In line with the global trend, MFS providers in Bangladesh introduced their own proprietary Quick Response (QR) coded or QR-based payment systems in 2018. However, these early models were merchant-specific, meaning each QR code could only be used for payments within the issuing provider’s network. To overcome the limitation, Bangladesh Bank launched Bangla QR as an interoperable payment platform in 2021, introducing an interoperable QR code payment standard that enables seamless transactions across different banks, MFS providers, and PSPs. This initiative has significantly expanded the acceptance and accessibility of digital payments among both merchants and consumers.
Nevertheless, nearly half of the eligible payment institutions have yet to operationalise interoperable QR-based payments. Despite having over 210 million active MFS accounts and 121 million mobile internet subscribers at the end of FY25, cash still dominates the retail ecosystem, accounting for 35 per cent of formal retail payments in Bangladesh—substantially higher than regional peers such as India and Pakistan.
Peer Country Experience with QR Code-Based Payments: To reduce dependence on cash, application-based instant payment systems (APIs) are gaining popularity worldwide. To ensure instant payment processing and smooth, secure, interoperable operations, many central banks have developed dedicated platforms to handle the high volume of retail transactions.
The Central Bank of Brazil launched Pix in November 2020 as a nationwide interoperable instant payment system. Pix connects banks, fintechs, and digital wallets through a centralized infrastructure, enabling seamless payments across institutions. Users can make payments using simple identifiers, such as phone numbers, email addresses, or taxpayer IDs, or by scanning standardized QR codes. Transactions are typically processed within seconds at no cost for individuals, promoting efficiency, financial inclusion, and interoperability. The Central Bank of Brazil mandated that any financial institution with more than 500,000 accounts must join Pix. The system quickly gained widespread popularity, with 149 million individuals and 15 million firms using it as of December 2023. Consequently, the proportion of cash transactions declined from 42 percent in 2020 to 22 percent in 2023(Sampaio & Ornelas, 2024).
The Monetary Authority of Singapore (MAS) launched FAST (Fast and Secure Transfers) in 2014 to enable real-time interbank payment interoperability by building a national e-payments infrastructure that facilitates simple, swift, seamless, and secure payments. Initially, the uptake of FAST among corporates and smaller businesses was limited until 2016–17. In 2017, MAS introduced PayNow under the FAST payment system, an overlay service that enables payments via QR code scanning. Both individuals and entities can perform PayNow transfers by scanning the PayNow QR code through the mobile banking applications of participating banks. The launch of PayNow significantly boosted the adoption of the FAST payment system. By 2024, the volume of FAST transactions had reached 500 million (valued at S$661,748 million), compared to just 39 million transactions (valued at S$73 million) in 2017.
Malaysia implemented its interoperable payments framework with DuitNow, launched by PayNet under the Real-time Retail Payments Platform (RPP) in December 2018. DuitNow allows real-time fund transfers 24/7 using simple identifiers such as mobile numbers, national ID (MyKad), business registration, or passport numbers. The country also introduced a unified QR payment standard, DuitNow QR, under the Interoperable Credit Transfer Framework (ICTF), enabling any participating bank or e-wallet app to scan a standard QR code at merchants regardless of provider.
In 2021, Bank Negara Malaysia (BNM) and the Bank of Thailand (BOT) launched a cross-border QR payment linkage between Malaysia and Thailand. Under this linkage, consumers and merchants in both countries will be able to make and receive instant cross-border QR code payments using DuitNow and PromptPay (Thailand’s QR Code-based payment system) platform.
In 2023, Malaysia further enhanced cross-border interoperability by linking DuitNow with Singapore’s PayNow, enabling instant P2P transfers between the two countries. The use of DuitNow QR codes continued to increase given their convenience, lower cost, and wide coverage. There are 2.6 million registered DuitNow QR acceptance points across Malaysia as ofthe end of 2024. It helps promote greater adoption of e-payment in Malaysia. In 2024, per capita e-payments transactions reached 409, compared to 170 in 2020.
