The Effects of Domestic Electronic Payment System on the Velocity of Money: An Empirical Study on Bangladesh

Abstract

Rapid economic development, coupled with adoption of internet and digitization across all sphere of life, electronic form of transactions has taken off in Bangladesh in last decade. At present, Bangladesh Electronic Fund Transfer Network (BEFTN), Bangladesh Real Time Gross Settlement System (BD-RTGS), and National Payment Switch Bangladesh (NPSB). are the available electronic payment systems for fund transfers between bank accounts of different banks in electronic form. These systems are managed by the central bank of the country – Bangladesh Bank. Beside these interbank payment systems, payments through mobile financial services and ATM cards, debit cards, credit cards can also be considered as electronic payment. This paper aims to evaluate the possible effects of electronic payments on velocity of money in Bangladesh. The study used secondary data obtained from the website of Bangladesh Bank. Using statistical model, this paper found that only mobile wallet transaction volume currently impacts velocity of money in Bangladesh.