Industry Details

12:00 AM, April 05, 2018 / LAST MODIFIED: 12:17 PM, April 05, 2018

Cashless shopping & Dining

Digital payments have seen tremendous growth in Bangladesh. Only in 2016, people made 180 crore transactions worth Tk 23 lakh crore in Bangladesh, Bangladesh Institute of Bank Management said in a study. The amount of transactions has seen exponential growth in the last five years, said Mahbubur Rahman Alom, an associate professor of BIBM. Mobile financial services platform channelled most of the transactions, according to the study. Cashless transactions reduce the scope for tax avoidance on real estate purchases, curbs generation of black money, reduces the costs of currency printing and its management.

Dutch-Bangla Bank has the country's highest number of ATMs and the biggest agent banking network. The cost of an electronic transaction is one-fourth that of human-given services, said AbulKashem Mohammad Shirin, managing director of DBBL. Cashless transaction still has huge potential in Bangladesh, as only 1 percent of the country's transactions are made through digital platforms, Syed Mohammad Kamal, country manager of MasterCard. The e-commerce market now stands at more than Tk 400 crore a year and is expected to grow manifold. The mobile financial services platform has grown significantly over the last couple of years, which has grown 120 percent a year since 2011.


12:00 AM, August 12, 2018 / LAST MODIFIED: 04:09 PM, August 12, 2018

Perks of digital transactions

Zina Tasreen
Technology is perhaps the greatest of God's gifts after the gift of life, eminent American physicist Freeman Dyson once said -- and looking at the great convenience that the digital payment system provides, one can see why such a grand proclamation was made. Like every morning, Muhammad Zahidul Islam, a journalist, set off for his assignment. Upon arriving at the venue, as he was about to pay his taxi driver, he discovered that he had left his wallet behind at home. In simpler times, one would think that the only two options for Islam would be to plead the taxi driver to collect the fare from his home later in the day or go back to grab his wallet and miss the event for which he came in the first place.

But thanks to the advent of digital payment he had another option: pay the driver through the mobile financial service platform. The taxi driver had a bKash account and so did Islam with sufficient balance on it and a potentially tricky situation was averted -- without breaking a sweat.

Then there is the story of Arzina Akhtar Brishti, the sole breadwinner of a family of three -- but based some 260 kilometres away. The 23-year-old works as a maid in a house in Dhaka while her physically challenged parents live in a remote village in Rangpur. Previously, she would take leave every 5-6 months and make the arduous journey back to her village to hand over her earnings to her parents to get by for the next few months. Or, if she could find someone going to her village, she would give her salary to them to take to her parents. Both the options were unreliable for her parents: they never knew when the next round of funds would come. But thanks to MFS, they no longer need to play a guessing game and endeavour to make the amount last longer: now, at the end of every month Brishti sends her salaries to her parents, who get the amounts within minutes. Brishti's and Islam's are not isolated cases; like them 229 lakh others are employing the platform on a regular basis to remit salaries to rural areas, make payments to merchants, settle dues, clear utility bills and make online purchases.

Introduced in 2011, the platform has 229.09 million active accounts as of May, after a purge in the latter half of 2017 following central bank instructions. Some 59.8 lakh transactions taking place every day on average, as per latest data from the central bank, which is of the month of May.
A total of Tk 32,822.83 crore was transacted through the platform in May, up 25.42 percent from a year earlier, according to data from the Bangladesh Bank.

Currently, there are 19 MFS licence holders and all except one are offering the service. Dutch-Bangla Bank's Rocket and Brac Bank's subsidiary bKash together have 99 percent market share of the MFS market. The clear market leader is bKash, which caught the attention of global tech giant Alibaba. In April, Alipay, mobile and online payment arm of Alibaba, bought 20 percent stakes in bKash -- a deal that could turn out to be a gamechanger for the MFS sector in Bangladesh. By all margins, the platform is slowly but surely growing in popularity, but to accelerate the process, particularly in urban centres, the MFS players, particularly bKash, are providing up to 25 percent cashback offers for purchases at point-of-sale terminals and through e-commerce sites. Opening an MFS account is free and uncomplicated: a mobile phone number, a copy of the national ID card and one passport-sized photo are all that are needed. Because it does not necessitate a bank account, MFS has been a godsend for those in remote areas, where bank branches are few and far between, allowing them to get formal banking benefits. In the same manner, credit card has been a blessing for those with limited savings and frequent foreign travellers.

