Empowering Women Entrepreneurs: Harnessing Digital Payments to Serve Domestic and International Clients
Author: Munzeleen Sarwar
It is challenging to overstate the importance of women’s entrepreneurial activity and its contribution to a nation’s economic growth. Entrepreneurship significantly accelerates economic growth by creating new products and services that in turn create employment opportunities. While most of Bangladesh’s women are capable, possessing the necessary knowledge and credentials for employment and entrepreneurship, they face numerous barriers hindering their participation in economic activities.
These and more of such challenges collectively impede women’s journey towards effective entrepreneurship and economic empowerment. Without addressing the unique challenges of women-, representing half of the population-, true progress is unattainable. For many Bangladeshi women entrepreneurs, digital platforms like social media are currently the most practical means of starting a business, as these are offering them avenues for almost all types of buying and selling activities. In terms of the sector representation of women-led or managed enterprise on these platforms, existing research primarily indicates towards industries such as apparel and boutique, jewellery, fashion accessories, and cosmetics (Tabassum, 2018).
The Rise of Digital Platforms and F-commerce in Bangladesh
A study by Banga and Mendez Parra (2021) based on interviews with representatives from the e-Commerce Alliance Bangladesh (e-CAB) found that 80% of e-commerce businesses in Bangladesh are operated by SMEs (Small and Medium Enterprises). These SMEs leverage various digital platforms like social media (Facebook, WhatsApp), mobile banking, mobile financial services (MFS), or cash on delivery (COD) to sell goods and services to consumers.
The study argues that the lack of formal regulations in the e-commerce sector, also known as F-commerce, might foster entrepreneurship and the emergence of new e-commerce startups (Banga & Mendez Parra, 2021). According to UNCTAD (2019), the case of Priyoshop exemplifies how startups operating in the informal sector might eventually transition towards more formal business structures. This transition could be driven by organic growth and potential identification by established players seeking partnerships or acquisitions.
In a financial sector analysis conducted by IDLC in 2019, they have reported that more than 300,000 online businesses are operating in Facebook and women operate more than 50% of these businesses, which has a market size worth greater than BDT 312 crore. The analysis published by IDLC also states that, on average, these F-commerce business owners earn between BDT 10,000 to BDT 100,000 per month.
The COVID-19 pandemic significantly impacted women’s livelihoods in Bangladesh. Many women lost jobs, and female entrepreneurs running small and medium-sized enterprises (SMEs) faced substantial losses. In response, many women turned to Facebook as a platform for selling their products. The Women and E-commerce Forum reported a tenfold increase in membership, jumping from 30,000 in February 2020 to 300,000 by June 2020 (Fariha, 2021). This surge highlights the potential of F-commerce (Facebook commerce) to empower women entrepreneurs. Notably, at least 300 women in the organization now earn over BDT 100,000 per month, with some exceeding BDT 500,000 (Fariha, 2021)
Through offering efficiency and time saving mechanisms, the use of digital platforms facilitates the women entrepreneurs to find a better balance between their personal and professional lives. Social media platforms not only assist them in establishing online communities but also in expanding their client and audience base, reducing marketing expenses, and providing a convenient payment method. Furthermore, these platforms offer them with opportunities to venture into new markets, ensuring growth in business. Leveraging and benefitting from such digital services, small and medium-sized enterprises (SMEs) are a prevalent category for women entrepreneurs in these digital spaces.
The Role of Mobile Financial Services
A key enabler of e-commerce is mobile financial services (MFS), which has significantly helped create efficient and easy transactions with lower transaction costs for these business owners and has further boosted the growth of financial inclusion of women. MFS also connects these women to mobile banking, by making interbank account services easier to use and improving client convenience. On top of this, services fees with MFS are also less than with traditional banking. In a survey conducted by UNESCAP on 150 social media-based women entrepreneurs (SMBWE) from Bangladesh, it was revealed that a significant majority, comprising 85%, possessed mobile wallet accounts, with popular platforms including bKash, Nagad, Nexus Pay, or Upay. Among these SMBWE, an overwhelming 85% reported that their preferred payment method from customers was personal mobile wallets. Additionally, when it came to payment transactions with suppliers, 43% of SMBWE utilized personal mobile wallets. This underscores the pivotal role of mobile financial services in facilitating financial transactions for women entrepreneurs operating through social media platforms (ESCAP, 2021).
When dealing with suppliers and delivery platforms, MFS are crucial for the women-led businesses because of the ease in transferring money without the need to transport, enabling them to continue operations seamlessly without leaving their homes or business locations. With digital services offered to simplify different business functions, they can now dispatch their product parcels to their customers through delivery companies (logistical support) and receive their payments through MFS platforms (financial transaction support). Through MFS, these leaders are also being able to receive advance payments from their customers for pre-order-based items and place orders to the suppliers. According to a study by Akhter (2017) surveying 105 women entrepreneurs in Dhaka city, nearly half (49%) reported using cash on delivery with advance payment options facilitated by mobile financial services like bKash or Rocket. Sellers and buyers are now able to connect outside the horizon of urban Dhaka, expanding to the rural level through strong digital network. This also gives rise to the potential expansion of their business, helps them take control of their own finances and increases their financial decision-making capabilities.
