ePay (electronic payment) is a piece of web-based software for payment received against buying or selling of goods through the banking channel. In this case, banks work as a trusted partner of a buyer or seller for payment received and confirmation of delivery of goods as per specifications. The specification of goods and price selects buyers and sellers collectively and upon bargaining, sellers give formal invoices to buyers and buyers give acceptance that is called contact between buyers and sellers. The invoice is uploaded on the ePay system as well for informing the Bank. The buyers and sellers search their desired goods and customers using their existing formal and informal channels as well as e-commerce system but in future Banks may develop a website for searching verified and trusted suppliers where both the buyers and sellers will be registered. Now, banks earn commission against each transaction but in future analyzing buyers' purchasing behaviour and frequency with volumes as well as financial need with primary and support security can sanction funded credit limit in the form of conventional and Islamic modes. In case of credit sales for B2B, the ePay system can simultaneously be workable but banks charge is payable at first.
1) Need Assessment:
Upon discussion (in depth) with ten rural businessmen and supply chain specialists, we have found that they are procuring goods from wholesalers located at long distance from the retailer's sales center. For procurement of goods, sometimes they are paying in advance but don't receive the goods as per their specifications but received some low quality goods. On the other hand, some of wholesalers located at Dhaka informed that if they delivered the goods in advance or on credit they might not be receiving the payment in time and they might fall into a credit trap.
We find that here is a gap of trust due of weak commitment from both parties, even though the transaction is made using the existing banking channel, from the bank account of the retailer to the wholesaler's.
On the other hand, recently we found that some incidents occurred in e-commerce/digital commerce sector like advance payment was made by the customer and the goods were delivered after 2 to 4 months later by the seller. Considering the fact, Bangladesh Bank issued a circular vide PSD Circular Letter No.13 dated 29 August 2021 based on digital commerce management guide 2021 (issued by Bangladesh Government). In the circular, the Bangladesh Bank directed that account of the company of digital commerce organizations or individuals belonging to the company cannot be directly credited for advance payment of the price of goods or services.
Here we find that there is a gap of trust due to weak commitment from sellers and consequently a circular is issued by the central bank which creates a prospect for a bank to work as a trusted partner of buyers and sellers for the digital commerce.
Considering the above, we are finding a way to make an offer favouring all customers irrespective of account holders for making payment well-received using the banking channel where the bank will act as a trusted and secured payment gateway. The bank will make sure payment is received and earn in the form of commission against each transaction. With the data of payments received a bank can also analyze history of buying-selling attitude of a retailer, wholesaler as well as an individual customer. Upon analyzing the transaction pattern a bank can also offer funded credit limit to the buyers.
Here we find that bank has two ways to offer innovative line of product: (i) one is the support for making trustworthy transactions and ensuring receipt of goods duly and (ii) another one is based on historical transactions/performance offering funded credit limits (DL/OD limit).
2) Marketing Aspect:
a) Product: The brand name may be ePay that will be supporting the buyers and sellers making sure the payment is received in Taka with confirmation of delivery of goods.
b) Price: Price can be Tk.7.00 to Tk.10.00 against each transaction of Tk.1.00 to Tk.1000.00.
Presently some of the curriers are taking responsibility for collection of bills value upon delivery of goods (cash on delivery for B2B) where they charge Tk. 18.00 to Tk.20.00 against each transaction of Tk. 1,000.00 only. Charges of bKash is also Tk.20.00 against each transaction of Tk. 1,000.00 only.
c) Place: All over Bangladesh with presence in the mind of customers. The target customers will be the people who buy product through e-commerce (B2C/B2P) and B2B.
For booking of a customer the channel banking as well as branch banking division can support collectively and earn a part of commission. This will also support the bank for making relationship with the general people as well as businessman. A huge number of database like details of address, purchasing goods and habits as well as nature of business and transaction behavior will help the bank offer the funded limit. The funded limit can be offered using the channel banking as well as branch banking.
Moreover, in future the bank can also develop another website for searching buyer/ seller at home and abroad for earning non-funded as well as funded lending and earning more profit.
d) Promotion: Promotion through the existing distribution channel of Bank (Branch), social, printing and electronic media.
3) Risk Assessment
(i) Risk: How the buyer will make an order for goods.
Risk Mitigation: Buyers will order the goods using the existing channel (formal, informal and online/e-commerce). But in future banks may develop a website from where the buyer can search registered seller and make payment using the banking channel.
(ii) Risk: Huge investment will be required for procuring payment switch.
Risk Mitigation: Primarily we can operate it on a rental basis like the existing situation.
(iii) Risk: There will be large investments required for developing web-based secure and user-friendly software.
Risk Mitigation: There will be an opportunity to become a pioneer in this sector. Moreover, our plan will help develop user-friendly and secure software easily.
(iv) Risk: Customer is not habituated to this system.
Risk Mitigation: This is the new system but a customer is habituated to technology in a different form like smart phone and internet. Moreover, our existing agent banking and regular banking have a wide area of distribution network with 55 lac listed customers. If we consider the businessmen's suppliers and customers the figure will be much larger. Considering the large number of customers of our banks including agent banking customers and relationship with them, our entire team specially ARO/RO/SRO and Customer Relationship Officer can make it familiar to the target customers. We will also have an opportunity to invest in funded credit favouring the customers in future which will also help attract the existing targeted customers.
(v) Risk: If a seller delivers low quality goods, the bank may be at a reputational risk.
Risk Mitigation: The banks will clearly declare that they are trusted partners of buyers and sellers and payment is secured for delivery of goods as per quotation. Moreover, buyers will have an opportunity to get back the money, if goods are not delivered as per specification. As such, the image of the banks will increase and buyers will feel confident due to the payment received by the bank.
4) Justification of proposed ePay (powered by Digital System):
i) Mitigation of trust gap between buyers and sellers.
ii) Delivery of low quality product in deviation from specification will decline creating demand for ePay.
iii) Possible credit traps for sellers can enhance the demand for an alternative solution like ePay.
iv) People are growing habitual to technology and e-commerce.
v) Market size of B2B is un-predictable but very large and increasing.
vi) Trust is very important for business and bank is trusted by general people.
vii) Large databases can be stored on servers and that can be used for assessment and approval of further funded credit limit (OD/DL/TL).
Finally, it can be concluded that ePay (Electronic Payment) will help bridge the trust gap between buyers and sellers by providing a secure, transparent, and reliable payment mechanism. The platform is expected to improve accountability and transparency, and contribute to good governance within the digital payment ecosystem.
The author is a banker by profession.