India has achieved remarkable success in cashless retail payments through the Unified Payment Interface (UPI). The Reserve Bank of India (RBI) and the National Payments Corporation of India (NPCI) have played key roles in this achievement. Established in 2008 by RBI and the Indian Banks’ Association (IBA) under the Payment and Settlement Systems Act (2007), NPCI launched UPI in 2016 to connect financial stakeholders and facilitate QR code payments. UPI allows users to link their bank accounts to a unique virtual payment address (VPA), significantly streamlining transactions. RBI and NPCI also promoted Bharat QR and UPI QR codes, enabling low-cost, contactless payments for small merchants and reducing dependency on cash.
To promote digital transactions, India introduced several subsidy measures. Since January 2020, the Merchant Discount Rate (MDR) has been set to zero for RuPay Debit Cards and UPI transactions, with the government covering associated infrastructure costs through the “Incentive Scheme for Promotion of Low-Value BHIM-UPI Transactions.” In FY25, Rs1,500 crore was spent under this scheme, compared to Rs1,389 crore three years earlier, covering small merchant payments of up to Rs2,000. The MDR subsidy rate decreased from 0.25 per cent in FY24 to 0.15 per cent in FY25 (excluding some bill payments).
In January 2021, the RBI launched the Payments Infrastructure Development Fund (PIDF) scheme to subsidie digital payment acceptance infrastructure, such as Point of Sale (PoS) terminals and QR codes, in underserved regions. With a corpus of Rs1,467 crore—Rs250 crore from RBI, Rs474 crore from authorized card networks, and Rs743 crore from card-issuing banks—PIDF had disbursed Rs542 crore by November 2023. As of November 2023, 27 million QR codes had been deployed under the scheme.
India also organized initiatives such as Digital Payments Awareness Week and related campaigns to build trust and awareness among users. These efforts, combined with government subsidies and the COVID-19 pandemic’s push toward contactless payments, have driven exponential growth in QR code adoption. By the end of FY21, only 9.6 million QR codes had been deployed, rising dramatically to 646 million by FY25.
The experiences of peer countries demonstrate that modernizing payment systems—particularly through fast and interoperable digital solutions—can significantly enhance financial inclusion, reduce cash dependency, and improve transaction efficiency. Common success factors include strong regulatory frameworks, coordinated stakeholder engagement, and adoption of international standards. Bangladesh can draw valuable lessons from these cases, tailoring global best practices to its domestic context to foster a safe, efficient, and widely accessible digital payment ecosystem.
Challenges and Recommendations for Bangladesh: Bangladesh has made notable progress in promoting QR code–based payments through the Bangla QR initiative. However, the transition toward a fully digital retail payment ecosystem remains uneven. Despite having substantial mobile and internet penetration—188.57 million active mobile connections and 120.87 million internet users as of July 2025 —the actual use of QR-based payments remains relatively low. Beyond limited merchant adoption and insufficient stakeholder participation in the unification of Bangla QR, the main challenges lie in users’ lack of awareness, trust, and familiarity, as well as the underdeveloped financial ecosystem that constrains broader adoption.
Partial Adoption by Major Providers. Leading Mobile Financial Service (MFS) providers have yet to fully integrate Bangla QR for both issuing and acquiring transactions. This partial integration has resulted in frequent transaction failures in practice, despite interoperability being established in principle. Moreover, of the 95 payment service stakeholders, including 61 banks, only 45 have integrated the Bangla QR code into their respective application-based platforms. This reflects a relatively low participation rate and highlights the need for stronger coordination and regulatory enforcement to achieve seamless nationwide adoption
Reliance on Cash for Supply Chains and Low Merchant Adoption. Many small merchants in Bangladesh still rely on cash when purchasing goods from wholesale markets. In the absence of fully digitized supply chains, cash continues to play an essential role in day-to-day business operations, thereby interrupting the continuity of cashless transactions. This presents a significant challenge in promoting the adoption of QR-based payment systems. Furthermore, some merchants who have adopted QR payments display multiple QR codes for different service providers, causing customer confusion and undermining the operational efficiency and interoperability intended by the Bangla QR system.
