to
build user friendly products.This is in line with guideline # 4: Design for Individual User Needs
Needs and Capability.
• It is also important that workers continue receiving wages digitally for FinTechs to invest
resources.
Remaining challenge : Digital Capacity Building is
Essential
20
Digital capacity building continues to be essential; building on some of the principles of Responsible
Digital Payments Guideline, precisely:
1. Keep Clients’ Funds Safe (#1)
2. Design for Users Needs & Capability (#4)
• Workers need to develop ‘digital skills’ to use their digital wallets and be future ready for products
catered around them.
• Mobile phones and digital technology generally, currently have a male bias. Digitizing payments
risks women workers’ control over their money.That is not an argument against digital payments
buy for programs to build the digital skills of women.
• In addition to developing digital skills, encourage the use of toll-free helpline for payment related
issues. On the other hand, financial services providers should consider workers’ capacity when
designing user interface.
• Digital capacity building is important on the supply-side as well.Tk. 4,000 crore flows to workers
each month. If this is digitized it offers a very tempting target. Bangladesh Bank, the government
and FSPs have an obligation to make the system as secure as possible.
What role can each stakeholder play?
21
BGMEA
Brands
Continue to be the Digital Wages champion for
Bangladesh and escalate policy requirement to
government, including but not limited to, to have
a cost-sharing structure for the industry.
Provide a regulatory environment that foster product
innovation (FinTech), expansion of digital payments in
supply chain and monitor costs of cash out. Ensure the
security of the digital payments eco-system.
Financial Service Providers
Bangladesh Bank
Work with FMCG players to digitize its supply chain –
leading to digital retail payments for workers. Empower
agents to work with small merchants in RMG clusters.
Using a responsible business conduct lens., drive
digital payments in its key markets. Brands can
work with development partners to build digital
literacy curriculum and empower factories to
choose digital over cash.
Factories
Work with MFS providers to expand use cases,and
take support from existing resources to develop
capacity of workers to use digital wages. Consider
the longer-term benefits of switching to digital
wages
Government
Consider non-monetary rewards for factories who
continue to be digitized over a period. Monitor the cost-
sharing is implemented. Invite FinTechs to build
products and solutions catering to garment workers.
Government can also encourage merchants and
landlords to accept digital payments.
Making the most out of digital wages
22
Staying Digital
European Union has already announced a frontload of EUR 115
million for the RMG sector – mainly for workers who have lost jobs
during pandemic. Disbursement of these funds will also require
workers to have MFS wallets.
Social Protection Plan
Absence of a social protection plan in the largest export-oriented
industry in Bangladesh is a widely discussed issue. EU’s funding
can be the initial deposit towards a social protection program for
workers in Bangladesh whose incomes have diminished or overall
employability is at risk.
National Working Groups
To map resources and needs of the industry brands can participate
in the national working group to utilize this fund. Digital arm of
Government of Bangladesh, a2i’s participation is also crucial to
ensure that the fund is disbursed smartly.
Digital Wages for RMG is a National Priority
23
In the National Digital Payments Roadmap 2021, initiative by the Government of
Bangladesh, RMG is one of the four priority sectors.
In December 2021 – Bangladesh
will celebrate transforming itself
to a Digital Bangladesh that was
envisioned back in 2008.
The Digital Payments Roadmap
for RMG will be released on the
same occasion.
