Bangladesh Enters a New Era: Digital Payment System

Over the last three decades, financial services and payment methods have been significantly impacted by the revolution of digital technologies and telecommunication. We can make instantaneous transactions, shop for our goods and services online and assess our bank accounts from our phones. The transition to a cashless future economy will be marked as a breakthrough in the digitalization of the payment system. Four themes that are anticipated to influence this industry’s future are also projected to fuel the expansion of digital payments in Bangladesh. The advent of next-generation payment service providers, a supportive regulatory framework, the digitization of Bangladesh, and improved consumer experiences are the four factors that have fueled the expansion of Bangladeshi digital payment systems. Covid-19 fueled further the trend of digitization by pointing the finger at the concerned authorities of Bangladesh about its necessity. Payment system through mobile adds different dimensions to conventional payment methods. Banks even place high importance on investing in mobile payments. As evidenced by its National Financial Inclusion Strategy 2020–2024, which was unveiled in 2019 to support Bangladesh Bank’s (the central Bank of Bangladesh) regulatory initiatives, financial inclusion remains a policy goal in Bangladesh (Bangladesh Bank, 2019).

Present status of digital payment system in the world:

In the last three decades, a revolution in digital technology and communications has had a significant influence on financial services and payments. We make instantaneous transactions, shop for goods and services online, and access our bank accounts from our phones. Payment systems have become much more effective, affordable, and inclusive within nations thanks to these new means to access digital financial services. In addition to the global spread of formal financial institutions, the COVID-19 epidemic has sparked financial inclusion and led to a significant rise in digital payments. From 68% in 2017 and 51% in 2011, 76% of individuals worldwide now have an account with a bank, financial institution, or mobile money provider (World Bank, 2022). It’s significant that the expansion of account ownership was evenly divided among many more nations. The poll this year discovered that while much of the growth over the previous ten years was focused in China and India, the percentage of account ownership has climbed by double digits in 34 nations since 2017 (World Bank, 2022). Over 40% of individuals in low- and middle-income countries (apart from China) who paid a merchant in-person or online with a card, phone, or the internet have done so for the first time since the pandemic’s commencement (World Bank, 2022). Globally, two-thirds of individuals currently send or receive digital payments, with developing economies accounting for an increasing proportion from 35% in 2014 to 57% in 2021 (World Bank, 2022). World Bank Group President David Malpass said, “The digital revolution has catalyzed increases in the access and use of financial services across the world, transforming ways in which people make and receive payments, borrow, and save.” Bill Gates, co-chair of the Bill and Melinda Gates Foundation said, “By investing in digital public infrastructure and technologies for payment and ID systems and updating regulations to foster innovation and protect consumers, governments can build on the progress reported in the Findex and expand access to financial services for all who need them.”

Digital payment system in Bangladesh:

In Bangladesh, the payments environment has changed structurally during the past ten years. The landscape of digital payments appears promising. Consumer behavior is changing. Contactless and cashless transactions are becoming more prevalent as a result. COVID-19, meantime, has hastened the development of the digital payments industry. As the present generation is techy and depends on online services for convenience, the country is seeing enormous growth in digital services. Since more companies move their operations online, payment mechanisms have become more digitized and varied. The Covid-19 epidemic has further sparked the rise in digital payments, as seen by the 7% growth in mobile financial service (MFS) transactions in the third quarter of the fiscal year 2019–20 (LightCastle Partners, 2022). Here is an image from LightCastle Partners, 2022 (3) which shows the overall performance of country at a glance:

In the last two years, the use of digital payments has increased significantly. This may be seen in the rise of Mobile Financial Service, ATM (Automated Teller Machine), POS (Point of Sale), CRM (Cash Receipt Machine), and E-Commerce transactions between FY 2020 and FY 2021. The comparison among the raising is charted and diagramed below:

From the graph and chart, Mobile Financial Services increased by 172.37%, ATM increases by 126.05%, POS increased by 66.05%, CRM increased by 6127.59% as well as E-Commerce increased by 487.82% from December 2018 to September 2022. The growth of these digital payment technologies gives us a green signal about the bright of the digital economy in our country.

Challenges of adopting digital payment system in Bangladesh:

Despite Bangladesh growing fast with its digital economy, there are a few challenges. Financial illiteracy is the enemy of implementing “Digital Bangladesh by 2041”. Moreover, around 30 million people lack access to banking because of a substantial financial market gap, which has an unbalanced effect on lower-income groups (Global Findex, 2021). Furthermore, the complexities have diverted rural people from using digital payment systems.
Recommendation for eradicating the challenges:

Bangladesh’s government has already taken regulatory steps to bring the whole nation under the umbrella of digital payment systems toward forwarding the formation of a cashless society. To implement the vision, Bangladesh Government has formulated Bangladesh’s National Digital Payments Roadmap 2022-2025 (Better Than Cash Alliance, 2022). However, to face the challenges, Government can introduce financial literacy-related basic courses in the national curriculum. Moreover, income distribution gap can be closed down by the distribution of resource allocation so that people can engage in a formal financial channel through saving. Furthermore, simplicity and loyalty can be good resources to extract people from cash-king ideology to cashless thought.


Bangladesh, so far, is going forward toward digital payment systems with the blessing of Mobile Financial Service and internet banking. There is still potential for improvement because broadening public access to financial services is essential to make real our dream of “Digital Bangladesh by 2041”. The payment system may be considerably enhanced by overcoming obstacles and seizing opportunities. That day is not far away when society will be cashless with the blessing of the digital payment system.

The writer: Bijoy Dey
Deputy Director, Bangladesh Bank