Take the case of Abrar Hossain, a private sector employee, who fancied getting a state-of-the-art television but his monthly salary did not afford him the luxury of such a splurge in one go. But thanks to the equated monthly instalment (EMI) facility that comes with credit cards, he was able to make the purchase. He had to pay one-third of the television price upfront; the remaining amount was to be paid in monthly instalments over a six-month period -- and arrangement that did not strain his limited income. Thanks to the Bangladesh Bank's tripling of the limit for international online purchases to $300 per transaction in 2016, planning for a foreign trip has become exponentially convenient if one has a credit card.

Not only does one need not travel with a wad of foreign currency, one can also pay for accommodation in advance and take advantage of cheaper rates and buy entry tickets to tourist attractions beforehand and avoid the long queues. While it is undeniable that anyone who has a credit card risks running up too much debt -- a millstone that might take several years and lots of sacrifice to get rid off -- if used wisely the benefits can outweigh the downsides.


08:59 PM, May 19, 2019 / LAST MODIFIED: 09:55 PM, May 19, 2019

Mobile banking transaction limit increased

Star Online Report
Bangladesh Bank today enhanced the transaction ceiling for mobile financial service following requests from the leading players aiming to promote the expansion of the services. The move came two and a half years after the central bank lowered the ceiling, saying that the facility was being abused. From now, the maximum amount of Tk 30,000 can be deposited into an MFS account each day and Tk 2 lakh monthly which is double from the existing amount of Tk 15,000 and Tk 1 lakh respectively, according to circular of the central bank.

The number of daily cash-in transaction for an individual improved to five from existing two and monthly transaction number 25 from existing 20 times. The daily cash-out limit also uplifted to Tk 25,000 and monthly ceiling to Tk 1.50 lakh which was previously was Tk 10,000 daily and Tk 50,000 monthly. A person can withdraw money from the account for five times a day which was only two previously. MFS users also get relaxed dealings and can cash-out 20 times monthly, was only 10 times previously. However, the banking regulator hasn’t mentioned anything about the cash-out charge which cost 1.8 per cent.

Digital Financial Services The Next Step

LIGHTCASTLE ANALYTICS WING, January 15, 2019, 10:37 am

The current generation in Bangladesh is growing up with smart devices and convenience services as a greater number of businesses seek to bring their products and services to the doorsteps of consumers. In finance, however, businesses are using smartphones and other devices to bring financial services as close as to the palm of our hands. Digital financial services (DFS) allow users access to services like banking and utility/merchant payments at their time and place of leisure instantly, and companies to save costs of servicing in person. However, beyond convenience, DFS holds much greater potential – to promote greater financial inclusion in areas where financial institutions are scarce, combat fraud by ensuring payments to the right person, and reduce costs associated with making a large number of financial transactions. Besides benefiting just consumers and businesses, it also has the potential to benefit government through taxes as more financial transactions are made formal. It seems almost too good to be true, but the reality of this growing segment of fintech is that it’s changing the financial landscape of the world, especially in emerging countries like Bangladesh.

