Cashless Economy
Do you consider Bangladesh as a cashless economy?
The concept of a cashless economy refers to an economic system where financial transactions are carried out through digital means rather than physical currency. In recent years, Bangladesh has witnessed rapid growth in digital financial services, leading many to believe that the country is moving towards a cashless future. However, the question remains: has Bangladesh truly become a cashless economy, or does the country still heavily depend on cash?
What is a cashless economy?
A cashless economy is a system where financial transactions are conducted digitally, eliminating the need for physical currency. Transactions are made using mobile banking apps, credit/debit cards, digital wallets, and QR codes. Popular examples in Bangladesh include mobile financial services like bKash and QR code payments at local vendors.
The benefits of a cashless economy include increased transparency, faster transactions, improved tax compliance, and enhanced financial inclusion. It also leads to greater economic efficiency by simplifying money flows and reducing handling costs.
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However, it also presents challenges such as reliance on technology, which can be vulnerable to failures and cyber threats. Digital exclusion is another issue, as people without smartphones or internet access may be left behind. Also, concerns about cybersecurity and data privacy need to be addressed to protect users from fraud and breaches.
While a cashless economy brings significant benefits, these challenges must be carefully managed for a successful transition.
Bangladesh’s Developments toward a Cashless Economy
Bangladesh has seen significant growth in mobile financial services (MFS) with platforms like bKash, Rocket, and Nagad, enabling millions to perform digital transactions. These services allow users to send and receive money, pay bills, and shop online. The COVID-19 pandemic accelerated this trend, pushing more people toward contactless transactions.
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E-commerce has flourished as well, with businesses increasingly adopting mobile payments and card systems. Digital payments are now common in urban areas, extending from large stores and restaurants to ride-sharing services and even street vendors.
The government's initiatives, particularly the "Digital Bangladesh" vision and the "Cashless Bangladesh, Smart Bangladesh" campaign, have been crucial in this transformation. The introduction of QR code-based payments, like Bangla QR by Bangladesh Bank, has made it easy for even small and informal businesses to join the digital ecosystem. This low-cost solution allows customers and micro-merchants to make seamless transactions through various mobile apps and cards, paving the way for a more inclusive digital economy.
Bangladesh Facing Challenges and Limitations
Despite notable advancements, various obstacles continue to impede Bangladesh's complete transition to a cashless economy. A large portion of the rural population and informal sector still relies on cash, with many small business owners and daily wage workers hesitant to adopt digital payments due to limited digital literacy and concerns about taxation.
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Uneven access to smartphones and reliable internet, particularly in remote areas, further exacerbates the issue. Even when digital tools are available, many users lack the necessary skills or trust to engage confidently with them. Additionally, fears around cybersecurity, fraud, and data privacy create barriers to adoption.
Financial institutions also face infrastructure challenges, including a shortage of point-of-sale (POS) terminals and inconsistent customer service, which affects user satisfaction and overall trust in digital systems.
Is Bangladesh a cashless economy?
Bangladesh is making strides toward a cashless economy, though full digitalisation remains a work in progress. Mobile financial services (MFS) and QR code payments have grown rapidly, with monthly transactions exceeding BDT 3,000 crore, as per Bangladesh Bank.
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Urban areas lead the shift, while rural and low-income communities still rely heavily on cash. Initiatives like Bangla QR and personal retail accounts offer promise, particularly for micro-merchants and the informal sector.
However, for digital payments to be truly inclusive, the country needs stronger policy support, widespread financial literacy, improved infrastructure, and targeted awareness campaigns. These will help to bridge the gap and ensure equitable access to digital finance across all segments of society.
Final Lines
Bangladesh is progressing steadily on the path to becoming a cashless economy, but it is not there yet. The growing popularity of mobile banking, the government's proactive digital initiatives, and the development of low-cost, interoperable payment solutions are commendable.
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Yet, barriers such as cash reliance, digital exclusion, and security concerns continue to hold back full transformation. With the right investment, policy support, and public-private collaboration, Bangladesh has the potential to unlock the benefits of a truly cashless society and lead the way in digital financial innovation in South Asia.
13 days ago
Digital Currency: Benefits and Risks of the Cashless Economy in Bangladesh
The modern-day monetary transaction has its roots in the barter system of ancient times. Over the course of thousands of years, physical money has become an integral part of our daily life – until the idea of replacing cash with digital currency was propagated.
The idea of replacing cash has been around for a long with cheques and bonds. However, the true idea of replacing cash has not been possible to implement up until recently with the advent of Mobile Financial Services and cryptocurrencies. Let's take a look at how they are impacting the economy of Bangladesh and what are the prospects and risks of a cashless society.
What is Digital Currency?
Digital currency is a form of currency that is available only in electronic form. That is, the transactions will take place virtually without any physical interaction. The idea of digital currency was popularized in 2009 after the initiation of Bitcoin by a certain unidentified individual named Satoshi Nakamoto. Harnessing the blockchain mechanism, Bitcoin slowly gained traction and today it is one of the leading cryptocurrencies in the world.
The individual Bitcoins and other cryptocurrencies like Ethereum are stored in an e-wallet from which transactions can be made digitally. Currently, more and more organizations are opening up to crypto transactions as it is secure and an effective monetary system against cash-based transactions.
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State of Digital Currency in Bangladesh
However, the popularity of cryptocurrency is also a headache for central regulatory authorities like Bangladesh Bank. Cryptocurrencies are decentralized monetary systems meaning they are not regulated by any central bank or government. The valuation of cryptocurrency is solely dependent on the stock market fluctuations. The lack of control over the system makes many central Banks skeptical about its usage as well as long-term implication in the economy. As a result, Bangladesh does not allow the mining or transaction of any form of cryptocurrency.
However, with the increasing popularity and adoption of cryptocurrency, we are only putting ourself at disadvantage for not making use of the potential posed by the system. Currently, the market capitalization of Bitcoin alone stands at over a trillion-dollar, several times more than the GDP of Bangladesh. It is to be noted that a large population of Bangladesh is still unbanked. And without the inclusion of people in the banking system, it's nearly impossible to move forward with the idea of a cashless society. So what is the answer of Bangladesh to this? How are we trying to keep with the increasing trend of digital transactions?
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The answer is Mobile Financial Service. With over 47 million internet users and 165 million mobile subscribers, Bangladesh is rapidly moving into the age of the internet and digitalization. Leading banks tapped into this opportunity to introduce Mobile Financial Services like Bkash, Nagad, and Rocket.
The platforms aim to bring micro banking to the unbanked and make a transaction to various sectors a matter of a few taps on phone. Almost all the leading business including government channels now accepts payments through these MFS which is complementing the idea of a digital currency to some degree.
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