Limited Financial Literacy and Consumer Awareness. Although mobile and internet access are widespread, many users remain unaware of how QR payments work or view them with suspicion. Low financial literacy, distrust in digital platforms, and the absence of practical guidance discourage adoption among both merchants and consumers, especially in rural areas where cash habits remain deeply entrenched.
Technological and Access Barriers. Mobile payment applications often differ in design, navigation, and transaction processes, creating inconsistent user experiences. For new users—particularly those with limited technological familiarity—complex registration steps, transaction failures, or unclear interfaces can deter continued use. The lack of localized interfaces and responsive customer support further limits accessibility.
Cost of Acceptance for Merchants. The uniform Merchant Discount Rate (MDR) of 1.15 percent remains a major deterrent for micro and small merchants who operate on thin profit margins. For low-value, high-volume transactions, this fee structure discourages the acceptance of digital payments and reinforces reliance on cash.
Institutional Support Gaps. Bangladesh currently lacks a dedicated institution solely responsible for managing retail payment and settlement systems, which can slow development and limit operational efficiency. The ongoing Unified Instant Payment Infrastructure (UIPI) initiative aims to address this gap by creating an interoperable framework for instant payments. Building on this initiative, establishing a specialized corporation under BB could further strengthen oversight, enhance interoperability, and reduce operational pressures on existing systems, supporting the growth of a robust and scalable digital payment ecosystem.
Building a Fully Integrated Payment Ecosystem. The BB, in collaboration with major service providers, should ensure full interoperability by mandating the complete integration of Bangla QR for both issuing and acquiring payments. Simultaneously, digitization across supply chains should be promoted to enable small merchants to purchase wholesale goods electronically. Targeted incentives—such as transaction-fee rebates or small-value cashback—could encourage broader adoption among both merchants and consumers.
Enhancing Financial Literacy and Public Awareness. Given that internet and mobile penetration are already high, the primary challenge lies in motivating existing users to adopt digital payments. National and local-level awareness campaigns should focus on building trust, explaining QR payment processes, and addressing security concerns. Collaboration among the BB, MFS providers, commercial banks, and local government bodies can help deliver community-based training at the upazila level, demonstrating the simplicity and safety of QR transactions and promoting everyday use.
Improving Usability and User Experience. A consistent and user-friendly interface across QR payment applications is essential for sustainable adoption. BB could issue usability and accessibility standards to ensure app consistency and intuitive design. Introducing Bangla language interfaces, simplified onboarding procedures, and one-tap payment options can help users with limited digital literacy. To ensure a seamless and fully interoperable payment experience, all merchants must adopt and display only the standardized Bangla QR Code in accordance with regulatory guidelines.
Reducing the Cost Burden on Small Merchants. A tiered MDR structure should be adopted to make QR acceptance financially viable for small and micro businesses. Merchants with low transaction volumes could receive exemptions or reduced rates, while larger enterprises pay proportionate fees. Temporary subsidies or donor-backed support programs can further offset transaction costs during the early stages of adoption.
Strengthening Institutional Capacity. To ensure effective governance and future innovation, Bangladesh should establish a Retail Payment and Settlement Corporation under the BB. This entity would coordinate risk management, ensure interoperability, oversee the UIPI framework, and introduce new technologies such as instant QR settlements and offline payment mechanisms. Focused oversight would also help streamline stakeholder collaboration and accelerate the country’s transition toward a cashless retail payment ecosystem.
