bKash, valued at over $2 billion dollar in its last funding round, is Bangladesh’s first and only tech unicorn. The MFS company posted a profit of Tk 315.77 crore in 2024, a staggering 67% year-on-year increase. By all means, the company is just getting started as the MFS, the industry it operates in, is also just getting started.
The Mobile Financial Services (MFS) industry in Bangladesh has experienced remarkable growth, becoming an indispensable component of the country's financial ecosystem, expanding the formal financial industry and driving the digital economy.
Since its inception in 2011, MFS has evolved from facilitating basic money transfers to a wide range of financial transactions. It has also seen the ballooning of its user base, exceeding 200 million registered customers. A vast network of agents that partly enable the entire ecosystem has created a unique phenomenon.
Key players like bKash, Nagad, and Rocket dominate the market.
The regulatory framework established by Bangladesh Bank has been instrumental in guiding this growth. While the existing regulatory regime has played an important role in ensuring consumer protection and compliance, it has also stifled innovation and competition in some instances.
Technological advancements, particularly the increasing use of smartphones and mobile applications, alongside the continued relevance of USSD-based services, have played a significant role in shaping the industry's trajectory.
Despite its successes, the MFS industry in Bangladesh faces challenges such as agent network management, security concerns, customer education, and the need for greater interoperability.
While several major providers compete for market share, many industry insiders want to suggest that there is a lack of meaningful competition in the industry.
Looking ahead, the future of MFS in Bangladesh is promising. The market has room for further growth, MFS players are continuously expanding their service offerings, and new trends like digital banking will likely create new opportunities.
In this report, we take a stab at offering a comprehensive overview of the current state of the MFS industry in Bangladesh, its historical development, key players, regulatory framework, market dynamics, technological infrastructure, challenges, competitive landscape, and future outlook.
The Mobile Financial Services (MFS) industry in Bangladesh began in 2011.
Bangladesh Bank, the central regulatory authority, established an initial framework that allowed both banks and non-bank financial institutions (NBFIs) to offer these services.
Initially, the primary focus of MFS was simple payment transactions, with money transfers being the most common service. The popularity of this initial basic service eventually led to the industry's future expansion and service diversification.
Dutch Bangla Bank Limited (DBBL) pioneered the MFS in Bangladesh, launching its mobile financial service, initially known as DBBL Mobile Banking and later rebranded as Rocket, in March 2011.
Shortly thereafter, in July 2011, bKash entered the market as the second player. bKash began as a joint venture between BRAC Bank Limited and the United States' Money in Motion LLC.
In the yearly few years, these early players focused on building their presence and building a customer base for basic financial transactions.
After the initial foundational work in the early years, MFS experienced a significant expansion and diversification of services between 2016 and 2020. Companies expanded beyond basic money transfers to include a wider range of services such as bill payments and mobile recharge.
DBBL's mobile banking service was relaunched as Rocket in 2016 with enhanced service offerings and an ambition to capture a larger market share. However, the company never managed to reach its full potential.
Nagad entered the market in March 2019. Backed by the Bangladesh Post Office, Nagad quickly emerged as a strong competitor, built an extensive network and gained substantial market share in a relatively short period.
The growth of industry naturally made it lucrative to a growing number of new players. Several traditional banks also began to launch their own MFS services. MFS was no longer viewed merely as an additional service but as an integral part of the broader financial ecosystem.
The increasing competition served as key drivers for the expansion of MFS and the continuous introduction of new and varied services.
Then came COVID-19 pandemic in 2020, which completely changed the market landscape for Mobile Financial Services (MFS) industry in Bangladesh.
The pandemic and the subsequent restrictions on movement and physical interactions led to a significant acceleration in the adoption of digital services and people increasingly relied on services like MFS to manage transactions. Emphasis on things like contactless transactions to mitigate the spread of the virus helped a meaningful surge in the use of MFS for various digital transactions, including the payment of utility bills and other essential services. The pandemic helped embed MFS into the daily lives of many Bangladeshis essentially accelerating the adoption of the service across social classes.
The Government has also been using MFS platforms as a primary channel for disbursing social safety net payments and stimulus packages to support vulnerable populations. This move has not only provided essential financial assistance but also helped MFS services reach previously underserved segments of the population.
