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Inclusive instant payment system set for next July: BB

Published : Monday, 9 November, 2026 at 1:54 PM

Observer Online Report

Bangladesh Bank has taken an initiative to introduce an Inclusive Instant Payment System (IIPS) to bring all banks, mobile financial service providers and other financial institutions under a common digital platform, targeting its launch in July next year.

Under the new system, customers will be able to transfer money and conduct transactions easily using their bank accounts or mobile wallets, regardless of the financial institution where their accounts are held. This will eliminate the need to rely on separate networks for transferring money between different institutions.

The initiative is expected to expand financial inclusion, reduce cash transactions and make payments faster and easier. It will also bring people outside the conventional banking system within the reach of digital financial services.

The platform will be developed with technical assistance from the Gates Foundation, using open-source software developed under its Mojaloop initiative. The software is designed to facilitate integrated digital transactions among different financial institutions.

Bangladesh Bank Executive Director Md Sirajul Islam said, the main objective of the initiative was to bring all financial institutions under a unified system. This would gradually reduce the need for cash withdrawals and transfers between institutions.

He said customers would no longer be restricted to the networks of their respective banks or financial institutions once the system became operational. Instead, they would be able to transact directly with any participating institution.

The IIPS will support various types of transactions, including person-to-person transfers, business payments, payments at shops and commercial establishments, and government disbursements. Instant fund transfers among participating institutions will be possible by ensuring the necessary operational, settlement and security arrangements.

The new system will be developed on the country's existing digital payment infrastructure. The National Payment Switch Bangladesh (NPSB) has been facilitating interbank transactions through automated teller machines (ATMs), point-of-sale (POS) terminals and internet banking among participating banks since 2012.

However, the existing system has failed to bring all types of financial institutions under a single network. In particular, limitations remain in integrating mobile financial service providers and non-bank financial institutions into the same platform.

Earlier, the central bank had instructed banks, mobile financial service providers and payment service providers to introduce interoperable transactions through interconnections among them.

Under the directive, the maximum transaction fees, including VAT, were set at 0.15 per cent for banks, 0.20 per cent for mobile financial service providers and 0.85 per cent for payment service providers. The directive also prohibited charging recipients any transaction fees.

However, the initiative failed to achieve the expected results as several major mobile financial service providers did not join the system.

Sirajul Islam said the existing arrangement had not become operational as expected, making it necessary to develop a more integrated technological framework to bring all financial sector institutions on board.

The new IIPS is expected to overcome these limitations by establishing wider connectivity among different financial institutions.

Besides domestic transactions, the system could also play a positive role in facilitating international remittance disbursements.

In July, the Policy Research Institute of Bangladesh (PRI), with support from the Gates Foundation, launched a research initiative titled 'Analysis of Inclusive Instant Payment System (IIPS) in Bangladesh and the Use of Cross-border Remittances'.

Policymakers, central bank officials, financial sector representatives and researchers took part in the study. They discussed the potential of IIPS to expand financial inclusion, reduce remittance transfer costs and increase the flow of money through formal financial channels.

PRI Chairman Dr Zaidi Sattar highlighted the importance of remittances to Bangladesh's economy, saying they account for around 6 per cent of the country's gross domestic product (GDP). He stressed the need to bring remittances into the country through formal financial institutions and channel the funds towards productive investment.

Researchers believe that direct transaction facilities among different financial institutions would make domestic remittance distribution faster and easier. Connecting the system with authorised international remittance networks could enable money sent by expatriates to reach beneficiaries' bank accounts or mobile wallets quickly and at relatively lower costs.

However, introducing such cross-border transactions will require international partnerships, compliance with foreign exchange regulations, settlement arrangements and connectivity with authorised foreign networks.

The new system is expected to benefit not only individual customers but also businesses and government operations.

Sirajul Islam said increased digital transactions would reduce government expenditure on printing, transporting, storing and managing paper currency.

Businesses, meanwhile, would benefit from lower cash management costs, greater transparency in record-keeping and faster transactions. The government would also be able to distribute salaries, allowances, subsidies and social safety net benefits to recipients more easily through digital channels.

In recent years, the country's digital payment system has expanded with the growth of mobile financial services, internet banking, electronic fund transfers and QR code-based transactions. However, the lack of an integrated network among different institutions continues to create obstacles to seamless transactions.

Bangladesh Bank believes that introducing a common platform would help address these limitations and establish a more accessible, integrated and inclusive financial system.

However, the successful implementation of IIPS will depend on the participation of major financial institutions, technological reliability and security, affordable transaction fees and public confidence in digital financial services.

If implemented effectively, IIPS could bring significant changes to the country's payment system. It would make money transfers easier, faster and more affordable while improving transparency in the financial sector and bringing more people under formal financial services.

The target of launching the system in July next year is being viewed as an important step towards developing Bangladesh's digital financial sector.

-MT