Despite a concerted national push towards a digital financial ecosystem, recent data reveals that the vast majority of economic activity in Bangladesh continues to flow through traditional, non-digital channels. In October 2025, an astonishing 65.41% of the country’s total transaction value was conducted using physical cash, cheques, and over-the-counter banking services. Out of a total transaction value of Tk 26.67 lakh crore, a staggering Tk 17.44 lakh crore remained outside the digital sphere, underscoring a significant gap between policy ambitions and public practice. While the share of digital transactions did see a modest increase to 34.59% from 31.75% in June 2025, this slow pace of adoption signals deep-seated structural resistance and ingrained behaviors that current initiatives have yet to overcome. The persistence of these conventional methods raises critical questions about the effectiveness of existing strategies and the tangible barriers preventing a more rapid transition to a cashless economy.
The Enduring Dominance of Conventional Finance
A deep dive into the nation’s financial transactions reveals that the traditional banking sector remains the bedrock of the cash-centric economy, single-handedly accounting for 62.23% of the total national transaction value. This dominance is not accidental but is driven by established practices in commerce and personal finance. Cheque and voucher-based manual transfers constituted the largest portion of this, amounting to Tk 8.91 lakh crore, as businesses and large-scale traders continue to favor this method for high-value payments. This preference is rooted in a combination of habit, the perceived security of a physical paper trail, and the formal documentation it provides for accounting and legal purposes. Furthermore, direct cash deposits and withdrawals at bank counters added another Tk 5.78 lakh crore to the non-digital total, demonstrating that for a significant part of the population, the bank branch remains the primary interface for managing finances, rather than a mobile app or a website. This reliance highlights a trust and familiarity with physical banking that digital alternatives have not yet managed to supplant on a large scale.
While Mobile Financial Services (MFS) have become a ubiquitous part of daily life for many Bangladeshis, their overall impact on displacing cash is more complex than it appears. The data shows a striking paradox: MFS platforms dominated the volume of transactions, accounting for over 83% of all individual financial interactions. However, they contributed a mere 7.28% to the total transaction value. This disparity indicates that MFS is primarily used for small-value peer-to-peer transfers, utility payments, and mobile recharges, rather than for substantial economic activities. More importantly, a significant portion of MFS activity actively reinforces the cash economy. The Tk 84,754 crore processed through cash-in and cash-out services at agent points essentially uses a digital platform as a bridge to withdraw or deposit physical currency. Instead of creating a closed-loop digital ecosystem, this model positions MFS as a convenient tool for accessing cash, thereby perpetuating the very cycle it was intended to break and limiting its role in truly formalizing the economy.
Overcoming Barriers to a Digital Future
The slow migration toward a digital economy was not without clear impediments that required systematic attention. At the consumer and merchant levels, the limited acceptance of Point of Sale (POS) machines and QR code payments created a significant hurdle, forcing many to revert to cash for everyday purchases. This was compounded by persistent public concerns regarding cybersecurity, the reliability of services, and the impact of frequent service disruptions on business operations. Furthermore, transaction charges, however small, acted as a deterrent for both users and small merchants who operate on thin margins. In rural and semi-urban areas, these challenges were magnified by inadequate internet connectivity and a pronounced gap in digital literacy, which prevented large segments of the population from confidently engaging with digital financial tools. The concentration of high-value digital payments within institutional channels, such as the Tk 5.78 lakh crore in Real-Time Gross Settlement (RTGS) transactions between banks and corporations, further highlighted the disparity between the corporate and retail sectors, a gap that had to be bridged to achieve widespread adoption.
