Prepaid and gift cards: Bangladesh’s overlooked financial inclusion tool

In many developed economies such as the US, Canada, the UK, Germany, France, Japan, Singapore, Australia, and India, prepaid and gift cards have become an integral part of daily transactions. Available at supermarkets, airports, convenience stores, and shopping malls, these cards enable secure gifting, facilitate seamless digital payments, and serve as a gateway for millions to enter the cashless economy.

In contrast, Bangladesh is still grappling with limited retail access to prepaid and gift cards despite a surge in debit, credit, and prepaid card issuance. Most prepaid products remain accessible predominantly through banks and online platforms, leaving millions who rely on cash-based gifting and informal savings outside the formal financial system. This phenomenon, often referred to as "mattress money" or "matir bank," points to a large volume of money physically held outside banks and digital channels.

According to the Bangladesh Bank, as of 2025, there are over 43 million debit cardholders, nearly 3 million credit cardholders, and around 7 million prepaid card users. Despite these figures, more than 70% of all domestic transactions are still conducted in cash. This reliance on physical currency means substantial liquidity remains unaccounted for in the formal sector and contributes to the informal economy's persistence.

Data on Bangladesh's money supply further highlights this divide. The broad money supply (M2), which includes cash in circulation plus bank deposits, was approximately $168.5 billion (about Tk1,731,000 crore) in early 2025, growing about 8% annually. 

Narrow money (M1), reflecting physical currency plus demand deposits, stood at roughly $38 billion (Tk390,000 crore). Estimates suggest a significant portion of this currency circulates outside banking channels—held in homes as "mattress money" and through informal mechanisms—impairing the country's financial transparency and inclusion efforts.

In comparison, total bank deposits reached about $158 billion (Tk1,625,000 crore) during the same period, indicating a large chunk of money remains outside formal banking channels. This gap underscores the pressing need to channel informal cash into the formal financial system, where it can be used productively for economic growth.

Globally, prepaid and gift cards have proven critical in driving financial inclusion by providing safe, accessible alternatives to cash. In countries such as the US, the UK, Singapore, Germany, and India, broad retail partnerships, regulatory flexibility, and public awareness initiatives have made these instruments everyday tools for the unbanked and underbanked. They not only facilitate secure gifting but also encourage saving within formal financial systems.

Bangladesh stands at a critical intersection. 

Expanding retail-level access to prepaid and gift cards can serve as a transformative solution—enabling millions to convert their cash gifts and "mattress money" into digital value stored securely within the banking system. This would boost transparency, reduce the informal economy's scale, and help foster a truly cashless and inclusive economy.

To achieve this transition, several strategic steps are imperative. First, regulatory guidelines must be revised to permit pilot programmes and "sandbox" approvals for retail prepaid card distribution. Banks should be empowered to collaborate with merchants in transport hubs, markets, shopping malls, and small local shops, ensuring prepaid products reach all societal segments, not just urban or banked consumers. 

Furthermore, public awareness campaigns play a vital role in shifting perceptions and encouraging the adoption of prepaid cards as secure alternatives to cash gifts and informal savings.

The potential benefits are significant. By channelling dormant liquidity into formal finance through prepaid instruments, Bangladesh can unlock billions in idle funds, enhance financial inclusion, and propel national economic growth. This requires coordinated efforts by policymakers, the banking sector, and retail networks to transform Bangladesh's payment landscape and build a modern, digital economy accessible to all.

In conclusion, retail gift and prepaid cards are not just payment tools; they are critical enablers of financial democratisation. For Bangladesh, expanding its reach beyond bank branches into widespread retail outlets is key to bringing millions into the formal financial fold, harnessing "mattress money," and embracing a cashless future. 

Sketch: TBS

Md Abed Ur Rahman is VP and Head of Cards at Midland Bank PLC

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.