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Pathao’s Digital Payment Push Runs Into A Wall

To anyone who takes interest in Dhaka's tech ecosystem, digital payment is an important playground. A lot has already happened in the space over the past few years. This year alone, payment has seen major events like Alibaba picking up stake in bkash, iPay’s formal launch, Dutch Bangla Bank and a few other financial players entry to the payment market.

A lot more is going on than what meets the eye. It is an important market because of the ubiquitous nature of payment and its ability to connect with many other parts of our daily lives. This potential was one of the reasons behind Pathao’s push into the payment market, apart from its need for making its platform seamless, improve user experience and push cashless transactions.

Pathao Pay, Pre-payment solution, and regulation

Pathao first announced Pathao Pay in April this year. Like many other things with Pathao, soon after the announcement, it rolled out the product to some of its users in June. Pathao said at that time Pathao Pay is a pre-payment solution, a closed wallet, to be used within the Pathao ecosystem. Users can top-up a balance through credit, debit cards as well as MFS services, and the balance is then used within Pathao ecosystem. The goal was to eventually add other forms of cashing in - bank transfers, and even through our riders and captains which will act as moving agents. When it launched, Pay could only be used for Rides and Cars, and eventually to open it up for Food and Parcel services. It was not a payment service. It's a pre-payment solution for Pathao’s own services.

Pathao pay is a pre-payment solution, this is an important point to note. Because this is a common practice in many industries. For example, in the domain and hosting industry, many platforms have their own internal payment system where you need to upload money from cards or other accounts in order to make the payment.

Pathao and Platform

On the other side of the coin, Pathao aims to be a platform. It has already started to indicate that it aims to be a super app in Bangladesh where a user could get everything that he or she needs in one place. That’s where Pathao Pay comes in handy. If you could buy everything using the Pathao app and make the payment using Pathao Pay why should make your life easier?

Here is Pathao CEO Hussain M Elius in an interview with FS: “the main focus for us now is building a great product (Pathao pay). Maybe in a few years, it will become a stand-alone tool. What does Pathao have now?

Apart from transportations, Pathao also has partnerships with almost all the independent e-commerce merchants and we will have partnerships with almost all the restaurants. As we go, we will be adding more services which means the number of services that we enable through our app will grow, which means Pathao is everywhere when you think about it which will create more use cases for the pay.”
Pathao already has services like food and ecommerce on its platform. In all these, payment plays an outsized important role. That’s why Pathao has been pushing payment a lot.

Regulator speaks

However, it seems Pathao’s payment ambition has hit a regulatory wall, at least for now.

Bangladesh Bank has denied Pathao the permission to add payment service ‘Pathao Pay’, according to a report from bdnwews24.com. In an interview with bdnwews24.com, Serajul Islam, Bangladesh Bank spokesman, said that they did not clear Pathao to operate the wallet service due to ‘ethical reasons’. However, he did not explain further.
Regardless, it seems Pathao has to wait to have its own play in payment space and this timeline is yet unclear.

According to some sources, Pathao has partnered with iPay to integrate payment option in its app, for now, to replace Pathao Pay. This partnership also indicates that Pathao is not going to get into Payment anytime soon. However, it is unlikely that Pathao is going to give up on payment either - it is such as an important piece for its business. This is what Pathao CEO Hussain M Elius told to bdnwews24.com “ we had faced problem as we started the service as a closed wallet. We will turn the service into an open wallet in the future by fulfilling all the conditions so that no guideline is violated.”

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