Cash-based transactions cost Bangladesh’s economy around 28 times more than digital payments, highlighting the potential economic benefits of accelerating the country’s transition towards a cashless economy, according to a Bangladesh Bank (BB) study.
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, equivalent to 3.24 percent of the country’s gross domestic product (GDP) in 2023.
In comparison, the annual cost of the digital payments ecosystem was estimated at Tk 59.64 billion, or 0.11 percent of GDP.
The study put the annual per capita cost of cash transactions at Tk 9,938, compared with Tk 348 for digital payments, demonstrating the substantial difference in the economic burden of the two payment methods.
Talking to BSS, Md. Sirajul Islam, executive director of Bangladesh Bank, said that cash management involves significant expenses, starting with the import of raw materials required to print banknotes.
“Printing banknotes, transporting them and managing their circulation involve considerable costs for Bangladesh Bank,” he said.
He added that banknotes become old, damaged or torn through regular use and must be replaced, creating recurring expenses for the economy.
Islam said wider adoption of digital payments could reduce these costs while helping curb corruption, theft and the misuse of money by making transactions more traceable.
The study estimated that banks bear Tk 368 billion in annual cash-related costs, equivalent to 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 include printing and distributing currency, transporting and securing cash, maintaining bank branches and automated teller machines, and the time people spend withdrawing, carrying and handling money.
The study also highlighted the potential fiscal cost associated with the shadow economy. It estimated shadow-economy-related revenue losses at Tk 933 billion, equivalent to 1.77 percent of GDP and 54.76 percent of the total estimated cost of cash.
Even excluding these estimated revenue losses, cash transactions cost the economy around 12 times more than digital payments, according to the study.
Digital payment ecosystem faces challenges Despite the lower estimated costs, the study found that Bangladesh’s digital payments ecosystem faces financial and operational challenges. It generated an estimated around Tk 23 billion in annual revenue against costs of Tk 59.64 billion, leaving a gap of about Tk 36.64 billion.
High merchant charges, delayed settlement, limited interoperability among payment systems and unreliable internet connectivity remain major obstacles to wider adoption.
Concerns over fraud, failed transactions and incorrect transfers, along with limited digital literacy, also discourage some consumers and businesses from using electronic payment services.
The study drew on desktop research, reviews of payment-system data and policies, 21 key informant interviews and five focus group discussions to assess the costs and challenges associated with cash and digital transactions.
Despite the expansion of mobile financial services and electronic transfers, cash continues to dominate Bangladesh’s payment landscape, accounting for more than 80 percent of transaction volume across different use cases, according to the study.
Traders and consumers need confidence Small traders are particularly sensitive to digital transaction fees, as additional charges can reduce already narrow profit margins. Merchants also need clearer information about payment procedures, settlement periods and transaction costs.
For consumers, digital payments can offer convenience and greater transaction traceability.
However, reliable services, accessible complaint-resolution mechanisms and stronger protection against fraud are essential to building confidence.
The study indicates that expanding digital payments requires more than technological infrastructure. Affordable services, reliable connectivity, user-friendly systems and better public awareness are also necessary to encourage people and businesses to reduce their dependence on cash.
Bangladesh Bank has promoted Bangla QR as a national standard to encourage interoperable digital payments. The central bank introduced a zero-percent interchange reimbursement fee for Bangla QR transactions from October 1, 2026, aiming to make the system more attractive to merchants.
The initiative is intended to support wider acceptance of QR-based payments and reduce barriers to digital transactions. However, its effectiveness will depend partly on whether merchants and consumers find the system affordable, convenient and reliable.
Digitalisation could improve transparency The study’s findings suggest that reducing dependence on cash could lower transaction costs across the economy. Digital transactions can also generate electronic records, potentially improving financial transparency and helping authorities monitor economic activities more effectively.
Sirajul Islam said broader use of digital payments could reduce the recurring costs associated with printing, transporting, replacing and managing banknotes.
However, the transition will require coordinated efforts by Bangladesh Bank, commercial banks, payment service providers, businesses and consumers. Strengthening consumer protection, improving interoperability, addressing settlement delays and expanding digital literacy will be important to sustain public confidence.
The study recommended addressing practical barriers to digital payment adoption while expanding access to electronic payment infrastructure.
Its findings point to a substantial potential economic benefit from digitalisation, but the scale of that benefit will depend on how effectively Bangladesh can make digital payments accessible, affordable and trustworthy for people across different income groups and business sectors.