Global Perspective – The Trillion Dollar Market

According to Findex, 78% of the world’s unbanked adults receive wages in cash and have access to mobile phones [1], giving the market a high potential profitability. Companies dedicated to mobile-money such as Alipay and bKash already boast a user base of 520 and 30 million respectively [1]. Although big players in the industry started initially with only mobile money services, there is a growing trend towards providing a wider variety of financial services including e-wallets, payment platforms, savings accounts, insurance, fixed deposit schemes and other services. Despite the growth in the number of adults with a bank or mobile-money account in the world, growing by 515 million in the past 3 years, a quarter of all accounts worldwide remain inactive with no deposits or transactions in the last year [1].
The bulk of profits earned by facilitating companies come from cash-in-cash-out and transactions (McKinsey global banking practice March 2018). Mobile-money carries a great potential for reducing the need for cash and making everyday payments easier. In Africa its effects were much further reaching, where it was used as a tool for fighting corruption and providing emergency-response workers their salaries while avoiding increased propagation of Ebola. Despite the reduction in need for cash, it unlikely to be brought down to zero, as seen in Norway, which has the lowest cash usage still set at 17% of all payments despite being the world’s greatest adopter of digital financial services (DFS) [1]. In developed countries the mobile money market is fragmented, but in emerging nations are dominated by few players like bKash in Bangladesh which holds 60% of the total, M-PESA holding 80% in Kenya, and China dominated collectively by Alipay and Tencent [1]. In emerging countries, however, weak digital literacy among the population also means agents are part of the business model as middle men to facilitate transactions.

Bangladesh Policy & Trends

In 2011 Bangladesh Bank issued “Guidelines on Mobile Financial Services (MFS) for Banks” bringing MFS activities under formal regulations. This includes the adoption of only bank-led model for financial services, where customers deal with banks through a mobile finance intermediary. The government has also taken initiatives to promote digital financial services through Access to Information (a2i) with initiatives like Digital Financial Services Lab in partnership with Bangladesh Bank, aimed towards incubating fintech startups targeting low-income groups. Currently the central bank allows multiple uses of MFS but is not limited to remittance, cash in/out, utility bill payments, C2B payments, salary disbursements, and government payments. Recently in 2016, there was a sharp decline in number of banks authorized to provide MFS due to non-compliance of regulations. However despite this, the number of transactions and volume has seen a steady growth.
Since then, MFS has seen exponential growth due to the proliferation of low-cost mobile phones and increasing network coverage throughout the country. However challenges such as digital literacy, limited competition, and security concerns remain an issue in taking the next step towards greater financial inclusion. In 2017 there were 58.6 million registered customers in total, however, only 23.1 million are active [8]. In 2018, mobile banking alone has been estimated to be generating 994 crores, or over $188m in daily transactions [7]. According to 2017 report, 37% of the population was financially included through registered accounts with a full-service financial institution [2]. However, this 5% growth from 2016 is a result of an increase in registered accounts and decline in users of microfinance and NBFIs [2], showing that greater financial inclusion through use of MFS has a significant effect on other activities with the similar goals.

Source: Bangladesh Bank

Market Players

The mobile-money market in Bangladesh is currently dominated by bKash with Rocket as a distant second. However there are many other digital financial services (DFS), each with its own distinct focus.



Institutional Backing



Payment Platform


Digital Payment Focus


Digital Financial Service

Post Office

Larger Transaction Limit; Regulatory Advantage

D Money

Digital Payment Platform

Post Office

Digital Islamic Wallet
2tk Accounts


Mobile Financial Service


Largest Market Share & Network of Agents


Mobile Banking

Dutch Bangla Bank

Banking Facilities

Nexus Pay

Mobile Financial Service for Existing Customers

Dutch Bangla Bank

No  Transaction Commission Charged

iPay is a digital e-wallet that allows users to make payments by linking their bank account to the system to access funds. The service is currently linked with all 57 banks in the country and is recognized as a payment system by over 100 brands covering more than 2000 outlets [4].
Nagad is a digital financial service of Bangladesh’s Post Office, which has over 8500 branches in the country. Unlike other players in the market, this service has a regulatory advantage. This is due to it not being regulated by the central bank as a result of the postal act [13]. This allows users to make over 5 times greater daily transaction limits of other MFS in the country [13].
D Money is fintech company working in collaboration with the Post Office, with an aim to reach the greater population in rural and remote areas. It recently launched ‘Daak Taka’ a banking service allowing users to open an account for as little as 2tk. It allows users to make payments as well as withdraw and deposit money. Recently they signed an agreement with Al Arafah Bank to provide the first islamic e-wallet.
bKash is the most popular MFS in the country with a market share of over 60%. Besides facilitating cash transactions, they also boast over 180,000 agents in the country, and an increasing number of integration with banks in the country. It has the largest user base, and is unique in that it also facilitates remittance and provides interest on savings. Recently the company announced a strategic partnership with Ant Financial, which will be taking a 20% stake in the local MFS giant.
Rocket is a bank-led mobile banking service, with agents that are also available in the 182 branches of DBBL in the country. It is the first company to provide banking facilities through mobile phones. It is second to bKash in terms of MFS market share in the country and currently has 218,818 agents.
Nexus Pay is an app provided to DBBL account holders with the goal of providing advanced banking services and integrating cards of customers. Unlike other vendors, all services through Nexus Pay are completely free and does not require any additional commissions.

