Bangladesh Bank has unveiled draft regulations to modernise the country’s digital payment system, aiming to foster fintech innovation and ensure safer transactions.
Bangladesh Bank has released a draft regulation aimed at modernising the country’s rapidly expanding digital payment ecosystem. This initiative opens up new possibilities for fintech innovation while enhancing the security of transactions. The draft Payment System Operator (PSO) Regulations, issued this week by the central bank’s Payment Systems Department, are now open for feedback from banks, fintech companies, and other industry stakeholders before being finalised.
Under the proposed regulations, Payment System Operators (PSOs) will not be permitted to issue e-money and will be required to settle all transactions through licensed commercial banks. Furthermore, applicants must be registered under the Companies Act, 1994, with an application fee set at Tk 50,000 and a licence fee of Tk 5 lakh.
The draft categorises PSOs into five distinct groups: Merchant Acquiring, Payment Switching, ATM/CRM Acquiring, Payment Initiation Service (PIS), and Card Scheme. Minimum capital requirements vary depending on the category. For example, Tk 1 crore is required for Merchant Acquiring, Tk 20 crore for ATM/CRM Acquiring, Tk 10 crore for Switching Services, and Tk 2 crore for Payment Initiation Service (PIS).
The new regulations align with the Payment and Settlement Systems Act, 2024 and aim to bring non-bank payment operators under a comprehensive regulatory framework. This will strengthen oversight, improve risk management, and increase consumer confidence in digital payments.
A key feature of the draft regulations is the introduction of Payment Initiation Service (PIS)—a third-party mobile application that allows users to link multiple bank accounts and digital wallets. This service enables users to make payments with a single click, directly from their bank accounts, without the need for the third-party app to hold or store customer funds. PIS apps will operate with the explicit consent of the customer, ensuring secure and transparent transactions directly through the user’s own bank.
According to Bangladesh Bank officials, the introduction of PIS marks a significant move toward open banking and account-to-account (A2A) payments in Bangladesh, similar to systems already popular in advanced digital economies.
“This innovation will make online shopping, bill payments, and business transactions much simpler and faster,” said a senior official involved in drafting the regulations. “Even banks without their own apps will be able to enable digital transactions through PIS platforms.”
In addition to the core regulations, PSOs will be required to maintain an ongoing capital reserve linked to their average monthly transaction value over the past year. They will also need to implement a comprehensive risk management framework to address liquidity, operational, fraud, and money laundering risks.
Moreover, PSOs will be required to preserve transaction data for a minimum of 12 years, and any major data breach or operational failure must be reported to Bangladesh Bank within 24 to 72 hours.
These new draft regulations signal a significant step towards shaping a more secure and efficient digital payments landscape in Bangladesh, paving the way for greater fintech innovation while ensuring robust consumer protection.