What licensing and regulatory steps apply to a fintech offering a digital wallet in Bangladesh?

Launching a digital wallet service in Bangladesh requires compliance with a specific licensing framework governed primarily by Bangladesh Bank under its Payment Systems Regulations. Depending on the service model (e.g., wallet-based transactions, merchant payments, or fund storage), you may need authorization as a Payment Service Provider (PSP) or Payment System Operator (PSO).

Launching a digital wallet service in Bangladesh requires prior authorisation from the Bangladesh Bank as per the prescribed legal and regulatory framework. The service must operate through a prescribed model, which has a specific capital requirement threshold. There are other regulatory and investment-safeguard considerations. Compliance obligations include (but are not limited to): (a) maintaining a robust Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) programme aligned with the requirements of Bangladesh Financial Intelligence Unit (BFIU); (b) implementing e-KYC procedures; (c) transaction monitoring, and regular reporting of suspicious activities; and (d) Other applicable regulatory requirements of Bangladesh Bank. It is highly recommended to consult and engage a local counsel before initiating any procedure.

Launching a digital wallet service in Bangladesh requires prior authorisation from the Bangladesh Bank as per the prescribed legal and regulatory framework. The service must operate through a prescribed model, which has a specific capital requirement threshold. There are other regulatory and investment-safeguard considerations. Compliance obligations include (but are not limited to): (a) maintaining a robust Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) programme aligned with the requirements of Bangladesh Financial Intelligence Unit (BFIU); (b) implementing e-KYC procedures; (c) transaction monitoring, and regular reporting of suspicious activities; and (d) Other applicable regulatory requirements of Bangladesh Bank. It is highly recommended to consult and engage a local counsel before initiating any procedure.

To launch a digital wallet in Bangladesh, you must navigate the Payment and Settlement Systems Act, 2024 and the Bangladesh Payment and Settlement Systems Regulations (BPSSR). Bangladesh Bank (BB) is the sole regulator for these services. The specific path depends on whether you intend to offer cash-in/cash-out via physical agents or a purely app-based wallet.

1. Key License Categories
- PSP: For independent FinTechs. Allows issuing e-wallets, merchant payments, and QR transactions. Required paid-up capital: BDT 20 Crore (approximately USD 200 million).
- MFS: For bank-led models (for example, bKash). Required if you want to use a physical agent network. Paid-up capital: BDT 45 Crore (as a bank subsidiary).
- PSO: For backend infrastructure like payment gateways or switches. Paid-up capital: BDT 5 Crore (minimum).

Note: Most digital wallet startups apply for a PSP license. However, under current 2026 guidelines, MFS licenses require a Bank-Led model where a scheduled bank must own at least 51% of the equity.

2. The Regulatory Step-by-Step
Phase 1: No Objection Certificate (NOC) — You submit your business plan, 5-year financial projections, IT architecture, and Fit and Proper documents for directors. If satisfied, BB issues an NOC.
Phase 2: Final License — You have one year from the NOC to set up your local data center and software. BB will then conduct a rigorous onsite IT and security audit before granting the final license to commence business.

3. Compliance and Reporting Obligations
AML/CFT: You must register with the Bangladesh Financial Intelligence Unit (BFIU). This includes implementing e-KYC (biometric/NID verification), screening against UN/Sanctions lists, and filing Suspicious Transaction Reports (STR).
TCSA: 100% of customer e-money balances must be held in a dedicated TCSA with a scheduled commercial bank. These funds cannot be used for your company's operational expenses.
Data Localization: All financial and transaction data must reside on servers located within Bangladesh.
Reporting: You must submit daily and monthly transaction-level data to Bangladesh Bank via their web portal.

4. Should You Engage Local Counsel?
Yes, engaging local counsel is highly recommended for three reasons:
- Vetting the Fit and Proper Criteria: A local firm can perform the necessary background checks on directors to ensure they aren't loan defaulters, which can cause BB rejection.
- Structuring Equity: If you have foreign investment, counsel is needed to ensure compliance with BIDA and Bangladesh Bank foreign exchange regulations for profit repatriation.
- Drafting Policy Manuals: You will need specialized legal drafting for AML/CFT Policy, Consumer Protection Policy, and Merchant Service Agreements, aligned with 2026 circulars.