So What’s Next?

Given the increasing penetration of smartphones and internet, coupled with a growing number of agents and users, in the near future we may see a larger variety of financial services available digitally to the greater population. This includes but is not limited to:

  • savings schemes
  • credit disbursements
  • insurance, and
  • investing services.

Given the exponential increase in volume of transactions, we may also see a stronger KYC framework in place as more information will be available on individual purchase patterns and spending habits of users. This may also pave the way to individual credit ratings to facilitate instant credit disbursements to the greater population. If this occurs, there may be a significant rise in consumption in the country. If the current market players provide incentives to local small sized merchants, we may in addition see a significant decrease in the amount of hard cash circulating in the economy. No matter what the future holds in store though, one thing is for certain, the next generation of Bangladesh will be growing up with digital financial services as an inseparable part of their lives.

Mohammad Shehab, Junior Associate at LightCastle Partners, has prepared the write-up. For further clarifications, contact here:


12:10 AM, August 12, 2018 / LAST MODIFIED: 12:21 PM, August 12, 2018
Towards a cash-lite Bangladesh

Pial Islam
Cash is king. That age-old saying is up for a rethink today. The world has since transitioned from monarchies (with kings and queens) to democracies (with Prime Ministers and Presidents). Payment instruments are also transitioning – from paper money and coins to their digital counterparts that no longer require physical cash. How far has Bangladesh come in that journey towards a cash-lite society?

Let's revisit some basic concepts before answering that question. Any monetary transaction requires at least two parties, namely, a payer and a payee. The system through which the exchange of value happens between the payer and payee is the payment system. Value is exchanged using payment instruments like cash, cheque, card, mobile money etc. The central bank, commercial banks, and payment service providers (such as mobile money operators)are some of the key actors in this domain. Integration of all these parties to facilitate the transaction between payer and payee forms the payment ecosystem of a country. If the instrument used for the transaction is in digital form, such as cards or mobile money, it constitutes a digital transaction and contributes towards a cash-lite ecosystem. The payment ecosystem of an economy is usually never static; shifts in technology and cultural factors drive the economic and political gears that evolve the payment systems.

In 2016, pi STRATEGY conducted a detailed study to understand all forms of payments that take place in Bangladesh and estimate what percentage of those payments are through digital means and what percentage are through cash. This landmark study, funded by the United Nations, was launched by the Honorable Finance Minister at an event organized by the Prime Minister's Office. The study found that government entities, businesses, individuals and donors together make an estimated 4.4 billion payments per year in Bangladesh, which translates to approximately USD368 billion annually, or about USD1 billion per day. 6.24% of the total volume of transactions and 11.83% of the monetary value in the economy flow through digital channels. (In countries such as Canada and the Netherlands, over 50% of the payments are through digital channels.) In terms of monetary value, an estimated 68.97% of the payments originating from the government are made using electronic means, while only 3.29% of the payments from businesses and 2.61% of the payments from individuals are done electronically.

The study made a few recommendations the country could adopt to accelerate the transition to a cash-lite society. These included fully implementing and integrating the NID with payment systems, improving the regulatory environment to encourage greater competition, and enhancing interoperability to create an unrestricted flow of money among users across multiple channels.

In the two years that passed, commendable progress has already been made, especially with respect to NID integration and interoperability. Based on its June 2018 quick re-assessment, pi STRATEGY estimates that the money flowing through electronic means in Bangladesh has increased from 11.83% to nearly 18%. This is a significant rise in a short time. The two biggest contributors to this increase are greater adoption of mobile financial services and the government's efforts in using electronic payments in social safety net programs. pi STRATEGY forecasts indicate that Bangladesh will reach the 33% mark by its 50th birthday, and cross the 50% threshold by 2025, if the current trends in payment digitization continue.

