Bangladesh’s reliance on cash costs the economy about Tk1.70 lakh crore a year, or 3.24 per cent of gross domestic product, according to a Bangladesh Bank study that counts not only the cost of handling money but also lost tax revenue, consumer time, forgone interest and security risks.
The study, The Cost of Cash Study in Bangladesh: A Comparative Analysis of Cash and Digital Payment, estimates the annual per capita cost of cash dependency at Tk9,938, compared with Tk348 for digital payments.
Including estimated shadow-economy losses, cost of cash is about 28 times higher than digital payments.
The largest component of the Tk1.70 lakh crore burden is Tk93,300 crore in estimated government revenue losses linked to the shadow economy, equivalent to 1.77 per cent of GDP and 54.76 per cent of the total.
This is foregone tax revenue, not a direct cash-handling expense.
Commercial banks bear another Tk36,800 crore, or 21.57 per cent of the total estimated cost of cash dependency, through branch infrastructure, security, cash handling and transportation.
Consumers incur about Tk28,000 crore. Their burden includes time spent accessing and handling cash, interest forgone on money held in cash, risks of theft or loss and fees paid to financial-service providers and agents.
Of that Tk12,200 crore in opportunity cost from time spent accessing cash, Tk6,400 crore in forgone interest and Tk5,400 crore in security risks.
Retail micro-merchants bear about Tk6,200 crore through cash management, security and time costs, while microfinance institutions incur Tk5,600 crore.
Bangladesh Bank’s own burden is around Tk400 crore and fast-moving consumer goods retailers about Tk60 crore.
Together, those costs amount to about Tk1.70 lakh crore.
If estimated shadow-economy revenue losses are excluded, the cost of cash falls to about Tk77,087 crore, or 1.47 per cent of GDP. Even on that narrower measure, the study says cash still costs about 12 times more than digital payments.
Bangladesh’s cash management begins with importing raw materials for banknotes and continues through printing, transportation, circulation and replacement.
Despite those costs, cash remains deeply entrenched because its use reinforces itself across the economy: consumers prefer cash because merchants accept it, while merchants depend on it because wholesalers and suppliers also transact in cash.
The study estimates cash accounts for about 75 per cent of retail transactions in Bangladesh.
Wider adoption of digital payments has been held back by merchant charges, delayed settlement, weak interoperability, unreliable internet connectivity, fraud concerns and limited digital literacy.
Only 28 per cent of adults are financially literate, while nearly half of mobile-money users cannot operate their accounts independently, according to data cited in the study.
Small traders are particularly sensitive to digital transaction fees because they can erode thin margins. Individual mobile financial service accounts also face a Tk50,000 daily limit for cash-in, cash-out and person-to-person transfers, while card transactions typically settle on the following day, delaying merchants’ access to working capital.
Cross-country comparisons suggest Bangladesh’s underlying cash-handling burden is broadly in line with other cash-heavy developing economies.
If the shadow-economy losses are removed, cash costs about 1.47 per cent of GDP in Bangladesh, compared with 1.7 per cent in India and 1.6 per cent in South Africa.
Per capita, the cost is about $37 in Bangladesh, against $21 in India and $106 in South Africa, although the studies cover different years.
The study was conducted in May before the central bank accelerated its cashless push.
Bangladesh could lower economy-wide transaction costs and improve financial transparency by reducing its dependence on cash, the study highlighted.
