Bangla QR rollout spurs fee backlash, inclusion debate

In a landmark move effective July 1, 2026, Bangladesh mandated the adoption of a single interoperable Bangla QR code across all merchant points, replacing the fragmented landscape of multiple bank-specific QR codes. This unified payment standard, endorsed by the central bank, seamlessly integrates 46 banks, 7 mobile financial service providers, and 4 payment service providers, reflecting a concerted government effort to simplify digital payments nationwide. The groundwork for this integration was laid with the launch of instant interoperable settlement on November 1, 2025, enabling real-time fund transfers and significantly enhancing transaction efficiency across the ecosystem.

The scale of Bangla QR adoption is impressive, with over 963,000 merchants onboarded by the end of 2025, processing more than Tk 2,700 crore across 6.6 million transactions. Banks like Islami Bank and BRAC Bank have aggressively expanded merchant onboarding, with Islami Bank alone registering over 103,000 merchants by mid-2026 and BRAC Bank mandating QR integration for new SME accounts while linking its Astha app to the network. This rapid expansion underscores a strategic push to embed digital payments deeply within small and medium enterprises, driving nationwide acceptance and usage.

Despite the robust rollout, challenges persist around Merchant Discount Rate (MDR) fees and concerns over digital transaction transparency. Bangladesh Bank’s fixed minimum MDR of 1% including VAT has drawn criticism from the Bangladesh Micro and Small Payments Consumers’ Association, which advocates for capping or exemptions to alleviate cost burdens on small merchants operating with thin margins. Additionally, informal traders remain hesitant to fully embrace the system due to fears that digital transaction trails could invite tax scrutiny, a barrier highlighted by payment expert Tareq Refat Ullah Khan, signaling that policy adjustments will be crucial for broader inclusion.

Looking ahead, the government and Bangladesh Bank aim for digital transactions to constitute 80% of all payments within the next decade, supported by initiatives like financing approximately 30,000 smartphones for low-income users to bridge access gaps. However, as Khan notes, the sustainability of Bangla QR’s success hinges on critical policy decisions regarding how the costs of infrastructure and MDR fees are shared among stakeholders, including government bodies, banks, payment networks, and merchants. This balancing act will determine whether the interoperable payment system can achieve its transformative potential across Bangladesh’s diverse economic landscape.

BRAC Bank has positioned its mobile app Astha at the heart of Bangladesh's digital payment revolution, processing over BDT 25,000 crore monthly and spearheading the expansion of Bangla QR payments among SMEs and retail sectors. This commitment is reflected in their substantial investments in digital infrastructure and the strategic move to mandate Bangla QR onboarding for new SME account holders, embedding cashless transactions from the outset. By leveraging a workforce exceeding 10,000 employees across branches and agent networks, BRAC Bank actively educates merchants on the technology’s benefits, ensuring widespread adoption and sustained growth.

bKash, a subsidiary of BRAC Bank, complements this ecosystem by deploying the largest Bangla QR network nationwide, covering over 800,000 merchants and effectively replacing older QR codes to streamline cashless payments. Beyond scale, bKash enhances transaction safety and user experience through innovations like digital payment speakers that provide instant confirmations, while promotional offers incentivize adoption. This synergy between bKash’s expansive merchant network and BRAC Bank’s financial services is exemplified by a pilot program offering collateral-free instant loans to merchants based on transaction history, seamlessly integrating credit access with digital payment activity.

Security underpins this digital transformation, with BRAC Bank prioritizing robust cybersecurity measures including encryption, multi-factor authentication, and continuous threat monitoring via advanced SIEM and SOAR platforms. These safeguards not only protect customer data but also fortify the digital infrastructure critical to maintaining trust and efficiency in high-volume transactions. Additionally, BRAC Bank’s incentive programs, such as instant fund settlements and reward points redeemable for benefits like annual fee waivers, further encourage merchant and customer engagement, creating a virtuous cycle of adoption supported by both technology and tangible rewards.

