EkPay offering payment services without licence
EkPay, an e-payment system of the Aspire to Innovate (a2i) programme of the government, has been offering all types of payment services without obtaining a licence from the Bangladesh Bank (BB), which is in clear violation of the Payment and Settlement System Act-2024.
The a2i programme of the Information and Communication Technology (ICT) Division and Cabinet Division is supported by the United Nations Development Programme and is a special programme under the past government's 'Digital Bangladesh' agenda.
For all latest news, follow The Daily Star's Google News channel. However, the payment system operator (PSO), which is owned by the a2i programme, has been operating services since 2019 without a licence.
No person, institution or company will be able to operate any payment system or provide payment services without obtaining a licence from the Bangladesh Bank, according to the Payment and Settlement System Bill-2024 passed in early July.
In July of last year, EkPay applied for the BB licence for the first time but the central bank's Payment Systems Department rejected the application as a wrong application method was used
A PSO is an entity licensed by the Bangladesh Bank to operate a settlement system for payment activities.
The Bangladesh Payment and Settlement System Regulations-2014, introduced by the banking regulator, also bars such services without a central bank licence.
Industry people said the platform has been bypassing central bank regulations and conducting business for years while the regulator remained silent as the platform is owned by a government division.
In October 2019, Sajeeb Wazed Joy, ICT affairs adviser to former prime minister Sheikh Hasina, launched the platform during a ceremony organised by the ICT Division.
EkPay was developed by the a2i programme.
a2i officials said EkPay has been providing digital payment services for 147 government services under 78 government departments. The card payment gateway of five banks, nine mobile financial service providers and internet banking services offered by three banks are also connected to the platform.
The PSO's daily transactions now number 10,000 to 15,000, involving Tk 2 crore to Tk 3 crore.
In July of last year, EkPay applied for the central bank licence for the first time but the central bank's Payment Systems Department rejected the application as the wrong application method was used.
A senior central bank official, with first-hand knowledge of the issue, told The Daily Star that a2i did not follow the proper criteria when applying, which is why it was rejected.
"At that time, we asked them to form a separate company to operate the PSO and instructed them to keep their operations on a limited scale before availing the licence from the central bank."
However, EkPay is yet to be able to form a company, he added.
The payment system platform maintains accounts with several banks as trust cum settlement accounts, but as it has no licence, central bank regulations do not permit it to maintain those accounts, as per central bank officials.
Contacted, Bangladesh Bank Executive Director and Spokesperson Husne Ara Shikha told The Daily Star that EkPay took steps to obtain a central bank licence.
It applied to the Bangladesh Bank for the issuance of a no-objection certificate (NOC) to continue its operational activities.
She said that before issuing a NOC, the central bank provided some instructions as per the rules and the implementation of those directives is ongoing.
The digital platform requested the central bank for a 120-day tenure to implement the directives, Shikha said.
In a written statement, the central bank spokesperson said the platform operated under a ministry, which is why it did not create a risk.
"The main purpose of this platform is to ensure and facilitate payment facilities, including payment of various utility bills, education fees and all types of government service fees and bills."
A senior official of a leading PSO told The Daily Star that EkPay has a monopoly when it comes to providing payment services for government institutions.
He said the digital payment platform had been growing illegally under a government division.
"This model is similar to that of mobile financial service provider Nagad," he said, referring to the facilities enjoyed in the past by the digital financial service arm of the Bangladesh Postal Department.
However, a2i officials, seeking anonymity, told The Daily Star that EkPay and four other a2i initiatives, including ekShop, have been operational for the past few years and the government has been fixing the budget for those initiatives each year.
There were plans to give those initiatives to the private sector, he added.
The Agency to Innovate (A2i) Bill 2023 was passed in parliament in July last year, but the a2i project has yet to turn into an agency, which is why EkPay has been unable to get the licence.
Mamunur Rashid Bhuiyan, additional secretary and project director of the a2i programme, told The Daily Star on Monday that this was an innovative initiative under a2i and that the central bank was aware of Ekpay.
AKM Fahim Mashroor, a tech entrepreneur, said that laws and regulations were not followed in many cases here.
The regulatory body was also not working or imposing anything independently due to political reasons, he added.
As the digital platform is running under a ministry, the central bank may not bring it under regulations like Nagad, said Mashroor, co-founder and CEO of Bdjobs.com and Ajkerdeal.
The Bangladesh Bank should uphold its autonomy in such cases, he added.
"As a PSO, EkPay was enjoying a monopoly in case of payments of various government institutions, which adversely impacted other PSOs and they lost their market share to EkPay."
This is a threat to the private sector, he pointed out.
Currently, there are 10 PSOs licensed by the central bank.
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