The Mobile Financial Services (MFS) market in Bangladesh has seen phenomenal growth over the last decade to the extent that it has transformed the entire financial services landscape. Started with P2P money transfer, MFS players such as bKash now offer all kinds of financial services including becoming a hub for accessing many other services.
As of December 2024, the total number of MFS accounts in the country had reached an impressive figure of over 238 million. This reflects the widespread adoption of MFS and its growing influences in Bangladesh's financial services landscape.
The growth in user numbers accompanies a substantial surge in the volume of transactions conducted through these platforms.
In 2024 alone, the total value of customer transactions via MFS reached Tk 17.37 lakh crore, a 28.42% increase compared to the Tk 13.52 lakh crore recorded in 2023. It tells us that people are increasingly relying on MFS for a wide range of financial activities.
Bangladesh Bank data indicates a consistent upward trend in transaction volumes throughout 2024, highlighting the sustained momentum and growing importance of MFS in the financial lives of Bangladeshis.
While the number of registered MFS accounts provides a broad overview of adoption, the number of active accounts offers a more nuanced understanding of actual usage.
As of January 2025, the number of active MFS accounts in Bangladesh stood at 893.84 lakh. Active accounts are typically defined as those with at least one transaction within a specified period, often the last three months.
The difference between the total number of registered accounts and the number of active accounts suggests a few things.
First, while a large population has access to MFS, there is still potential for MFS providers to improve user engagement and drive more frequent usage among those who have registered but are not actively transacting. Second, the market for MFS services, even the basic ones, is far bigger than the current usage. And finally, MFS has a long way to go to become an everyday financial solution.
Understanding the reasons behind this gap between registered and active users and implementing strategies to improve active usage can unlock further growth opportunities.
MFS platforms have played a significant role in the growth of digital payments in Bangladesh. It has played a role in growing various digital services such as online shopping. More people now use digital services to pay for essential services such as utility bills, as well as for education fees and government-related charges.
Like many things in life, the MFS industry in Bangladesh follows an 80/20 rule when it comes to market share distribution. Top three key players, bKash, Nagad, and Rocket, own significant market share.
bKash, which holds the position of the market leader, boasts a substantial user base of nearly 60 million customers as of 2022, and maintains a significant lead ahead of the rest of the competition. The company commands such market power that the entire category of the service has become synonymous with its name.
Its comprehensive range of services and extensive agent network have made it a ubiquitous presence in the MFS landscape.
Nagad, the number two player in the vertical, has rapidly grown to become the fastest-growing MFS operator in the country. Leveraging the postal network's reach and offering competitive pricing, Nagad has captured a significant portion of the market.3
Rocket, while considered the pioneer in the MFS sector in Bangladesh, now stands third in terms of market share.
In addition to these top three, other MFS providers such as Upay, mCash, and Tap also contribute to the competitive landscape.
As we mentioned earlier, analysis of the market share shows a high degree of concentration among the leading providers.
As of December 2022, the latest comprehensive data available, bKash held the largest market share at 39.9%, followed by Nagad at 18.1%, and Rocket at 11.7%. It is important to note that data from 2022 and 2020 shows an even higher share for bKash, which suggests a changing competitive landscape.
This concentration highlights the intense competition and the ongoing efforts of these major players to further solidify their positions in the market.
| Provider | Market Share (%)* |
| bKash | 39.9 |
| Nagad | 18.1 |
| Rocket | 11.7 |
| Other | 30.3 |
* as of December 2022.
MFS providers used a host of strategies to gain and retain market share. Continuous diversification of service offerings to cater to a broader range of customers. Pricing strategies, particularly the reduction of cash-out charges, have also been a key competitive tool.
Companies also took advantage of clever partnerships and collaborations. For instance, Nagad worked with mobile operators to help users create accounts at scale. bKash has actively collaborated with banks to offer digital savings and loan products, expanding its role beyond basic payment services. Partnerships with international remittance service providers have also been important for enabling cross-border financial transactions.
Additionally, bKash received investment from organizations like IFC, the Bill & Melinda Gates Foundation, and Alipay (Ant Group). The company also entered into technological collaborations with companies like Huawei. These collaborations and investments play a significant role in expanding service offerings, and shaping the industry.
