P2P Bangla QR could reshape Bangladesh’s digital payment ecosystem

Bangladesh is on the verge of another milestone in its digital payment journey. Bangladesh Bank has instructed banks, mobile financial service (MFS) providers and payment service providers (PSPs) to enable person-to-person (P2P) transfers via Bangla QR with their mobile mobile applications by 31 October, readying the service for a rollout on 1 November.

The forthcoming interoperable Peer-to-Peer (P2P) Bangla QR standard has the potential to fundamentally transform the way people transfer funds across bank accounts, MFS and PSPs wallets. 

While Bangla QR has so far been associated primarily with merchant payments, the new P2P Bangla QR introduces an entirely different use case. Instead of scanning a merchant's QR code at a shop, the sender will simply scan the beneficiary's Bangla QR displayed on a banking, MFS, or PSP mobile application—or even print or share a QR Code image linked to the beneficiary's account or wallet.

This seemingly simple innovation could reshape not only customer experience but also the economics of retail payments, cash distribution, and financial inclusion in Bangladesh.

A truly Interoperable Payment Experience

Today, most banks, MFS and PSP Providers are connected through the National Payment Switch of Bangladesh (NPSB), enabling customers to transfer funds seamlessly across different institutions. The upcoming P2P Bangla QR will leverage this existing interoperability infrastructure.

With approximately 140 million Current and Savings Accounts (CASA) in banks and 240 million digital wallets maintained by MFS and PSPs, every account and wallet can eventually be linked to a unique Bangla QR. Whether the beneficiary uses a bank account, an MFS wallet, or a PSP wallet will become almost invisible to the customer. The sender simply scans the beneficiary's QR- the system determines the destination automatically. This is exactly how interoperability should work. 

A Simpler Customer Experience

Today's fund transfers often require customers to manually enter the account provider of the beneficiary, account/wallet number, account/wallet title/name, routing information, P2P Bangla QR eliminates these steps.

The process becomes remarkably simple: open a banking, MFS, or PSP app, scan the beneficiary's Bangla QR, enter the transfer amount, authenticate and confirm the transaction.

The beneficiary may present the QR on a smartphone, printed paper laminated QR card, or share with social media. This significantly reduces typing errors, improves convenience, and makes digital payments accessible even for users with limited digital literacy.

Existing Interoperable Pricing Framework

One distinctive feature of Bangladesh's interoperable payment ecosystem is that the sender bears the transfer fee, while the beneficiary receives the full amount. Currently, NPSB interoperability supports the following pricing structure: a) Bank to bank maximum Tk. 10; b) Bank to MFS/PSP maximum 0.15%; c) MFS to Bank/PSP/MFS maximum 0.85%, and d) PSP → Bank/MFS/PSP maximum 0.20%. The same pricing framework may be adopted for P2P Bangla QR transactions. Although the fee varies depending on the originating institution, the pricing remains considerably lower than many traditional cash-based fund transfer methods.

The Biggest Disruption: Cash-In, Cash-Out (CICO)

Perhaps the greatest impact of P2P Bangla QR will be on Bangladesh's long-established Cash-In Cash-Out (CICO) model. Today, millions of customers transfer money by depositing cash with an MFS agent (Cash-In), sending e-money and withdrawing cash from another agent (Cash-Out).

Customers generally do not pay for Cash-In. However, Cash-Out typically costs around 1.5% to 1.85% of the withdrawal amount. Behind this model lies an extensive distribution network. MFS providers compensate agents, distributors, and channel partners for both Cash-In and Cash-Out services. These commissions constitute one of the largest operating costs for MFS providers. This is also one of the reasons why the interoperability fee for transfers originating from MFS (0.85%) is higher than that of banks or PSPs.

The cost structure has also influenced the merchant acquiring market. MFS providers have long argued for a minimum Merchant Discount Rate (MDR), while banks have often subsidized MDR to acquire high-volume merchants and mobilize deposits. P2P Bangla QR has the potential to alter these economics fundamentally.

Emergence of White-Label CICO Agents for Banks, MFSs and PSPs 

One of the most exciting possibilities created by P2P Bangla QR is the emergence of white-label Cash-In Cash-Out (CICO) agents. Instead of relying solely on dedicated MFS agents, thousands of grocery shops, pharmacies, stationery stores, rural retailers, and neighborhood businesses could provide interoperable CICO services to all banks, MFS and PSP customers using their ordinary bank accounts.

