Bangladesh’s economy could save a great deal if more payments were made digitally instead of in cash. A Bangladesh Bank study has found that the annual cost of digital payments is about one twenty-eighth of the cost of the cash payment system. In other words, cash costs about 28 times as much as digital payments.
The finding comes from the Bangladesh Bank study ‘The Cost of Cash Study in Bangladesh: A Comparative Analysis of Cash and Digital Payment’.
According to the study, cash payments cost the country about Tk 1.7 lakh crore in 2023, equal to 3.24 percent of that year’s gross domestic product (GDP). The digital payment system cost Tk 5,964 crore a year, just 0.11 percent of GDP.
Per person, cash costs Tk 9,938 a year, against only Tk 348 for digital payments, the study says. The gap shows the economic potential of reducing reliance on cash and expanding digital payments.
Bangladesh Bank Executive Director Md Sirajul Islam said managing cash involves significant costs. From importing the raw materials needed to print banknotes to printing, transporting and keeping notes in circulation, the central bank bears many kinds of expense.
He said that with regular use, banknotes become old, damaged and torn, and new notes have to be printed to replace them, so these costs recur in the economy again and again.
Greater use of digital payments could reduce these costs, Sirajul Islam said. Because transaction records are kept, it could also help curb corruption, theft and misuse of money.
The study found that cash costs banks about Tk 36,800 crore a year, 0.70 percent of GDP. Consumers spend Tk 28,000 crore a year on it, 0.53 percent of GDP. Bangladesh Bank’s own cash management costs about Tk 400 crore a year.
These costs include printing and distributing currency, transporting money and keeping it secure, running bank branches and ATM booths, and the value of the time people spend withdrawing, carrying and using cash.
The study also highlights the revenue the government loses to the shadow economy, estimating the potential loss at Tk 93,300 crore a year. That is 1.77 percent of GDP and 54.76 percent of the total estimated cost of cash.
Even leaving out the lost revenue, cash still costs about 12 times as much as digital payments, the study says.
Although digital payments cost far less than cash, the study found the system has some financial and operational limits. Digital payments earn an estimated Tk 2,300 crore a year, against operating costs of about Tk 5,964 crore, leaving a gap of about Tk 3,664 crore between income and spending.
The main obstacles to wider digital payments include high fees charged to merchants, delays in settling transactions, limited interoperability between payment systems and unreliable internet connections.
Fraud, failed transactions, money sent to the wrong account and limited skill with digital technology also put many customers and merchants off electronic payments.
To assess the costs of cash and digital payments and the related challenges, the researchers carried out desk research, reviewed payment system data and policies, held 21 interviews with stakeholders and ran five focus group discussions.
The study says that despite the growth of mobile financial services and electronic transfers, cash still dominates the country’s payment system. More than 80 percent of all transactions of various kinds are still made in cash.
The study notes that small traders are sensitive to the cost of digital payments. Their margins are already thin, and extra fees on digital payments can cut them further. Merchants also need clear information on how payments work, how long settlement takes and how much it will cost.
For consumers, digital payments save time and effort and keep a record of transactions. But to build trust in the system, services must be reliable, complaints must be easy to lodge and resolve, and people must be protected from fraud.
Building technical infrastructure alone will not expand digital payments, the study says. Affordable services, reliable internet, easy-to-use systems and greater public awareness are also needed. Through these steps people and businesses can be encouraged to rely less on cash.
To this end, Bangladesh Bank has introduced ‘Bangla QR’ as a national standard to encourage interoperable digital payments. To make it more attractive to merchants, the central bank set the interchange reimbursement fee on Bangla QR transactions at zero percent from 1 October 2026.
The aim is to increase acceptance of QR code payments and remove barriers to digital payments. How effective it proves will depend on how affordable, convenient and reliable the system becomes for merchants and consumers.
The study’s findings suggest that reducing reliance on cash could lower transaction costs at every level of the economy. Digital payments leave electronic records, which can improve financial transparency and help the authorities monitor economic activity more effectively.
Bangladesh Bank Executive Director Sirajul Islam said greater use of digital payments would cut the recurring costs of printing, transporting, replacing and managing banknotes.
But the shift from cash to digital payments needs a joint effort by Bangladesh Bank, commercial banks, payment service providers, merchants and consumers. Stronger customer protection, better interoperability between payment systems, an end to settlement delays and greater digital skills and awareness are all important.
Alongside expanding digital payment infrastructure, the study recommends solving the practical problems that hold back its use.
According to the findings, expanding digital payments could bring the economy significant savings. But to realise the full benefit, digital payments must be made accessible, affordable and reliable for everyone, whatever their income or type of business.
বাংলায় মূল প্রতিবেদন পড়ুন · Read the original Bengali report