Bangladesh Bank, the country's central bank, stands as the primary regulatory authority overseeing the Mobile Financial Services (MFS) industry.
The initial MFS guidelines, issued in 2011, provided the foundational rules for the industry's operations. Over the years, these guidelines have been revised and updated to address the changing dynamics of the market and to align with the national objectives.
The Bangladesh Mobile Financial Services (MFS) Regulations, 2022, replaced the earlier guidelines and consolidated the regulatory framework for the MFS industry.
The objectives of Bangladesh Bank's regulations for the MFS industry are multifaceted. Firstly, the regulations aim to create a competitive and enabling environment that encourages the growth of cost-efficient and prompt MFS. Secondly, promote convenient access to formal financial services at an affordable cost, particularly for the poor and unbanked segments of the population. Thirdly, a key focus of the regulatory framework is to ensure compliance with Anti Money Laundering and Combating Financing of Terrorism (AML/CFT) standards.
The regulatory landscape for MFS in Bangladesh includes several key policies and requirements.
Licensing of MFS providers follows a bank-led model, where only scheduled commercial banks, financial institutions licensed by Bangladesh Bank, or Government Entities are permitted to lead MFS operations, often through subsidiaries. Regulations also stipulate ownership structures, mandating that a single parent bank/FI/Government Entity must hold at least 51% of the equity of the MFS providing subsidiary.
Operational guidelines define the permissible range of services that MFS providers can offer, including cash-in and cash-out, person-to-person, business-to-person, and government-to-person payments, as well as setting transaction limits and outlining requirements for fund management.
Compliance obligations are a critical aspect of the regulatory framework, with a strong emphasis on Know Your Customer (KYC) and Customer Due Diligence (CDD) procedures, as well as adherence to AML/CFT regulations and data security standards.
In response to the evolving needs of the market, Bangladesh Bank has also implemented recent policy changes, such as increasing the limits on daily and monthly transaction amounts for MFS accounts.
Bangladesh Bank’s regulatory framework has been instrumental in shaping the MFS industry. The central bank’s approach to issuing guidelines and adapting them over time has provided a stable and structured environment for the industry's growth.
However, these regulations have also presented certain challenges. While many credit the regulatory regime for ensuring risk management and consumer protection, others complain it has stifled innovation and competition by being too stringent and pro-incumbent. Some argue that the bank-led model and ownership restrictions hinder innovation and investment.
Additionally, MFS providers have faced ongoing challenges in navigating the evolving regulatory landscape, particularly in areas such as ensuring full compliance with KYC/CDD requirements and implementing robust AML/CFT measures.77 Moreover, the effectiveness of current regulations in addressing issues like fraud and illicit financial flows within the MFS ecosystem remains a subject of ongoing scrutiny and debate.
The Mobile Financial Services (MFS) industry in Bangladesh has witnessed a consistent and substantial increase in transaction volumes and values, as evidenced by data from Bangladesh Bank.
In November 2024 alone, the total number of MFS transactions reached 652,101,737, with a staggering transaction value of Tk 1,567,877.4 million.
This represents a significant rise compared to November 2023, when the number of transactions stood at 542,074,508 with a total value of Tk 1,196,691.9 million. The trend of increasing transaction volumes has been sustained throughout 2024, with monthly transaction values consistently exceeding Tk 1 trillion, peaking at Tk 1.64 trillion in December.
Inward remittances through MFS have also seen remarkable growth, reaching Tk 12.41 billion in December 2024, a 15.23% increase compared to the previous month.
This continuous surge in both the number and value of transactions highlights the growing reliance on MFS as a primary mode of financial transaction for a significant portion of the population in Bangladesh.
Analysis of user demographics reveals that while Mobile Financial Services have achieved widespread adoption, there are notable patterns in usage. Data indicates a higher adoption rate among males compared to females. For instance, a survey conducted by Bangladesh Bank in 2018 found that 79% of MFS users were male, while female participation was only 21%.
Similarly, a 2023 report by GSMA noted that in Bangladesh, 45% of mobile money account owners were male, compared to just 20% female, indicating a persistent gender gap in access.
