Accra:Cash-based transactions impose a significant financial burden on Bangladesh's economy, costing approximately 28 times more than digital payments. This discrepancy underscores the potential economic benefits of shifting towards a cashless economy, based on a study by Bangladesh Bank.
According to Bangladesh Sangbad Sangstha, the study, titled "The Cost of Cash Study in Bangladesh A Comparative Analysis of Cash and Digital Payment," estimated the annual cost of cash transactions at Tk 1.70 trillion, accounting for 3.24 percent of the country's GDP in 2023. In contrast, the digital payments ecosystem's annual cost was estimated at Tk 59.64 billion, or 0.11 percent of GDP.
The study highlighted that the annual per capita cost of cash transactions is Tk 9,938, compared to Tk 348 for digital payments, illustrating the substantial economic burden of cash. Md. Sirajul Islam, executive director of Bangladesh Bank, explained that cash management involves substantial expenses, including the import of raw materials for printing banknotes. Regular use causes banknotes to become old or damaged, necessitating replacement and incurring recurring costs.
Islam emphasized that wider adoption of digital payments could reduce these expenses while curbing corruption and theft by making transactions more traceable. The study found that banks bear Tk 368 billion in annual cash-related costs, or 0.70 percent of GDP, while consumers incur Tk 280 billion, or 0.53 percent of GDP. Bangladesh Bank's own cash-related costs were estimated at Tk 4 billion annually.
These expenses encompass printing and distributing currency, transporting and securing cash, maintaining bank branches and ATMs, and the time people spend handling money. Additionally, the study estimated shadow-economy-related revenue losses at Tk 933 billion, equivalent to 1.77 percent of GDP, even excluding these losses, cash transactions cost the economy around 12 times more than digital payments.
Despite lower costs, Bangladesh's digital payments ecosystem faces financial and operational challenges, generating around Tk 23 billion in revenue against costs of Tk 59.64 billion. High merchant charges, delayed settlements, limited interoperability among payment systems, and unreliable internet connectivity hinder wider adoption.
The study calls for confidence-building measures among traders and consumers. Small traders are particularly sensitive to digital transaction fees, which can cut into their profit margins. Consumers need reliable services, accessible complaint mechanisms, and stronger fraud protection to build trust in digital payments.
Bangladesh Bank has promoted Bangla QR as a national standard to encourage interoperable digital payments, introducing a zero-percent interchange reimbursement fee from October 2026 to make the system more merchant-friendly. However, the system's success will depend on its affordability, convenience, and reliability for merchants and consumers.
The study suggests that reducing cash dependence could lower transaction costs and improve financial transparency by generating electronic records. However, transitioning to digital payments requires coordinated efforts from Bangladesh Bank, commercial banks, payment service providers, businesses, and consumers, along with strengthened consumer protection and expanded digital literacy.
The study recommends addressing practical barriers to digital payment adoption and expanding access to electronic payment infrastructure, emphasizing the potential economic benefits of digitalisation if payments become accessible, affordable, and trustworthy.