Unlike conventional MFS agents, they would not need to purchase e-money from any provider. Instead, they would simply use the balance maintained in their bank account. Customers of any participating bank, MFS, or PSP could transfer funds to the agent's account or wallet and receive cash.

Higher Return on Investment for Agents

Traditional MFS agents purchase e-money with cash from a specific provider. That investment serves only customers of that provider. If customer transactions decline, the invested e-money generates no return. So, agents are not interested in serving smaller wallet providers. White-label CICO agents would operate differently.

Their working capital would simply be their ordinary bank deposits. The same account balance could simultaneously support CICO services, inventory purchases, business operations, and personal financial needs. No provider-led rebalancing would be required. Liquidity management becomes the responsibility of the agent themselves. As a result, capital utilization and return on investment (ROI) could be substantially higher than under the traditional MFS agent model. 

Strengthening Financial Inclusion

This model also creates incentives for greater financial inclusion. Small businesses would increasingly maintain active bank accounts because those accounts could simultaneously serve as business transaction accounts, settlement accounts, CICO operating accounts, and digital payment acceptance accounts. More cash would naturally flow into the formal banking system while digital transactions expand. 

A Strong Incentive for Merchants

P2P Bangla QR introduces another important opportunity. Unlike merchant QR transactions, P2P transfers do not attract Merchant Discount Rate (MDR). For very small businesses, this could become an attractive payment acceptance channel.

Customers can conveniently transfer funds by scanning a QR without merchants paying MDR. This could encourage many micro-businesses and informal enterprises to adopt digital payments more rapidly. Consequently, P2P Bangla QR could significantly accelerate digital payment adoption among Bangladesh's smallest merchants.

Existing Misuse of Merchant Bangla QR

The industry has already experienced one unintended consequence of pricing differences between merchant payments and Cash-Out services. MFS providers frequently argue that merchant Bangla QR is sometimes being used for Cash-Out transactions rather than genuine payments for goods and services. The economic incentive is straightforward. The Interchange Reimbursement Fee (IRF) is zero and maximum Merchant Discount Rate (MDR) for Bangla QR is a maximum of 1.15% , whereas customers typically pay around 1.85% for Cash-Out through MFS agents.

For merchants who also operate as CICO agents, processing a transaction as a merchant QR payment while handing over cash can become more profitable than processing it through the formal Cash-Out channel. This pricing arbitrage blurs the distinction between merchant acquiring and cash distribution services and creates incentives for misuse.

As a result, MFS providers have expressed concerns that merchant Bangla QR is being used beyond its intended purpose, leading to revenue leakage from Cash-Out services and creating an uneven competitive environment. This concern has also influenced the industry's approach to interoperability. Some MFS providers have been reluctant to actively promote off-us Bangla QR transactions, fearing that broader interoperability could further increase the misuse of merchant QR for disguised Cash-Out activities. 

A Regulatory Challenge

The introduction of P2P Bangla QR presents both tremendous opportunities and important regulatory challenges. On one hand, it provides a legitimate, interoperable, and low-cost mechanism for person-to-person transfers, reducing dependence on expensive Cash-In Cash-Out services.

On the other hand, if merchants begin routinely accepting commercial payments through P2P Bangla QR to avoid MDR, it could distort competition, reduce merchant acquiring revenues, weaken incentives for investment in merchant acceptance infrastructure, blur the distinction between merchant and personal transactions and complicate payment system oversight.

The interoperable P2P Bangla QR is far more than another payment instrument. It represents the next evolution of Bangladesh's digital payment infrastructure. By enabling customers to transfer funds instantly across banks, MFS providers, and PSPs simply by scanning a QR code, it promises a faster, safer, and more inclusive payment experience. Its impact could extend well beyond convenience.

P2P Bangla QR has the potential to reduce dependence on costly CICO network, create a new generation of white-label CICO agents, improve capital efficiency for businesses, strengthen financial inclusion, expand digital payment acceptance and stimulate greater competition and innovation across the payment ecosystem.

At the same time, its long-term success will depend on thoughtful regulatory design. A well-calibrated pricing framework, clear separation between merchant and P2P QR use cases, robust transaction monitoring, and effective consumer protection will be essential to maximize innovation while preventing regulatory arbitrage.

If implemented effectively, interoperable P2P Bangla QR could become one of the most transformative innovations in Bangladesh's payment ecosystem since the establishment of the National Payment Switch of Bangladesh (NPSB), bringing the country one step closer to a truly seamless, interoperable, and inclusive digital economy.