From a social perspective, MFS empowers women entrepreneurs to overcome logistical hurdles often faced during their business ventures. It gives women the liberation and security to process transactions anywhere and anytime via mobile banking, without having to constantly pay visit to a physical branch of a bank. This is especially true for women who face social pressure to avoid male dominated financial institutions.
How Do Digital Payments Help Empower Women Entrepreneurs?
Personal Retail Accounts (PRAs) and merchant accounts on MFS platforms like bKash have opened up significant avenues for women-led online and Facebook businesses. These accounts allow them to receive payments from clients and participate in the digital economy with lower cash dependency. A PRA account through bKash allows individuals to receive payments, send money, and cash out within limits without needing a formal business registration. Additionally, bKash offers educational seminars to empower women entrepreneurs with knowledge about PRAs and merchant accounts, potentially including information on their current fee structure. Furthermore, merchant accounts come with QR codes for easy in-person transactions and the ability to send/receive payments to other businesses. Thanks to bKash, buyers and sellers are now benefitted and can now pay for purchases instantly, regardless of their physical location. This eliminates the hassle of carrying cash or waiting for change, saving them valuable time.
Remittances, whether domestic or foreign, can be a major factor in expanding women’s economic chances since they provide them more power over their own finances and, consequently, more decision-making authority. MFS has quickly become a popular choice for remitting funds back to Bangladesh (USAID, 2017). International remittance services are provided by certain MFS providers, enabling women business owners to swiftly and safely receive money from clients abroad. This gives them the potential opportunity to engage in international trade and grow their clientele and supplier network outside of Bangladesh.
Women Freelancers: Potential for Further Innovation and Cross-border Payments
When it comes to the freelancing sector of Bangladesh, a large gender gap can still be observed. According to a survey reported in the research paper “Socio-Economic Impact of Freelancing: Evidence from Bangladesh” (Islam & Islam, 2023) on a sample of 200 freelancers in Bangladesh, the results revealed a significant gender gap. The data indicates that a vast majority, 90.5%, of the surveyed freelancers were male, while only 9.5% were female (Islam & Islam, 2023). This is quite unexpected as freelancing offers significant advantages for women in Bangladesh who aim to contribute to their family’s financial stability or advance their professional trajectories in diverse fields. With the flexibility to set their own schedules and manage workloads according to their personal commitments, women freelancers can effectively balance their professional and personal responsibilities.
Empowerment through freelancing not only enhances women’s economic independence but also allows them to pursue career aspirations aligned with their skills and expertise. Access to international digital labor markets such as Upwork and Fiverr opens doors for women freelancers to find suitable employment options. However, challenges persist in increasing female participation in the freelancing sector. Lack of awareness and limited digital literacy skills along with limited access to technology and infrastructure may be causing this gender divide. Efforts such as training, upskilling, and awareness campaigns are crucial to providing women with the necessary skills and confidence to engage in freelancing work.
Recognizing the potential of both freelancing and digital commerce, the government has taken steps to facilitate cross-border transactions for entrepreneurs. These initiatives make services like international money transfer platforms more accessible. For example, enabling Bangladeshi nationals to utilize bKash mobile wallets for direct money transfers through services like Xoom (owned by PayPal) simplifies receiving payments from international clients. This focus on Mobile Financial Services (MFS) clearly signifies the government’s commitment to boosting both freelancing and digital commerce entrepreneurship in Bangladesh. The government’s focus on MFS, exemplified by facilitating cross-border payments for bKash wallets, empowers women and freelance/e-commerce entrepreneurs. However, unlocking this sector’s full potential requires further initiatives. These might include digital skills training, a balanced e-commerce regulatory framework, and affordable internet access.
Freelancing or cloud-work emerges as a viable avenue to address the gender wage and employment gap in Bangladesh’s labor market. To further support women’s participation in the freelancing sector, training programs on relevant IT and professional skills need to be expanded, enabling them to earn a comfortable living while managing household responsibilities.
Closing Gender Disparities in Entrepreneurship
Payment methods utilizing digital channels can significantly enhance the growth drivers of women entrepreneurship in Bangladesh. From the convenience of mobile banking facilitating seamless and rapid transactions for women to manage payments with suppliers and customers, digital payments offer immense potential for empowering women in Bangladesh. The digital financial service providers have already made significant contributions through their solutions, serving as a tool to empower women by enhancing financial management, asset accumulation, and economic participation. Digital payments play a pivotal role in advancing women’s progress, prosperity, and empowerment, directly contributing to inclusion in the digital economy, financial literacy, technological proficiency, and recognition.
BSS (2022) reported the Bangladesh government’s comprehensive strategy to enhance women entrepreneurship in Bangladesh. A notable initiative is the “Sathi” network, a partnership involving Bangladesh Bank, the Financial Institutions Division, and commercial banks. Led by women entrepreneurs who operate digital centres, this network is dedicated to accelerating financial inclusion and promoting increased participation of women in the financial sector.
While E-commerce and F-commerce have facilitated further inclusion of women in the economy, challenges persist, especially in addressing gender gaps in the freelancing sector, where women entrepreneurship has significant potential to flourish. The combination of freelancing and digital payments can offer further empowerment opportunities to women and facilitate inclusion in the ICT sector, underscoring the importance of addressing challenges to close gender disparities and promote women’s economic participation.
References
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