Post Covid-19 Digital Payments Roadmap–
Objectives and Priority Sectors
24
Priority Sectors prioritization for roadmap preparation
Ready-made
garments
Agriculture
Retail & e-
Commerce
Education
Largest contributor to Exports in
Bangladesh & highest % female
labor force in employment sectors
One of the largest contributor to
country’s labor force & growing share
in country’s GDP
Largest contributor to the labor force
of the Bangladesh &
One of the priority sectors for
government benefits delivery
• Celebrate the progress and identify the remaining and new challenges for digital payments in a growing digital
economy in Bangladesh
• As a national process, led by theGovernment, align with key public and private sector stakeholders, including
innovators and FinTech's as the agenda moves towards accessibility, adoption and usage
• Prepare a harmonized action-plan towards achieving the goal of digitization of payments along with dedicated
priority-sector specific roadmaps
Key
Objectives
Themes for Discussion & Key Stakeholders
Segments
25
Discussion
Themes
Key
Stakeholders
International
Development
Organizations
Government Private Sector Demand Side
Cost Distribution Gender Inclusion
Expansion &
Usage
Impact of COVID-
19
Responsible
Digital Payments
NOTE: Think tanks are also included in the stakeholder groups
Priority Sectors
For Questions on the Post Covid-19
Digital Payments Roadmap
process and consultations, please
contact us at a2i and the Better
Than Cash Alliance

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Responsible Digital Wages in RMG sector of Bangladesh

  • 1. RESPONSIBLE DIGITAL WAGES IN IN RMG SECTOR OF BANGLADESH January 2021 A post pandemic stock take & preparation for the Post Covid-19 Digital Payments Roadmap 2021
  • 2. Bangladesh Development Goals & Priorities 2 Growth trajectory towards a developed economy LDC Graduation Digital Bangladesh & Middle Income Country Developed Country Both these goals form part of the Vision 2021 of the government. Digital Bangladesh aims at effective use of technology to enhance people’s lives and access to services. The Middle Income country agenda aims at poverty reduction and consistent GDP growth Bangladesh aims at elevation from the least developed country status after a revaluation in 2021 after an initial meeting of the criteria in 2018 The government is working and planning meticulously in meeting the standards for the country to meet the qualification of the status to a developed economy. This is being planned through setting short & long term goals, digitization as the backbone of the economy and overall inclusion of the country’s citizens 2021 Bangladesh has well defined medium and long term policy approaches to elevate to the status of a developed economy 2024 2030 2041 SDG achievement Bangladesh achieved the MDGs and is on a consistent path to achieving the SDGs by 2030 through constant tracking and improvement
  • 3. To understand the challenges in wage digitization in garments sector, in the midst of a global pandemic, the principal conveners of the Digital Wages Summit 2019 under the leadership of the Government of Bangladesh strived to understand the challenges of wage digitization in the garments sector during a global pandemic.The rapid assessment considers the following as key stakeholders of the digital wages ecosystem in Bangladesh. 3 Analyzing the roadblocks and enablers towards responsible digital wages RMG Workers Financial Service Provider Buyers Government Regulator Factories As merchants and agents contribute to workers’ experience of using digital wages, they views have also been considered.
  • 4. Key Milestones 4 Government, manufacturers, brands, associations commit to digitizing 90% RMG workers’ wages in Bangladesh by 2021 Stimulus package worth BDT50 billion was announced by Government of Bangladesh for the export-oriented sector, mainly targeting the RMG sector November’ 19 Bangladesh Bank mandated all RMG factories to digitize wages through a circular from Bangladesh Bank April’ 20 In less than two weeks, 1.92m new MFS wallets were created.The digital wages agenda got a major boost. It is a tremendous achievement for the industry! During the peak of Covid-19 crisis, 77% workers were getting paid digitally.
  • 5. 5 About a year into the pandemic 2020 was a difficult year for RMG sector • about 70,000 workers lost their jobs (BGMEA) • Eventually 90% orders were reinstated • However, prices of apparel exported from Bangladesh dropped by 2.87% By Q4, many factories went back to cash payments • In November, just about half of the workers (54% )received digital wages • Workers are not complaining about cash wages either
  • 6. During 2020, challenges that emerged as a result of rapid digitization 6 Limited Incentive The stimulus package incentivized factories to shift to digital. Some factories found it very challenging to digitize, therefore had to switch back to cash. Many factories that went digital did not do so fully.The cash payments infrastructure remained in place, making it easier to revert to cash. On a positive note, the initial investment has already been made (workers have wallets) and majority of factories have gone through a few cycles of digital payments.The stimulus program was a boost for the industry that was already gearing towards maximum digitization. LimitedUseCase Workers have limited use cases for which they wish to be paid digitally and/or lack awareness of use cases that are available such as sending payments or topping up airtime. The ecosystem around the worker (merchants, landlords) do not support digital payments. Workers need more training to drive usage of financial services, especially women. Regulations need to allow innovations around product development for low- income segment. Cost Burden Rushed Onboarding As onboarding happened in a rush – the factories and MFS providers relaxed the requirements. For example, many used birth certificates instead of NID. If they want to receive wages digitally, workers must re-register their accounts with ID proof.. Many would rather get paid in cash. Many also did not use their own SIM card while they were registering in April 2020. There is no clear guideline on cash out; factory’s mid- management feels ultimately this cost will be forced on factories. Fifty percent of workers in our survey said they want to pay zero for cash out.
