P2P payments coming to Bangla QR, BB asks all to ready apps by 31 Oct

In a bid to reduce cash reliance and drive digital payment adoption, Bangladesh Bank has instructed financial institutions to enable person-to-person (P2P) transfers via Bangla QR.

Banks, mobile financial service (MFS) providers, payment service providers (PSPs), and payment system operators (PSOs) must integrate the feature into their mobile applications by 31 October, readying the service for a rollout on 1 November.

According to a central bank directive issued on 6 August, institutions must allow users to generate personal QR codes for P2P transfers and scan or upload codes shared by others.

Bangladesh Bank Payment Systems Department Director Sharafat Ullah Khan told TBS on Wednesday, "We will take comprehensive steps to turn Bangla QR into a single, universal QR code for transactions. The charge on merchant payments has already been reduced to zero, which will take effect from 1 October."

"Currently, transactions worth Tk50-60 crore are being made through Bangla QR every day. We expect the volume to increase several times from the beginning of October. We will also introduce more services in line with market demand," he said.

Bangladesh Bank spokesperson Arief Hossain Khan said the introduction of P2P transactions through Bangla QR would significantly increase digital transactions.

"At present, when someone uses Send Money, entering even one wrong digit can result in the money being transferred to the wrong account. With a unified QR code, that risk will no longer remain," he said.

"A customer will be able to make transactions through their QR code using either a bank or an MFS account without any complications. There will be no need to enter the recipient's name or other information again," Arief added.

He said discussions had also been held with government agencies on using Bangla QR for payments in sectors such as education and healthcare, as well as for tax collection by the National Board of Revenue (NBR).

"Necessary steps will be taken to introduce such services," he said.

How P2P payments will work

Bangla QR is currently used mainly for customer-to-merchant (C2M) payments. A customer can scan a merchant's Bangla QR code using a bank or MFS app and make a payment after purchasing a product.

Under the new system, the same technology will support P2P transactions. For example, a child in Dhaka could generate a P2P Bangla QR code through an app and send it to their father. The father could then scan the code and transfer the required amount.

The system will reduce the need to manually enter bank account numbers, routing numbers and other details. There will be no separate charging mechanism for P2P transactions. 

Bank-to-bank transfers will be subject to existing interbank fund transfer (IBFT) charges, while transactions involving banks, MFS providers and PSPs will be charged at the rates prescribed for inter-institutional transfers.

Major barrier for digital expansion

At a programme in Chattogram on 8 August, central bank Governor Md Mostaqur Rahman noted that limited smartphone use remained a major barrier to expanding digital transactions. 

Around six crore people still use feature phones, he said, adding that initiatives were being taken to make low-cost Android smartphones available to bring them into the digital payment ecosystem.

"Feature phone users are willing to spend around Tk3,000 for a good phone. On the other hand, manufacturers have said it is not possible to provide an Android phone for less than Tk8,000. Bridging this gap of around Tk5,000 may require an investment of nearly Tk30,000 crore," he said.

Work is under way to find ways to arrange the investment, while initiatives are also being explored to allow people to buy phones in instalments, the governor said. 

If mobile operators can facilitate instalment purchases of Android phones, he added, a large number of feature-phone users could be brought into digital and financial inclusion.

Meanwhile, Bangladesh Bank Payment Systems Department-1 Additional Director Md Parvez Anjam Munir said Bangladesh spends around Tk20,000 crore a year managing cash.

The cost covers the lifecycle of banknotes, from printing and production at the security printing press to distribution, circulation, collection of damaged and worn notes and their eventual destruction.

The expenditure could be reduced significantly by cutting dependence on cash and expanding digital payments, he said.

Bangla QR use surges

Bangladesh Bank data show rapid growth in Bangla QR transactions. 

In January, 7,23,378 transactions worth Tk212.05 crore were made through the system. By July, the number had risen to 62,54,938, with their total value reaching Tk1,475.95 crore.

The number of transactions increased about 8.6 times in six months, while their value rose nearly sevenfold.

The number of merchants accepting Bangla QR has also climbed sharply. There were 13,52,712 merchants in May, rising to 16,85,188 in June and 24,25,133 in July. The number increased by about 79% in three months and nearly 93% over the past 10 months.