Why has growth of transactions through Bangla QR stalled?

The ''Bangla QR'' initiative, launched to popularise digital transactions by reducing the use of cash, has stalled. Initially, the transaction pace was encouraging, but recently there has been a decline. Although Bangladesh Bank has set targets for banks and financial institutions to increase transactions.

Meanwhile, from this month, Bangla QR code service has been introduced for peer-to-peer transactions.

An analysis of Bangladesh Bank's data from May to October shows that in the last two weeks of May, daily transactions through Bangla QR amounted to Tk 2-3 billion. In the first week of October, daily transactions rose to Tk 13. 5 billion. After that, transactions began to decline. By the last week of October, transactions fell to Tk 11. 9 billion. Without new initiatives, there seems to be no immediate potential for growth in transactions, according to industry insiders.

Regarding this, Bangladesh Bank spokesperson Arif Hossain Khan said, "We don't understand why the pace of transactions through Bangla QR has decreased. Bangladesh Bank is trying to increase transactions by removing obstacles. If necessary, more initiatives will be taken to make Bangla QR universal."

In July, the use of Bangla QR code was made mandatory for transactions. Therefore, all banks and MFS had to install Bangla QR codes at the merchant level instead of their unique codes. Various banks and MFS institutions have given four to five Bangla QR codes against a single bank or MFS account of these merchants. This has become an alternative system for merchants scattered across the country to withdraw cash. This list of merchants includes everyone from rural shopkeepers to large service and product sellers. As a result, the MFS agent ecosystem has collapsed due to the influence of a large number of merchants.

From October, Bangladesh Bank made it free for sellers to receive money through Bangla QR. Therefore, merchants don't need to pay any fees to receive money from customers and return it in cash. In contrast, a specific fee is required to cash out from MFS agents like bKash, Nagad, and Rocket.

For this fee, MFS companies pay the government more than Tk 3 as revenue for every thousand. But there is no cost if the money is withdrawn through merchants. Additionally, merchants do not have to pay any revenue to the government. Therefore, withdrawing cash using this QR code is beneficial for both customers and merchants.

For the government and MFS companies, this poses a significant business obstacle. On 30 September, Bangladesh Bank announced that if money is withdrawn through Bangla QR to increase digital transactions, those accounts will be closed. Since then, MFS and banks have been closing accounts when money is withdrawn instead of purchasing. From then on, the pace of QR transactions has declined.

To boost transactions through Bangla QR code, Bangladesh Bank has allocated Tk 1 billion in the 2026-27 fiscal year to provide incentives to banks and MFS companies. Incentives are being provided for transactions up to Tk 2,000 at the stores of registered small and marginal vendors or service providers. Under this facility, the bank or MFS company that sets up the QR code at the merchant point gets an incentive of 0.10 per cent of the transaction. On the other hand, the issuing company through which the customer is paying receives an incentive of 0.20 per cent of the transaction. Yet, transactions are not increasing as expected.

The analysis of data shows that in 7 out of the last 24 weeks, QR transactions were negative. Industry insiders blame several technological and structural weaknesses for this stagnation in transactions. They believe that a large portion of the country's citizens are now customers of mobile banking services like bKash and Nagad. The service cannot be popularised without the active participation of these two companies. Additionally, customers need to be made aware, and infrastructure needs to be developed. It's also essential to make banking apps more user-friendly. The announced initiative to enable the use of the Bangla QR app without the internet also needs to be implemented.

In opening new merchant accounts with Bangla QR, Islami, Pubali, Janata, Sonali, and Rupali Bank are currently leading.

When asked, Sonali Bank's Managing Director (MD) Shawkat Ali Khan told Prothom Alo, "We have set targets for our employees to increase the use of Bangla QR. This is gradually increasing account openings and transactions. If everyone progresses this way, the service will grow."