In Bangladesh, consumers are rapidly embracing cashless forms of payment, such as cards, QR codes, and online wallets, as they recognize the numerous benefits they offer. Will it be better for sustainable growth if we go cashless? What could be its possible benefits?
Cashless payments provide convenience and efficiency, eliminating the need for physical change and enabling faster transactions. They also offer enhanced security features, including fraud detection and prevention mechanisms, that cash payments cannot match.
There is still a chance of theft is seen in the market or busy areas of the city. Also, to purchase, one must not go outside. People can do transactions while staying at home. It is faster and safer.
The Bangladesh Bank has observed a substantial increase in card usage, with transactions through cards at the point of sale growing by 58% from February 2020 to February 2023 and online payments experiencing a 3.3-fold growth in the same period.
Contactless payments have played a vital role in the growth of cashless transactions. Introduced in 2018 for credit cards, contactless payments now allow users to tap and pay for purchases without needing a PIN or two-factor authentication for transactions up to Tk 5,000.
This payment method is particularly suitable for crowded places like transit systems, quick-service restaurants, and supermarkets, enabling quick and secure transactions.
The government of Bangladesh aims to make 75% of the country’s transactions cashless within the next four years, highlighting the momentum behind this shift.
With the introduction of chip-and-PIN technology in cards, multiple layers of security, and real-time fraud detection, the risk of fraud is significantly minimized.
Tracks and transparency
Cashless payments also contribute to transparency and efficiency for businesses, streamlining operations and supporting working capital. One might forget when and where he/she spends money, but in a cashless society, the application one uses shall have all the transactions he/she made in a certain period.
In this way, businesses and startups will remain transparent cause any sort of illegal or unusual payment will be there in the digital system.
Several factors contribute to the growth of cashless payments in Bangladesh. Regulatory policies, such as the ‘Cashless Bangladesh’ initiative by the Bangladesh Bank, encourage digital payments through an interoperable QR code system, making it accessible to micro-businesses and street vendors.
E-commerce platforms have also played a crucial role in popularizing digital payments by offering special sales and campaigns that promote cashless transactions. Incentives like cashback offers and possible VAT waivers can further encourage consumers and merchants to embrace digital payments.
Although there are infrastructural and connectivity challenges, particularly in rural areas, the move towards a cashless society in Bangladesh is gaining momentum.
Continued investment in infrastructure and digital literacy, along with the commitment of all stakeholders, including the government, businesses, and consumers, is crucial for achieving a truly cashless society.
The benefits of digital payments extend beyond convenience and efficiency, contributing to financial inclusion, economic growth, and poverty reduction.
The transition to a cashless society represents a significant opportunity for Bangladesh to establish itself as a competitive player on the global stage. Bangladesh can build a more inclusive and prosperous future by embracing digital payments and investing in the necessary infrastructure and awareness.