How do Bangladeshis send money to their families? Anatomy of a digital payment trend

introductory

In today's globalised world, cross-border remittances have become an important economic source for many families. For Bangladesh, remittances from overseas workers are one of the important pillars of the country's economy. According to statistics, Bangladesh's remittance income in 2022 is more than $21 billion, accounting for more than 6% of GDP. Traditional cash remittance methods are being replaced by digital payments, and this paper will provide insights into how Bangladeshis are sending remittances to their families through emerging digital means of payment and explore future trends in this area.

1. Traditional remittance methods and their limitations

(1) Bank Transfer

Banks were one of the first channels for international money transfers and the process includes:

• Fill out a transfer request form at an offshore bank;
• Provide the payee's account information (e.g. SWIFT code, IBAN, etc.);
• Wait 3-5 business days for the account to arrive;

While safe and secure, fees are high (usually charging US$10-20 per transaction) and residents in remote areas may not have easy access to banking services.

(2) Western Union and MoneyGram

These two international giants have long dominated the cash-on-demand model:

• vantage: Immediate arrival and wide network coverage;
• drawbacks: Poor exchange rates and high commission fees (about 5%-10%).

However with the rise of mobile payments, these traditional institutions are also accelerating their digital transformation to remain competitive.

2. The rise and advantages of digital payments

In recent years, the development of "financial technology" (FinTech) has made cross-border payments more efficient and cost-effective. Below are the current mainstream digital solutions:

(1) bKash - The Local Mobile Wallet Leader

bKash is the largest e-wallet platform in Bangladesh (over 70 million users) and supports the following operations:

1. Offshore → Local Transfer:
   • International platforms such as PayPal can be tied to bKash accounts;
   • bKash also supports direct transfers from China to Bangladesh after partnering with Alipay;
2. Domestic P2P transactions:
   -Enter the other party's mobile phone number to the account in seconds, the single day limit of about 500 U.S. dollars; -Enter the other party's mobile phone number to the account in seconds.

Applicable Scenarios:: Small, high-frequency transfers, particularly suited to the daily expenditure needs of migrant families

(2) Nagad - Express Programme supported by the Government

Nagad, launched by the postal department, is fast capturing the market with its low rates (only 1%):
|Functions|Details|
|—|—|
|International acceptance|Support for SWIFT network deposit
|Over 250,000 agents nationwide.

It also integrates phone top-ups and bill payments within its app to further enhance stickiness.

Case Comparison

Assuming a transfer of $200 from Saudi Arabia to Dhaka.
||Traditional Channels (bank)|Nagad|
|—|—|—|
|Handling Fee15 |2 |
|Time Consumption |3 days |<30 mins |

Obviously the digital solution wins in terms of economy and efficiency!

An Innovative Attempt at "Blockchain + Stablecoin"

Some younger groups are starting to use cryptocurrencies such as USDT for cross-border settlements:
✅ Reduce costs by bypassing middle rows (<$1 each)
❌ Higher threshold of wallet knowledge on both sides of the equation

The model is still niche but growing rapidly - with related transaction volumes doubling year-on-year in 2023.

future outlook
By 2025.
☑️ Central Bank Digital Currency (BDT-CBDC) to be run on a pilot basis; and
☑️ more foreign platforms such as Wise enter the fray; the
☑️AI risk control makes it possible to transfer large amounts in real time.

In summary, from queuing at the counter to doing it at your fingertips - technology is making it easier than ever to "connect with family"!

3. In-depth analysis of digital payment platforms

(1) bKash: the benchmark for mobile payments in Bangladesh

Co-invested by BRAC Bank and Ant Group (Alipay's parent company), bKash has become one of the most popular e-wallets used by people in Bangladesh. Its core strengths include:

• Wide user coverage: More than 70 million registered users with an extremely high penetration rate;
• Convenient cross-border remittance support: Connect with international platforms such as PayPal and Alipay to facilitate direct transfer of funds from overseas workers back to their home countries;
• low-threshold operation: Only a mobile phone number is required to complete the transaction, suitable for a less educated user group.

Example of usage flow (overseas → local transfer)

1. Overseas remitters initiate transfers through partner organisations (e.g. Ria, WorldRemit);
2. The recipient receives an SMS notification and goes to a bKash Agent or withdraws the funds directly in the App;
3. Funds are instantly available with a fee of approximately 1%-2%.

Despite the high level of convenience, large transactions are still restricted (the single-day limit is usually US$500) and there is insufficient coverage of agent locations in some remote areas.

(2) Nagad - low-cost alternative promoted by the Government

As the official payment instrument launched by the Bangladesh Post Office, Nagad has grown rapidly in recent years, with key features including.

In 2023, Nagad added the SWIFT international money collection service to enable overseas workers to transfer funds directly from their bank accounts in Europe and the United States and have them automatically converted into BDT (taka).

Comparison of actual experience

Suppose Rahim, who works in Dubai, wants to send $300 to his hometown.

Clearly digital channels are reshaping user expectations of value for money!

4.Impact and challenges of emerging technologies

(1) Exploration of blockchain cross-border settlement
Some tech companies are starting to offer transit solutions based on cryptocurrencies such as USDT/XRP: The
✅ Extremely low cost: on-chain transfer fees <$1
⏱️ real-time clearing: no need to wait for bank processing
⚠️ but faces regulatory uncertainty - Bangladesh's central bank has warned that "unapproved crypto transactions are illegal"

The model is still limited to the young & tech-savvy, but is growing at an alarming rate.

(2) AI wind control to enhance security
To prevent fraud and money laundering, platforms such as bKash have introduced machine learning algorithms.
-Biometric login (face/fingerprint)
Real-time blocking of unusual transactions (e.g. sudden large transfers)
Video verification of identity required for all >$500 transactions from 2024

These measures, while increasing the number of steps, have also significantly reduced the rate of financial crime.

5.Trend forecasts for the next five years

According to the studies of the World Bank and the Bangladesh Central Bank, the industry will show the following directions of development.

🔼 Central Bank Digital Currency (CBDC) landing pilot
Digital Taka is expected to be launched by 2026, achieving.
-Precision regulation of monetary policy
-Direct subsidy disbursement to the poor

🌍 More international players entering the market
PayPal, Wise and others are applying for local licences that could bring.
✓ Better exchange rates ✓ Multi-language support ✓ Globalised account system

📲 Super App Eco Integration
Payment platforms to incorporate more lifestyle services.
▶️ Insurance Purchase ▶️ Online Education ▶️ Medical Appointments...

Conclusion:Technology makes it easier to connect with family members
From hours of queuing at wire transfer counters in the past to mobile payments at your fingertips today - technological advances have not only improved efficiency, but have also enabled millions of Bangladeshi families to access timely financial support. With the entry of CBDC and international giants, the true meaning of 'financial inclusion' is being redefined. For the average user, paying attention to officially certified channels, comparing rates and adapting to new tools will be key to maximising the value of remittances!