Analysis of the current status of cashless society development in Bangladesh

The development of a cashless society in Bangladesh is in the early stages of rapid growth, with the government, private sector and international institutions actively promoting digital payments and financial inclusion. Its current status is analysed below in a number of dimensions:

1. Policy and infrastructure support

  • Government initiatives::
    • The "Digital Bangladesh 2021" strategy has cashless payments as a core objective and the National Payment System Bill was introduced in 2018 to regulate electronic transactions.
    • The central bank-led Bangla QR and MFS (Mobile Financial Services) frameworks have lowered the threshold for merchant access.
  • Correspondent Banking Network: Expansion of rural coverage through institutions such as the Postal Bank, BRAC, etc., with about 1 million agent outlets across the country (World Bank data).

2. The explosive growth of mobile payments

  • Dominant platforms::
    • bKash (Ant Group stake) holds 75% market share with over 70 million users; Nagad (state-owned background) has the fastest growing user base at 60 million (2023).
  • Transaction size: MFS transactions reach Tk 9.3 trillion (~$85bn) in 2022, exceeding 20% of GDP (RBI data).

3. Key drivers

  • Smartphone penetration: 451 TP3T penetration (GSMA) and 851 TP3T 4G coverage, but rural areas still rely on USSD feature phones to complete transactions.
  • Demand for financial inclusion: Traditional banks serve only 30% adults, MFS fills the gap - female account holdings rise from 26% in 2014 to 44% in 2021 (Findex).

4. Challenges and bottlenecks

  • cash inertia:: 901 TP3T of small transactions are still in cash (UNCDF research), partly due to fee sensitivity (e.g. bKash withdrawal fee of 1.851 TP3T).
  • Regulatory fragmentation: Complex rules for different payment licences and limited foreign exchange controls for cross-border payments.

5. Cases of innovation and international cooperation

5. Cases of innovation and international cooperation

  • local innovation::
    • Integration of bKash's "code payment" with microfinance: Through partnerships with telecoms providers such as Grameenphone, users can pay directly from their phone bill balance.
    • Nagad's "Digital ID Binding": Seconds account opening using government citizen database, doubling the number of users in two years.
  • International capital and technology inputs::
    • Ant Group introduces risk control algorithms after capital injection into bKash, fraud rate drops by 30%.
    • Visa has partnered with local banks to launch prepaid cards that bridge the MFS and traditional POS networks.

6. Industry eco-expansion (B2B and public services)

  • Corporate Payments: Rocket (Dutch-Bangla Bank) provides digitised payroll for garment factories, covering over 2 million workers (60% of export manufacturing).
  • state-run enterprise: After Dhaka Electricity Board supported MFS payment, the overdue rate decreased from 221 TP3T to 91 TP3T (RBI report 2023).

7. Socio-cultural barriers

  • gender difference:: Only 34% of female MFS users actively use the money transfer function (GSMA Women's Financial Inclusion Report), partly due to the male of the household controlling the device.
  • confidence gap: Cash preference in rural areas stems from uneasiness with "virtual balances" - the need for an agent to be present to assist with transactions.

8. Future trends

  1. Super App Competition: e.g. Pathao (travel platform) integrates payments to challenge traditional MFS giants.
  2. CBDC Pilot: Bangladesh's central bank plans to test retail-based digital currencies in 2025, potentially reshaping the role of correspondent banks.

[Key findings]

Bangladesh has established a globally leading mobile payment penetration framework, but cash dependency, regulatory synergies and gender equality remain deep challenges. Its model is informative for other low-income countries in South Asia - proving that skipping the card stage and going straight to mobile is a viable path to financial inclusion. (Let me know if you need to go deeper in a particular area)