From floor to runway

Every now and then, Bangladesh produces a rare policy miracle: an authority listens before the public loses its voice. Bangladesh Bank’s latest Bangla QR circulars deserve appreciation for correcting the course. In a culture where U-turns are treated as national shame and stubbornness as leadership, this is a welcome recovery of common sense. Bangla QR was a good start; the correction makes it credible.

The July 1 circular fixed a 1 percent minimum MDR for Bangla QR merchant payments. In most markets, regulators set ceilings to protect users. We discovered floors to protect charges. The August 10 circulars move correctly: transactions up to Tk 2,000 through NPSB get incentives, IRF is set at zero, and the July instruction is repealed from October 1, 2026.

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That October date should not be dismissed as a delay. Systems, apps, reconciliation, staff scripts and merchant communication all need adjustment. If the pipes are not ready, the tea seller will not blame “system migration”; he will ask for cash. A preparation window is wise.

The biggest disruption is IRF elimination. The acquirer, the merchant-side institution, no longer pays interchange to the issuer for Bangla QR transactions through NPSB. For eligible transactions up to Tk 2,000, BB pays 0.10 percent to the acquirer and 0.20 percent to the issuer. On a Tk 1,000 payment, that means Tk 1 and Tk 2. Adoption should not begin with punishment.

With the July floor revoked, the earlier MDR ceiling of 1.15 percent appears to remain unless BB clarifies otherwise. If micro-merchants can still be charged near 1.15 percent, many will treat Bangla QR like a decorative sticker: excellent for inspection, useless for business.

Market power also matters. TBS has reported bKash’s market share at around 70 percent and Nagad’s below 20 percent. On the acquiring side, bKash has deployed Bangla QR at more than 8 lakh merchants, while Nagad says its integration gives users access to nearly 10 lakh merchants. These figures are not directly comparable with issuer-acquirer market shares, but they illustrate the scale of the two players. Bangla QR may be interoperable, but market power is not distributed by QR code.

Big issuers, especially MFS players, face pressure because IRF is zero and incentives cover only small-ticket transactions. Their agent-network cost cannot be wished away. But shifting that cost blindly to wallet holders through cash-in charges may hurt adoption. BB should commission a transparent cost study before moving the burden from merchants to consumers.

Reliability is now the battlefield. A dominant acquirer must not make payments from competing apps slower or inconvenient. The customer will not know whether the failure came from the issuer, acquirer, switch, network or app. He will simply return to cash. BB should monitor success rates, routing, settlement, refunds and disputes.

Banks need a bigger role. BB’s approval for Banglalink as a PSP is promising. Mobile operators have distribution and rural reach. New operators and fintechs need room in fraud tools, reconciliation, merchant lending and SME finance. A cashless economy cannot be built by replacing one closed club with another better-dressed closed club.

The next reforms are clear: publish the MDR framework above Tk 2,000, minimise the MDR rate, define fraud liability, ensure near-real-time settlement, create a tax-comfort period for micro-merchants, and monitor interoperability. Bangladesh need not invent the wheel; it only needs to stop installing a toll gate before the wheel moves. The August 10 circular is not perfect, but it is a good correction. It replaces ego with evidence and a floor with a runway. The real test is whether policy can make digital payment feel cheaper, faster and safer than cash; otherwise, every scan becomes another paid checkpoint on the road to the future.

The writer is the founder of BuildCon Consultancies Ltd and BuildNation Ltd