There is also an interesting dynamic in MFS adoption between urban and rural areas. Surveys have shown a higher prevalence of MFS account ownership in rural areas in some instances. A 2024 survey by the Bangladesh Bureau of Statistics found that 21.82% of people in rural areas had MFS accounts, compared to 18.75% in urban areas.
Regarding age and income profiles, studies suggest that MFS users span all levels of education and income, although specific patterns may vary.
The adoption rates of Mobile Financial Services in Bangladesh are indicative of the strong demand for digital financial solutions.
MFS has successfully brought previously unbanked populations into the formal financial system, providing access to essential financial services like savings, payments, and remittances.
By offering convenient and accessible alternatives to traditional banking, MFS has bridged the gap between formal financial institutions and underserved communities.
| Metric | December 2024 | January 2025 | % Change |
| Total Transactions | 670,050,218 | 721,866,474 | 7.73% |
| Total Transaction Value (BDT Cr) | 164,739.36 | 171,664.12 | 4.2% |
| Inward Remittance (BDT Cr) | 1241.81 | 1239.28 | -0.2% |
| Cash In (BDT Cr) | 48032.37 | 48988.27 | 1.99% |
| Cash Out (BDT Cr) | 52597.57 | 55516.95 | 5.55% |
| P2P Transaction (BDT Cr) | 42847.66 | 44109.45 | 2.94% |
| Utility Bill Payment (BDT Cr) | 2633.43 | 2359.42 | -10.41% |
| Merchant Payment (BDT Cr) | 8424.06 | 8697.31 | 3.24% |
| Government Payment (BDT Cr) | 461.31 | 2018.33 | 337.52% |
While initially started with offering very basic services such as peer to peer money transfer via the USSD system, MFS in Bangladesh has evolved significantly and today, offers a diverse range of services.
Cash in and cash out stand out are the fundamental functionalities that enable users to convert physical currency into digital money within their mobile wallets and vice versa, primarily facilitated through a network of agents, as well as bank branches and ATMs.
Person-to-person (P2P) transfers are another core service, widely used for domestic remittances, allowing individuals to send money to family and friends across the country quickly and securely.
MFS players have since expanded their services to various bill payments, mobile recharge, allowing users to top up their mobile phone balances conveniently, and merchant payments, enabling users to pay for goods and services at both online and offline merchants, are gaining traction.
Salary disbursement through MFS platforms is also becoming increasingly common, particularly in sectors like the Ready-Made Garment (RMG) industry.
Government payments, such as the disbursement of social safety net funds and other allowances, are increasingly being channeled through MFS.
An important trend is the introduction of loan and saving products, facilitated through partnerships between traditional banks and MFS providers. While still in the early stage, insurance premiums payment and access to other financial products through MFS platforms are also beginning to emerge. Similarly, MFS is now being used in microfinance activities, enabling borrowers to make loan repayments and receive disbursements digitally.
Several MFS providers have established partnerships with international remittance service providers, streamlining the process for receiving funds from overseas and making it more accessible and affordable for beneficiaries in Bangladesh.
All in all, MFS, being mobile-first platforms, is increasingly becoming everything platform.
This increasing integration with other financial systems means MFS is increasingly becoming a comprehensive and interconnected digital financial ecosystem.
Additionally, MFS providers are now integrating with an increasing number of digital services, becoming a centerpiece of the growing digital economy in Bangladesh.
Initially, MFS relied heavily on USSD technology, which allows users with even basic feature phones to access services through simple menu-based interfaces. However, this has changed with the accelerating penetration of smartphones penetration and falling price of mobile data. For companies like bKash, mobile apps allow them to build more power platforms while offering richer user interfaces and more advanced features to users.
While apps have gained power, USSD-based services continue to remain relevant, particularly in areas with limited internet access or among users who prefer basic phones.
There have been other technological improvements. The adoption of e-KYC (electronic Know Your Customer) processes is a major one. It has streamlined customer onboarding, making it faster and more efficient to open MFS accounts.
QR code-based payments for merchant transactions is also gaining popularity, offering a convenient and secure way for users to make payments at various retail outlets.
API (Application Programming Interfaces) ecosystem is becoming increasingly important. APIs enable seamless integration between MFS providers, banks, and other financial service providers, enabling access to a wider range of services and improving the overall user experience. For example, bKash has partnerships with banks to offer digital savings schemes and nano-loan products directly through its mobile app.
