What is the penetration of mobile payments in Bangladesh?

The popularisation and development of mobile payments in Bangladesh has made significant progress in recent years, but still faces a number of challenges. The key points are analysed below:

1. Rapidly Growing Mobile Payment Market

• government-driven: Bangladesh Bank is actively promoting digital financial services, especially through initiatives such as "Bangla QR" and "MFS" (Mobile Financial Services). : Bangladesh Bank is actively promoting digital financial services, especially through initiatives such as 'Bangla QR' and 'MFS' (Mobile Financial Services).
• user growth: According to 2023 data, Bangladesh has over 70 million active mobile payment accounts (accounting for about 40% of the total population), with major service providers including bKash, Nagad and Rocket (Dutch-Bangla Bank).
• Transaction size: MFS transactions crossed Tk 10 trillion (about $90 billion) in FY2022-23, indicating widespread use.

2. Mainstream Mobile Payment Platforms

• bKash(Market share approximately 50%):
  • Launched by BRAC Bank in collaboration with Ant Group, it supports money transfers, bill payments, payroll and more.
  • Covering both urban and rural areas, even small merchants in remote areas accept bKash payments.
• Nagad(Fast-growing new player):
  • Co-operation with the postal sector to provide a low handling fee service, with the number of subscribers exceeding 70 million in three years.
• Other Service Providers: Rocket, Upay and others are also competing in the niche.

3. driving force

• The need for financial inclusion: Only 35% of adults have a traditional bank account, with mobile payments filling the gap.

4. Key factors driving the penetration of mobile payments (continued)

• Financial inclusion policy support::
  • The Government of Bangladesh has launched the Digital Bangladesh strategy, which aims to achieve a cashless society by 2025.
  • The RBI has asked banks and MFS providers to reduce handling charges and expand rural service outlets.
• High mobile phone penetration::
  • About 180 million mobile subscribers (number of SIM cards) nationwide, with a smartphone penetration rate of over 50% (GSMA data), laying the foundation for mobile payments.
• Accelerated digitisation of the epidemic::
  • Demand for contactless payments surges during COVID-19, with platforms such as bKash growing transaction volumes by more than 30% (2020-21).

5. Main application scenarios

• P2P transfers: Alternative to traditional cash remittances, especially dominant among migrant workers sending money back home.
• Utility contributions: Electricity, water, school fees, etc. can be paid online through Nagad or Rocket.
• E-commerce and retail payments: Daraz (owned by Ali), Pathao and other platforms access bKash/Nagad as preferred payment method.
  be an exception: High-end spending still relies on credit cards (only 2%-3% of the population).

6. Challenges ahead

7. Future trends

1. Expansion of cross-border payments::
   bKash has partnered with Alipay to allow Bangladeshi expatriates to send money directly from overseas to their local wallets.
2. biometrics::
   Nagad launches 'Face Verification for Account Opening' to streamline KYC process.
3. Super App Competition::
   Local platforms such as bKash add takeaway and taxi services to mimic the WeChat ecosystem.

(Case) Nagad's explosive growth

Through government partnerships and aggressive subsidisation tactics - such as "zero fee withdrawals" - Nagad's average daily volume surpasses $100 million by 2023, threatening bKash's market position.

(Summary)

Mobile payments in Bangladesh have covered basic financial needs, but complete replacement of cash will take time; regulatory relaxation and technological innovation will be the next key steps. (Add in-depth analyses in a particular area if required!)