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

Under the proposed system, customers will be able to transfer money and conduct transactions using bank accounts or mobile wallets held with any participating financial institution. This will eliminate the need to rely on separate networks for transferring funds between different institutions.

The initiative is expected to expand financial inclusion, reduce cash transactions and make payments faster, easier and more convenient. It will also create opportunities for people outside the traditional banking system to access 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 interoperable 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 common system.

Once launched, the IIPS will support a wide range of transactions, including person-to-person money transfers, business payments, purchases at shops and commercial establishments, and government disbursements. It will enable instant fund transfers among participating institutions through appropriate operational, settlement and security arrangements.

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

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

Sirajul Islam said the existing arrangement had not been effective as expected, highlighting the need for a more integrated technological framework to connect all institutions in the financial sector. The proposed IIPS is expected to overcome these limitations and establish broader connectivity across the industry.

The system could also play a positive role in distributing international remittances, beyond facilitating domestic transactions.

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 initiative, discussing 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 the country’s economy, noting that they account for around 6 per cent of Bangladesh’s gross domestic product (GDP). He stressed the need to bring remittances into the country through formal financial institutions and channel them towards productive investment.

Researchers believe that direct connectivity among financial institutions could make domestic remittance distribution faster and easier. If the system is linked with authorised international remittance networks, money sent by expatriate Bangladeshis could reach beneficiaries’ bank accounts or mobile wallets more quickly and at relatively lower costs.

The benefits of the proposed system are also expected to extend to businesses and government operations. Sirajul Islam said the expansion of digital transactions would reduce government expenditure on printing, transporting, storing and managing paper currency.

In recent years, Bangladesh’s digital payment landscape has expanded significantly through mobile financial services, internet banking, electronic fund transfers and QR code-based transactions. However, the lack of an integrated network among different service providers continues to create obstacles to seamless transactions.

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

The successful implementation of IIPS, however, 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, the system could bring significant changes to the country’s payment landscape by making transactions faster, easier and less expensive while improving transparency and bringing more people under formal financial services.

The targeted July launch is being viewed as an important step towards strengthening Bangladesh’s digital financial ecosystem.