A round-up of local payment tools in Bangladesh: from bKash to Nagad

Bangladesh's digital payments market has grown rapidly in recent years, with homegrown payment tools performing particularly well in the areas of financial inclusion and mobile payments. Below is an in-depth inventory and key analysis of the country's leading local payment platforms:

I. The Head Twin: bKash and Nagad

1. bKash (established in 2009)

• market share: Over 75% share of the mobile financial services market
• user scale: Over 70 million registered accounts, with a peak of 5 million transactions per day
• core functionality::
  • P2P transfer (supports contactless USSD operation)
  • Merchant code payment (covering 850,000 merchants nationwide)
  • Government social security distribution channel
• Innovative Highlights::
  Launch of "bKash Pay" virtual card in 2023 to support international e-commerce spending

2. Nagad (established in 2019)

• Background Advantages: State-owned platform jointly operated by the Postal Service and the Ministry of Finance
• miracle of growth: Acquisition of 60 million subscribers in 3 years with a sustained monthly growth rate of 8%
• rate strategy::
  | Type of Service | Fee Rates |
  |—————-|———-|
  | P2P Transfers | 0.45% |
   | Cash Recharge | Free Policy|
   | bill payment | 0.2%-1% |

II. Competitors in the segment
3.Rocket (DBBL)
–Featured Services:: Direct cross-border remittances (22% of Bangladeshi remittance business)
–Technology Architecture:: SIM Toolkit-based offline trading system

4.Upay (United Commercial Bank)
–Enterprise Solutions: Supply Chain B2B Settlement Platform has access to 4,500 SMEs
–API Ecology:: Open 47 financial interfaces to developers

5.Tap & Pay (City Bank)
–NFC Applications:: Exclusive partner of the metro ticketing system (350,000 transactions processed daily)

III. Regulatory framework and infrastructure
1.Central bank policy(new regulation 2023).
-Capital requirement for MFS licence increased to Tk 500 million (about US$ 4.5 million)
-Mandatory biometric level 2 verification

2.Progress on interoperability:
-NPSB (National Payment Switch Bangladesh) has achieved.
√ Inter-operator transfer success rate of 98.7%
√ Clearing statute of limitations T+1 shortened to real-time settlement

IV. Market challenges and development trends
1.Existing pain points:
-KYC pass rate is only 62% (lack of ID card coverage in rural areas)
-Cash-out costs as a percentage of revenue reach 28%

2.Innovation Direction Watch:
-AI Risk Control: Behavioural Biometrics Deployed by Nagad to Reduce Fraud Rates 37%
-Blockchain App: bKash Tests DLT Solution for Cross-Border Trade Letters of Credit

The industry is currently in a critical phase of transition from basic payments to integrated financial services. According to World Bank data, adult account penetration in Bangladesh has reached 53%, but there is still room to double the share of digital transactions. It is worth keeping an eye on the progress of Post Bank's upcoming 'Nagad Digital Bank' licence application in the next 12 months.

Note: All data as of 2024Q1, exchange rate reference US$1 ≈ Tk 110

V. Emerging Players and Innovative Payment Models

1. Emerging local payment platforms

• OK Wallet (One Bank)

  • locate: Specialise in corporate payroll and supply chain finance
  • Growth highlights: 3,00% growth in enterprise users by 2023, covering 2,000+ factory workers' payroll payments
  • Featured Functions:: "OK Credit" -- unsecured microfinance based on transaction data

• mCash (Mercantile Bank)

  • Rural penetration strategy:
    ✓ Agency outlets covering 98% of remote townships (over 120,000 retail outlets)
    ✓ Support for voice command transfers (for illiterate users)

• SureCash (Rupali Bank partnership project)

  • transformed:: Former P2P business contracted, now focusing on digital distribution of government subsidies (e.g. fertiliser subsidies for farmers)

2. Fintech cross-border challengers

VI. Breakout attempts in cross-border payments
1.bKash International Expansion
-Singapore/Malaysia remittance corridor (19% of Bangladesh remittance market)
-Visa co-branded card supports USD spending

2.Nagad's "Digital Corridor" programme
√Interconnection with Indian UPI system under test
√ Proposed access to Saudi Arabia's SPFS system

3.Policy Restrictions on Breakthrough Points
-CBDC Pilot: Central Bank's Digital Currency Project Expected to be Commissioned in 2025
-RTGS Upgrade: Large-value cross-border clearing timeframe shortened from T+3 to 4 hours

VII. Key Insights into Consumer Behaviour
1.Habit of Use Layering(BCG research data)
|Urban youth (18-35)|Rural middle-aged and older (40+)|
|—|—|—|
|Main Uses|Online Shopping(62%)｜Call Charge Recharge(88%)|
Frequency of transactions: 1.7 times per day: 4 times per month.
Balance Retention｜Tk.500(61%)|

2.Trust Comparison
-Nagad recognised in 45+ group for government background 89%
-bKash Brand Preference Among Gen Z 64%

VIII. Forecast of decisive elements for the next three years
–regulatory technology(RegTech): RBI-mandated AML AI screening tool inputs to grow by 200%+
–Super App War: bKash has integrated takeaway/cab services, Nagad in talks to take stake in largest online education platform
–Biometric Breakthroughs:
  ✓ IV payment trial (Nagad in collaboration with Fujitsu) 
 ✓ Voiceprint authentication accuracy improved to 99.2% (Bengali dialect optimised)

Current industry tipping point:
When mobile account penetration exceeds 60%, the profit model will shift from pure transaction fees:
▷ Value-added services such as credit insurance (bKash loan bad debt rate is only 1.8%)
▷ Data realisation (Dmoney's corporate credit product has a gross margin of 72%)

Note: Some data from the RBZ Financial Inclusion Report 2024 and Asian Development Bank research reports.