Moving to a cash-lite payment ecosystem offers many benefits. Cash is expensive and it carries a higher degree of risk. Conversely, digital money is more cost effective and less risky. Research also finds that digital payment ecosystems can be a driver for business innovation: bundling electronic payments information and software creates opportunities for businesses to streamline and automate processes relating to procurement, distribution, inventory management, and payment collections; entrepreneurs might also have greater access to credit through credit scoring mechanisms based on transactional histories.

Digital payment ecosystems can also support government's efforts in enhancing efficiencies and fighting corruption: since government is generally the largest payer (of salaries, pensions, and social safety net payments) and collector (e.g. taxes) in each country, it stands to gain substantially from a cheap, transparent electronic payment platform with adequate traceability and accountability of payments. A May 2018 pi STRATEGY study looked closely at the potential savings that could be achieved by the Government of Bangladesh through social safety net payment digitization. The study found that digitizing all social safety net payments could lead to approximately USD150 million in savings per year. This money could be used, for example, to support several million additional beneficiaries.

Despite its recent efforts in digital payments, Bangladesh still has a long way to go. Since Bangladesh has limited resources, we need to critically examine which paths are likely to lead to the highest returns on investments towards our goals. If our goals are to move as fast as possible towards becoming a cash-lite society while at the same time achieve our financial inclusion targets, the choice is clear: we will need to invest heavily in mobile financial services (MFS). MFS is cheaper to deploy than other digital channels (ATMs, cards, etc.). It already has far more payment points: the total number of ATMs and POS terminals in Bangladesh is collectively less than 50,000, whereas, there are more than 500,000 MFS agent points. MFS is far more widely adopted: the total number of debit and credit card holders is about 10 million after 20 years of cards presence in Bangladesh, whereas the total number of registered MFS accounts is over 60 million after 7 years of MFS presence. And perhaps most importantly, MFS has already demonstrated its ability to reach the poorer unbanked populations and therefore make significant impact on improving financial inclusion. The 10 million people with debit or credit cards today aren't exactly poor or financially excluded; in fact, they are among the top 6% of Bangladesh's socioeconomic class.

Having said that, there are many pieces of the MFS ecosystem puzzle that still need to be solved. Greater interoperability, healthier competitive environment, increased merchant payments, enhanced wallet adoption are but a few examples. Bangladesh should focus its energy and efforts in collaboratively solving these pieces of the puzzle to facilitate a faster transition towards a cash-lite society.

Pial Islam is Managing Partner at pi STRATEGY, a management consulting firm that specializes in helping clients transform ambiguity into opportunity. He can be reached at


12:00 AM, February 25, 2019 / LAST MODIFIED: 11:08 AM, February 25, 2019

BB to widen reach of digital wallets

Guidelines on way

Bangladesh Bank.
AKM Zamir Uddin


  • Clients to settle transactions using e-wallet apps  

  • Tk 20cr to be kept as paid-up capital to open e-money outlet 

  • KYC records of e-wallet users and transaction related history to be preserved for at least six years

  • Call centres to be run by start-ups round-the-clock to receive complaints from clients

  • Dispute to be resolved within 7 days

  • Charge and fee of transaction to be disclosed on respective start-up’s website 

The central bank is set to come up with a guideline for electronic money in further proof of its commitment to building a cashless society. The draft guideline has been sent to stakeholders for vetting, after which it will be issued at the earliest. At present, there is only one digital company, iPay, to provide e-money service in Bangladesh, but many are waiting in the wings. The finalisation of the guideline will help them get the licence.

An individual can transact a maximum of Tk 50,000 a day through the system, according to the central bank's instructions to iPay when giving the licence. The monthly ceiling for withdrawal and deposits is Tk 2 lakh. The digital wallet can have a maximum balance of Tk 4 lakh. The digital wallet must be linked with one's bank account, from where the money will be sent, according to the draft regulations.