Collaborate with International Payment System Experts. The Payment Systems Development Group (PSDG) of the World Bank has supported over 120 countries in modernising their payment systems and, more recently, has taken a leading role in global research and providing technical assistance on fast payment systems. Project FASTT marks a significant milestone in this effort and is supported by the Bill & Melinda Gates Foundation through the Finance for Development (F4D) Umbrella Program. Bangladesh could benefit from collaborating with such organizations, leveraging their extensive experience to develop infrastructure that enables frictionless, affordable, secure, and instant transactions.
By addressing these challenges through coordinated policy, infrastructure support, financial incentives, and awareness programs, Bangladesh can significantly accelerate the adoption of QR code–based payments and foster a more inclusive cashless economy.
Conclusion: The transition toward cash-less economy in Bangladesh is at a decisive stage. Although notable progress has been achieved with the introduction of the interoperable Bangla QR system, the adoption of QR-based payments remains slow compared to peer economies. The continued dominance of cash—accounting for 35 per cent of formal retail transactions in FY25—indicates that infrastructure alone is insufficient to drive behavioural change among consumers and merchants. The findings of this study highlight both supply-side and demand-side constraints that inhibit wider adoption, including the slow integration of major payment participants, uneven technological readiness, limited merchant on boarding, persistent consumer preference for cash, gaps in trust and awareness, and the absence of a simple, unified application-based interface.
International experiences from India, Brazil, Malaysia, and other economies demonstrate that rapid scaling requires a strong instant payment interface, low-cost transactions, targeted public awareness, and fully interoperable platforms. Drawing on these lessons, this study underscores the need for a dedicated, API-based unified retail payment interface in Bangladesh—one that connects all issuer and acquirer types, including banks, MFS providers, PSPs, wallets, and fintechs. Bb’s ongoing initiative to develop an Inclusive Instant Payment System (IIPS), supported by the Gates Foundation, represents a significant step in this direction. However, successful operationalisation will require sustained stakeholder engagement, investment in digital infrastructure, enhanced fraud-monitoring capabilities, and continued efforts to improve usability and trust.
To ensure that the upcoming IIPS effectively addresses existing interoperability limitations, further research is essential. In-depth, organised surveys involving users, payment participants, merchants, fintech companies, and industry experts would provide deeper insights into the root causes of low adoption of interoperable QR systems. The results from such research would help identify practical strategies to enhance usability, build trust, and boost operational efficiency. Additionally, learning from neighboring countries through site visits and knowledge-sharing initiatives would give Bangladesh direct understanding of the challenges they faced and the policy measures that facilitated rapid adoption. These evidence-based insights will be vital for designing a strong and user-oriented IIPS tailored to Bangladesh’s unique context.
Given the scale and complexity of the emerging payment landscape, this paper also proposes establishing a dedicated Retail Instant Payment and Settlement Corporation (RIPSC) regulated by BB. Such an institution could strengthen governance, address operational bottlenecks, enhance system resilience, and support continuous innovation in the retail payment space.
Although the IIPS initiative is still early in its development following the signing of an MoU, the measures recommended in this study could significantly increase acceptance of Bangla QR, reduce reliance on cash, and accelerate the transition to interoperable digital retail payments. Together, these actions would support Bangladesh’s broader move toward a modern, efficient, and increasingly cashless economy.
Finally, this study acknowledges certain limitations. Due to time and resource constraints, we were unable to conduct structured interviews with QR payment users, merchants, or payment participants. However, insights were gathered through discussions with officials from the Payment Systems Department and through personal user experiences, which helped identify key bottlenecks. A more comprehensive and rigorous picture could be developed through a dedicated survey addressing these limitations, which is recommended for future research.
[Concluded]
The article is an abridged version of the BB Working Paper No 2501. Md Rashel Hasan, Additional Director; Md Khorshed Alam, Joint Director; and Mst Nurnaher Begum, Director; Chief Economist’s Unit, Bangladesh Bank. The views expressed in the paper are solely those of the authors. rashel.hasan@bb.org.bd.
The full paper is available at: https://www.bb.org.bd/en/index.php/
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