  • 7. 7 Workers’ Preparedness with Digital Wages Onboarding happened in a rush, but two-thirds of workers were prepared for the shift to digital What were the workers told about the shift from cash to digital? 33% workers did not have sufficient time to open a wallet 45% created wallet in such a rush that they did not realize what they were signing up for 28%workers were already receiving wage digitally 23% workers were told that shift to digital wages is temporary 68% workers knew clearly why factories were shifting to digital wages 54% workers have received support with using MFS wallets from factories workers want to continue getting salaries via MFS, but factories are now paying in cash again 27%workers want to go back to cash salaries, but factories are continuing to pay digitally 38% Workers’ preferences Source: MFO | Total Sample: 1275 | Female: 961 | Male: 314
  • 8. Barriers of creating MFS accounts 8 Source: MFO | Total Sample: 1275 | Female: 961 | Male: 314
  • 9. Workers’ Experience with Digital Wages 9 Cost: Workers feel cash out fee is forced; they shouldn’t pay for something they didn’t ask for • 50% workers said they are not willing to pay any cash out charges • 31% workers feel getting paid digitally robs opportunity to use funds instantly • 25% workers will be happy to go back to cash • Main source of awareness is TV (53%) while only 16% workers learned about the package from factories • 21% claimed they have received fund from the stimulus package Awareness of stimulus package: Less than half are aware of stimulus package (39%) More workers believe cash gives them better control (73%) than digital payments (57%) • 44% believe getting paid digitally makes it saving for future easier – while 31% believe cash payments is makes for a better way of saving • When it comes to being prepared for unexpected payments – it doesn’t matter much whether they are paid in cash or digitally • Women’s digital literacy crucial for them to gain control over mobile money 35%workers believe move from cash to digital wages is a permanent change 60%workers would trust their factory management more if they paid digital wages Source: MFO | Total Sample: 1275 | Female: 961 | Male: 314
  • 10. Safety is not a concern with digital wages 10 Safety: Majority finds digital payments safe, but men find digital payments safer than women • 74% workers feels safe withdrawing money from agent point/ATM • 69% workers feels safe carrying cash from the agent point/ATM • 95% workers never felt harassed • 32% female workers are uncomfortable with visit to agent point, while for 28% said their husbands are not in support of their visits to agents 87% workers have their own MFS wallets. About one third of those who do not have wallets do not have ID proof (NID/smart card) Issues with PIN management remain but 48% workers can now check balance and 19% can make P2P transfer Source: MFO | Total Sample: 1275 | Female: 961 | Male: 314
  • 11. Gender Gap in Digital Empowerment 11 Source: MFO | Total Sample: 1275 | Female: 961 | Male: 314
  • 12. 12 Limited access and use case of digital payments MERCHANTS AGENTS Not accepting digital payments • Limited approach by MFS providers to create merchant account – cannot operate properly with personal account • Merchants’ entire supply chain is cash driven • Digitizing wages does not benefit them directly. But when there are enough digital payers – it might make a difference. Willing to adapt – but no one asked them to • If their suppliers accept digital payments • If they notice majority of workers request to pay digitally Difficult onboarding, smooth servicing • April was a tough time for agents – they had to onboard workers amidst lockdown/restriction. • MFS providers forecasted extra need for liquidity, so they didn’t face much problem. • Agents cannot explain to workers how cash out fee is calculated or who is bearing the cost – they want clarity to answer it • Abundance of agent points in RMG clusters, therefore, cash out is not a major challenge. • 81% workers reported there is abundance of agent points in their neighborhood Issues are more acute for women • Noticeably less female footfall at agent points. Sometimes female workers are sending male family members/colleagues to agents • Fraud calls have significantly increased since May – women are victims in most cases
  • 13. How can digital wages add more value? 13 Financial Service Providers • Made infrastructural investments following Bangladesh Bank’s circular • The digital wages in the garments sector needs to pose a greater business case beyond wages • Cost of cash out need to have a full proof solution. Long term sustainability requires commitment from factories to bear the cost • Absence of interoperable wallet is still a barrier for digital payments adoption Buyers • Digital payments is an enabler for future programs around social protection, access to finance etc. • Basic training on digital literacy and concerns specific to using DFS needs to be addressed by factories. Factories, BGMEA • Mandates and requirements from buyers and regulators have to make commercial sense in the larger scheme of things. Manufacturers are businesses and financial viability is prerequisite to any changes. • Businesses are operating in an extremely volatile and unpredictable environment – therefore buyers should not impose demands irresponsibly.