Once loaded, the customer can: send funds to another digital wallet, make payments for purchases at point-of-sale, pay utility bills, taxes, tuition fees and transport fares. Employers too can pay salaries to their employees' digital wallets, while pensioners, freedom fighters and those under the coverage of the government social safety net programmes can receive their monthly allowance in them. The digital wallet can be accessed through the mobile apps of the respective vendors. The vendors, which would be called e-money service (EMS) providers, would have to cough up Tk 20 crore in paid-up capital to get the green light from the Bangladesh Bank.

They will have to take licence from the Registrar of Joint Stock Companies and Firms. The EMS providers will have to maintain their total e-money balance in a trust-settlement account of a bank. The balance in the trust account will not be lower than the value of outstanding e-money at the end of the day. At least 20 percent of the balance of the trust account must be invested in government securities. Digital wallets with no financial transaction for a year will be made inactive after sending a notice to the user. The EMS providers will have to preserve the KYC (know your client) records of the digital wallet users and merchants and those of e-money transactions for at least six years from the date of the origination. The charges and fees for transactions must be articulated lucidly on the respective EMS provider's website so that there is no confusion or unawareness.
The EMS providers will have to maintain a call centre round-the-clock to receive customer complaints and resolve them within seven working days.


Creating Smart Cities

Bangladesh is on the path to be a middle-income country by 2021 which is well articulated in the government's development plans for the next few years. Urbanisation has a huge potential to contribute to this vision, as it is projected that more than half of the country's population will live in cities by 2050. While this is a huge opportunity, this could also be a potential challenge in terms of access to basic services, environmental degradation and pitiable living conditions. But it seems like Bangladesh is ready to grab the opportunity, a glimpse of which was visible at the Smart City Week organised by UNDP and the Access to Information (a2i) at the Prime Minister's Office, along with other urban stakeholders, from November 29 to December 5, 2017.

As an urban reform enthusiast from India, who had the opportunity to participate in this event, I felt this was a great initiative that attempted to construct a roadmap to co-create smart cities in Bangladesh. While this is an ambitious task, from my own experience with the government of India's Smart City Mission, it is a much-needed one.

The Smart City Week brought together a diverse group of stakeholders in the urban space—policymakers, city leaders, planners, authorities, communities and students. I was part of this diversity and represented IPE Global, which is an international development consultancy with its roots in India. While I shared some of our experiences of working in multiple and challenging Indian cities as part of the government's Smart City Mission, there was a realisation that many of the innovations that are tried and tested in our homeground can be dovetailed into the Bangladesh context.
One of the most attractive aspects of this Smart City Week was for people to participate, to develop a homegrown vision towards a Bangladeshi Smart City. This is important to emphasise as creating solutions that are suited to a particular social, political and economic context is critical. Moreover, a city can only be smart if it addresses the challenges of its slum-dwellers and I think this could be a common ground for India and Bangladesh to learn and share experiences with each other.

The other point of learning for the two countries could also be the use of technology to build inclusive cities that look after the poor and vulnerable. To me, this is the top line that defines a “smart city,” its ability to look after those who are at the bottom of the pyramid.

An integrated planning approach could support in addressing the needs of the poor in our cities. IPE Global has used this integrated approach for our work; an example will be from the State of Madhya Pradesh which is in Central India. One of the major components of this approach included creating an integrated cluster based approach to solid waste management. This resulted in significant reduction in transaction costs of solid waste management. Another integrated approach was to build and develop comprehensive water supply and sanitation system. Thirdly, integrated urban service centres were envisioned.

These centres would provide real-time data on multiple services while addressing citizen complaints and grievances in record time and with significantly reduced transaction costs. This ensured better coordination among various urban agencies like municipalities, development authorities and departments like police, transport and planning.

Cities are the centre of economic growth, innovation and empowerment. They are key to achieving the Sustainable Development Goal (SDG) agenda 2030. It is, therefore, encouraging to see Bangladesh gearing up to take on this challenge. It is the responsibility of the development community in Bangladesh to support the government in making our cities sustainable and truly smart. Learning from best practices from around the globe would be a logical start.

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