The country is bracing for a major transformation of its financial ecosystem as the central bank seeks to reduce dependence on physical currency and gradually build up a cashless economy. Driven by rapid technological advancement and continued modernisation of the financial sector, policymakers believe digital payments can improve efficiency, increase transparency and support broader financial inclusion.
The initiative also aligns with the government's wider development agenda aimed at building a more technology-driven economy.
The transition to cashless transactions has increasingly become a strategic priority across many countries as governments and central banks attempt to reduce the costs associated with handling physical money while improving transaction efficiency and accountability.
Bangladesh Bank or the central bank sees the country's demographic and technological advantages as key factors supporting such a transition into digital finance. A young and increasingly technology-aware population, coupled with growing internet penetration and widespread mobile-phone use has created conditions for expanding digital financial services.
Technologies such as Artificial Intelligence (AI), Big Data, Cloud Computing, Robotics and the Internet of Things (IoT) are increasingly becoming part of broader economic activities, creating new opportunities for financial technology development.
Central bank officials believe the expansion of digital-payment platforms could eventually eliminate the need for carrying physical cash for many day-to-day transactions while creating transparent and traceable financial records.
The country's payment system has already undergone notable changes over the past decade. Electronic Fund Transfer (EFT), internet banking services, Real Time Gross Settlement (RTGS), mobile financial services, online payments and Point-of-Sale (POS) systems have gradually expanded across the financial sector.
The central bank now aims to accelerate this process by encouraging wider adoption of interoperable payment systems. As part of this effort, Bangla QR was introduced in 2022 as a unified and affordable digital-payment platform designed primarily for small and midsize businesses.
The system allows customers to make payments using a single QR code irrespective of their banks or mobile financial-service providers, reducing dependency on separate platforms.
To accelerate adoption, all city corporations and municipalities have been instructed to make inclusion in Bangla QR transactions one of the conditions for issuing and renewing trade licences for retail businesses. However, despite policy support, implementation has yet to gain the expected momentum.
Market participants say retailer adoption remains relatively weak as many businesses continue using QR codes linked to individual mobile financial -service operators instead of the unified Bangla QR system. According to central bank estimates, around 1.2 million Bangla QR codes are expected to be in operation nationwide. However, shop owners in many areas still prefer displaying separate mobile financial-service -payment codes on their shop walls.
Industry participants say the limited use reflects a combination of behavioural and practical challenges. Retailers often see little immediate commercial benefit in changing existing payment practices.
Financial analysts say stronger incentives and more effective enforcement measures may be required by the central bank to increase adoption among businesses. Some observers also argue that technological readiness alone may not guarantee success.
Transitioning to a cashless economy requires significant behavioural changes among consumers, merchants and institutions. Building trust in digital systems, increasing awareness and strengthening digital literacy could prove equally important as technological infrastructure.
Recognising these challenges, Bangladesh Bank has prepared a phased strategy consisting of short-term, medium-term and long-term action plans.
Short-term plan: Under its short-term plan, the central bank has prepared a five-year Cashless Bangladesh Roadmap. During the period it intends to expand Bangla QR usage among small and medium enterprises and establish a government fund aimed at helping SMEs integrate into the digital-payment ecosystem.
The plan also proposes promoting digital payments in priority sectors, including education, healthcare, land administration, transportation and retail services. Authorities further aim to establish data-sharing mechanisms, alternative data-use systems, APIs and open banking standards to facilitate the development of a private credit bureau.
Guidelines for Payment System Operators (PSOs) and Electronic Money Issuers (EMIs) are also expected to be introduced, alongside district-level financial literacy programmes.
Medium-term plan: Under the medium-term strategy, the central bank plans to strengthen electronic Know Your Customer (e-KYC) procedures and reduce digital fraud through real-time mobile SIM -registration verification using databases maintained by the Bangladesh Telecommunication Regulatory Commission (BTRC).
Other government service payments and related financial transactions are also expected to be integrated into digital -payment infrastructure.
The authorities also intend to conduct initial assessments for implementing Regulatory Technology (RegTech) and Supervisory Technology (SupTech).
Long-tem plan: Over the longer term, Bangladesh Bank aims to build a technology-driven financial ecosystem capable of conducting nearly 80 per cent of national transactions through cashless channels within the next five years.
The central bank also expects the expansion of financial-technology services to generate significant employment opportunities.
Challenges remain. People familiar with the development have said that a large-scale shift away from physical currency may reduce the central bank's seigniorage income derived from issuing currency.
Questions also remain regarding digital accessibility. A significant share of the population, particularly in rural areas, still lacks access to smartphones, internet connectivity and digital skills. Without addressing such structural barriers, analysts warn, achieving a fully inclusive cashless society may prove difficult.
For Bangladesh, therefore, the journey towards a cashless economy may be less about replacing currency and more about ensuring that technological progress reaches all sections of society.
jasimharoon@yahoo.com