BRAC Bank’s Astha app has become a cornerstone in expanding digital payments across Bangladesh’s SMEs and retail sectors, processing over BDT 25,000 crore monthly and driving widespread adoption of the Bangla QR interoperable payment system. By mandating Bangla QR onboarding for new SME accounts and integrating incentives alongside instant fund settlements, BRAC Bank is actively fostering financial inclusion and enabling small merchants to build documented transaction histories that unlock access to formal credit and SME loans previously out of reach.

The Inclusive Instant Payment System (IIPS), developed by Bangladesh Bank on the open-source Mojaloop platform with support from the Gates Foundation and the Policy Research Institute of Bangladesh, aims to create an interoperable, affordable payment ecosystem that reduces remittance costs and enhances accessibility and security. Experts emphasize that achieving a cashless economy requires robust governance, consumer protection, and integrated national strategies to mobilize diaspora investment and lower transaction costs, positioning IIPS as a critical infrastructure for inclusive economic growth.

bKash’s nationwide deployment of the largest Bangla QR network, covering over 800,000 merchants and facilitating daily digital transactions exceeding Tk200 crore, exemplifies the government’s push towards a cashless economy. This interoperable system not only reduces reliance on cash—which still accounted for 35% of formal retail transactions in FY25 and costs the government an estimated Tk 20,000 crore annually to manage—but also supports innovative financial products like collateral-free instant loans for merchants, further empowering small businesses and sustaining digital payment adoption.

Despite significant progress, expanding financial inclusion remains a challenge as only 28.3% of adults hold bank accounts compared to 47.8% with mobile financial service accounts, and many small retailers still lack access to either. Bangladesh Bank’s ambitious target to grow digital transactions to 80% within a decade includes initiatives like financing smartphones for low-income users to bridge access gaps. However, the mandated 1% Merchant Discount Rate (MDR) fee on Bangla QR transactions poses a barrier for small merchants, prompting calls from advocacy groups to reduce or cap these charges to ensure sustainable and equitable adoption.

A major barrier to the sustainable adoption of interoperable digital payments in Bangladesh is the high Merchant Discount Rate (MDR), currently fixed at 1 percent inclusive of VAT, which significantly erodes the slim profit margins of small merchants. For instance, a shopkeeper making a Tk 70-80 profit on a Tk 1,000 sale loses Tk 10 to fees, prompting the Bangladesh Micro and Small Payments Consumers’ Association to demand a cap at 0.25 percent or a five-year exemption for small businesses. This cost challenge is compounded by the reluctance of many small retailers who lack bank or mobile financial service accounts, making participation in digital payments difficult and costly, as highlighted by BRAC Bank’s observations on merchant hesitancy.

Tax apprehensions among informal traders present another significant hurdle, as the digital transaction trail raises fears of increased scrutiny and potential liabilities, slowing the shift from cash to digital payments. This concern underscores the need for policy frameworks that balance transparency with protections to encourage onboarding without deterring informal sector participants, a critical factor given that cash still accounted for 35 percent of formal retail transactions in FY25, indicating persistent gaps in financial inclusion and consumer trust.

Addressing these intertwined challenges requires a collaborative policy approach involving the government, Bangladesh Bank, commercial banks, payment networks, and merchants to equitably share the costs of Bangla QR infrastructure and transaction fees. As Khan emphasizes, the unresolved question of cost-sharing is pivotal to making the system affordable and ensuring widespread uptake. Complementing this, BRAC Bank’s initiatives—such as merchant incentives, instant settlements, and customer reward programs—demonstrate how financial institutions can actively promote adoption while reinforcing consumer protection through robust encryption, multi-factor authentication, and fraud monitoring, though ongoing customer vigilance remains essential.

Fundamentally, expanding financial inclusion stands as the cornerstone for sustainable digital payment adoption, as many small merchants remain outside the formal banking ecosystem. By developing the Inclusive Instant Payment System (IIPS) on the open-source Mojaloop platform, Bangladesh Bank aims to reduce costs, enhance security, and integrate diverse financial institutions, thereby improving accessibility. However, this technological progress must be matched by inclusive policies and consumer education to build trust and ensure that the benefits of a cashless economy reach all segments of society.