  • 15. 15 RESPONSIBLE DIGITAL PAYMENT GUIDELINES 1. Treat users fairly • Shift from merely protecting clients from risks to promoting their agency, informed choice and control. 2. Ensure user funds are safe and easy to use • Ensure user funds can be accessed in times of need - especially in cases of fraud, mistaken transactions, hidden fees, system downtimes and last mile challenges. 3. Commit to transparency, especially on pricing • Equip clients with clear, simple and readily comparable information to encourage a more predictable and reliable ecosystem. 4. Design for individual user needs and capabilities • Invest in building competencies around prototyping, segmentation and market feedback to proactively deliver relevant product choices. 5. Support user choice through interoperability • Build on shared digital infrastructure - data registries, API-enabled information exchanges and digital IDs, while optimizing security, speed and convenience of the user experience.
  • 16. 16 6. Promote accountability across the value chain • Ensure systems and processes are in place for actors in the supply chain, such as agents, employees and third-party service providers, to act responsibly when working with clients. 7. Safeguard client data • Introduce reasonable measures to protect client data while leveraging information available to understand user behaviors and preferences. 8. Make recourse clear, quick and responsive for all users • Update design and integration of recourse systems - providing clear, quick and responsive resolution while maintaining accountability. 9. Prioritize women • Embed a gender lens across all responsible digital payment guidelines – ensuring women’s voices are prioritized in the decision-making process, create products that are responsive to their realities and commit to continuous learning built on gender-disaggregated data analysis. RESPONSIBLE DIGITAL PAYMENT GUIDELINES
  • 17. 18 Remaining challenge : Sustainability of digital wages Driving responsible cost sharing among stakeholders Treating clients fairly (#1) is one of the guidelines (#1) of responsible digital payments. Reflecting on this guideline, digital wages should not add cost burden for workers. While the journey from 1.85% to 0.8% is commendable, there is a need for transparency around cost. Government of Bangladesh can play a stronger role to ensure that cost of cash out is absorbed by relevant stakeholders and workers do not take the burden. • The outcome of the effort should be a responsible cost sharing ratio that the industry can implement. With such arrangement brands can make it a compliance requirement for every export-oriented factory. • Transparency regarding cost sharing is equally important – the industry needs to share its role to ensure cost remains unambiguous to the end uers.
  • 18. 19 Remaining challenge : Building the ecosystem Enhancing access to and use of digital financial services One of the pillars of responsible digital payment guidelines suggest ‘Support user choice through interoperability’ (#5) • The introduction of wallet interoperability may need to be expedited before the sector witnesses more drop-outs from digital wages. • If workers do not see use cases beyond withdrawing the money from agent point and sometimes remitting them to village, they will not demand/prefer digital wages from factories. • MFS providers may consider working with FMCG companies to digitize its supply chains to build use case for the consumer. • Additionally, workers’ financial records can be utilized in credit and risk profiling to design financial products beyond vanilla wallets. • ICT Division, Ministry of Posts &Telecommunication, may invite FinTechs to work with this data to build user friendly products.This is in line with guideline # 4: Design for Individual User Needs Needs and Capability. • It is also important that workers continue receiving wages digitally for FinTechs to invest resources.