MFS industry has seen phenomenal growth in Bangladesh. However, several challenges continue to impede its full potential.
One of the key challenges is the relatively low financial literacy and awareness. While awareness of MFS is generally high, the actual usage and understanding of the various services remain limited for a significant portion of the population.
How MFS players address this gap through educational initiatives will play an important role in determining the growth of MFS in the coming days.
Another significant challenge revolves around the agent network, which is the backbone of MFS in Bangladesh. Issues related to the availability, liquidity, and reliability of agents, especially in remote and underserved areas, can limit the accessibility of MFS for many potential users.
Security concerns and the prevention of fraud remain critical challenges. Despite the security measures implemented by MFS providers, incidents of fraud and financial malpractice can erode user confidence and hinder the growth of the industry.
The lack of full interoperability between different MFS providers presents another significant barrier to the development of a truly unified digital payment ecosystem in Bangladesh. Addressing this issue is crucial for enhancing user convenience and maximizing the potential of MFS.
There needs to be greater competition and cost of transactions in certain areas should come down significantly if MFS aims to become a default payment alternative to cash.
Finally, infrastructure limitations continue to pose a challenge to the widespread adoption and use of MFS in Bangladesh.
Relatively low penetration of smartphones, particularly in rural areas, as well as unreliable internet connectivity and the high cost of data are some of the challenges that need to be addressed.
The Mobile Financial Services (MFS) industry in Bangladesh exhibits a competitive landscape dominated by a few key players, primarily bKash, Nagad, and Rocket.
bKash and Nagad, in particular, hold a significant majority of the market share, with bKash being the long-standing leader.
These major providers compete intensely on factors such as service offerings, transaction fees, agent network reach, and technological innovation.
Companies have used a host of strategies including service diversification, moving beyond basic money transfers to offer a wider range of financial solutions like bill payments, merchant payments, and even access to savings and loan products.
Pricing, especially the reduction of cash-out charges, has also been a key tactic used by providers like Nagad to attract and retain customers.
The industry has seen relatively few major mergers or acquisitions, but partnerships and collaborations are common.
Foreign players and investments have had a notable impact on the MFS industry in Bangladesh.
bKash, for example, has attracted significant investments from global organizations such as the International Finance Corporation (IFC), the Bill & Melinda Gates Foundation, and Alipay (Ant Group), providing it with both capital and technological expertise.
Foreign technology providers like Huawei have also played a crucial role by supplying MFS platforms with cutting-edge digital finance solutions.
The future for the MFS industry in Bangladesh appears exceptionally promising, with strong growth projections indicating continued expansion in both the number of users and the volume and value of transactions. MFS providers such as bKash have become important digital platforms and many have the potential to play a critical role in the development of the overall digital ecosystem in Bangladesh in the coming years.
Experts predict that the daily transaction volume through MFS could potentially reach Tk 10,000 crore within the next two years, highlighting the immense growth trajectory of the sector.
Several emerging trends are expected to shape the future of MFS in Bangladesh. There is a clear shift towards the increasing adoption of digital payments for a wider range of transactions beyond traditional money transfers, including e-commerce, utility bills, and other services. The emergence of digital banks and the potential role of existing MFS providers in this space represent another significant trend, promising to bring more sophisticated and accessible financial services to a broader population.
The integration of Artificial Intelligence (AI) and machine learning technologies is expected to play an increasingly important role in improving fraud prevention, risk assessment, and personalizing financial services within the MFS ecosystem.
All in all, the opportunity for the industry is immense going forward. MFS providers should focus on strategies to improve user engagement, particularly inactive registered users, and continue to diversify their service offerings to meet the evolving needs of the market. Pricing is something that people rarely talk about when it comes to MFS. However, the current cost of MFS transactions is high and the players who can address this meaningfully will gain a huge competitive advantage.
Policymakers and regulators should prioritize measures to promote greater interoperability between MFS platforms. There should be meaningful efforts to improve financial and digital literacy across all segments of the population.
Finally, sustained investment in the country's digital infrastructure, including expanding affordable access to smartphones and reliable internet connectivity, is crucial for supporting the continued growth and reach of the MFS industry in Bangladesh.