  • 19. Remaining challenge : Digital Capacity Building is Essential 20 Digital capacity building continues to be essential; building on some of the principles of Responsible Digital Payments Guideline, precisely: 1. Keep Clients’ Funds Safe (#1) 2. Design for Users Needs & Capability (#4) • Workers need to develop ‘digital skills’ to use their digital wallets and be future ready for products catered around them. • Mobile phones and digital technology generally, currently have a male bias. Digitizing payments risks women workers’ control over their money.That is not an argument against digital payments buy for programs to build the digital skills of women. • In addition to developing digital skills, encourage the use of toll-free helpline for payment related issues. On the other hand, financial services providers should consider workers’ capacity when designing user interface. • Digital capacity building is important on the supply-side as well.Tk. 4,000 crore flows to workers each month. If this is digitized it offers a very tempting target. Bangladesh Bank, the government and FSPs have an obligation to make the system as secure as possible.
  • 20. What role can each stakeholder play? 21 BGMEA Brands Continue to be the Digital Wages champion for Bangladesh and escalate policy requirement to government, including but not limited to, to have a cost-sharing structure for the industry. Provide a regulatory environment that foster product innovation (FinTech), expansion of digital payments in supply chain and monitor costs of cash out. Ensure the security of the digital payments eco-system. Financial Service Providers Bangladesh Bank Work with FMCG players to digitize its supply chain – leading to digital retail payments for workers. Empower agents to work with small merchants in RMG clusters. Using a responsible business conduct lens., drive digital payments in its key markets. Brands can work with development partners to build digital literacy curriculum and empower factories to choose digital over cash. Factories Work with MFS providers to expand use cases,and take support from existing resources to develop capacity of workers to use digital wages. Consider the longer-term benefits of switching to digital wages Government Consider non-monetary rewards for factories who continue to be digitized over a period. Monitor the cost- sharing is implemented. Invite FinTechs to build products and solutions catering to garment workers. Government can also encourage merchants and landlords to accept digital payments.
  • 21. Making the most out of digital wages 22 Staying Digital European Union has already announced a frontload of EUR 115 million for the RMG sector – mainly for workers who have lost jobs during pandemic. Disbursement of these funds will also require workers to have MFS wallets. Social Protection Plan Absence of a social protection plan in the largest export-oriented industry in Bangladesh is a widely discussed issue. EU’s funding can be the initial deposit towards a social protection program for workers in Bangladesh whose incomes have diminished or overall employability is at risk. National Working Groups To map resources and needs of the industry brands can participate in the national working group to utilize this fund. Digital arm of Government of Bangladesh, a2i’s participation is also crucial to ensure that the fund is disbursed smartly.
  • 22. Digital Wages for RMG is a National Priority 23 In the National Digital Payments Roadmap 2021, initiative by the Government of Bangladesh, RMG is one of the four priority sectors. In December 2021 – Bangladesh will celebrate transforming itself to a Digital Bangladesh that was envisioned back in 2008. The Digital Payments Roadmap for RMG will be released on the same occasion.
  • 23. Post Covid-19 Digital Payments Roadmap– Objectives and Priority Sectors 24 Priority Sectors prioritization for roadmap preparation Ready-made garments Agriculture Retail & e- Commerce Education Largest contributor to Exports in Bangladesh & highest % female labor force in employment sectors One of the largest contributor to country’s labor force & growing share in country’s GDP Largest contributor to the labor force of the Bangladesh & One of the priority sectors for government benefits delivery • Celebrate the progress and identify the remaining and new challenges for digital payments in a growing digital economy in Bangladesh • As a national process, led by theGovernment, align with key public and private sector stakeholders, including innovators and FinTech's as the agenda moves towards accessibility, adoption and usage • Prepare a harmonized action-plan towards achieving the goal of digitization of payments along with dedicated priority-sector specific roadmaps Key Objectives
  • 24. Themes for Discussion & Key Stakeholders Segments 25 Discussion Themes Key Stakeholders International Development Organizations Government Private Sector Demand Side Cost Distribution Gender Inclusion Expansion & Usage Impact of COVID- 19 Responsible Digital Payments NOTE: Think tanks are also included in the stakeholder groups Priority Sectors
  • 25. For Questions on the Post Covid-19 Digital Payments Roadmap process and consultations, please contact us at a2i and the Better Than Cash Alliance