Digital Cash (dCash) is a proposed digital payment instrument issued against receivables to support short-term financing, typically for periods of 30 to 120 days and up to a maximum of one year. It would facilitate the purchase and sale of goods and services by allowing buyers to pay with digital units issued by banks, financial institutions or fintech companies. Designed primarily to settle payments arising from credit sales, dCash could support secure and transferable transactions in both business-to-consumer (B2C) and business-to-business (B2B) markets.

Description of the business idea

According to IDLC Finance Ltd., Bangladesh’s supply-chain finance market is worth approximately BDT 4,000 crore ($325.4 million), including financing provided by banks and non-bank financial institutions (NBFIs). The market has considerable room to grow. Globally, the supply-chain finance market was projected to reach about $5.70 billion in 2025, indicating significant opportunities in this sector. However, supply-chain finance providers often face shortages of deposits and capital, even though this type of financing is generally short term, with a duration of less than one year.

In response to these challenges, we have designed an innovative product called Digital Cash. Under the proposed model, a fintech company, bank or finance company would issue digital units or points to a supplier on behalf of a customer. The units would be valid for a short period and backed by receivables equal to or greater than their value. During this period, the issuer would charge a service fee of up to 0.50% per quarter on the units, instead of the regular annual interest rate of about 15%. The following example explains how the system would work.

For a credit sale worth Tk 100, the company would issue 100 digital units to the seller on behalf of the buyer. The seller could transfer these units to its suppliers, who could then use them for further purchases within the system. If the credit period were 90 days, the holder could redeem the units for Tk 100 at maturity. The company would recover the amount from the original buyer. If the buyer could not pay because the goods remained unsold, the fintech company could provide financing secured by the goods, a post-dated cheque, a guarantee or another approved form of security.

A blockchain-based or other secure digital ledger would record transactions and maintain the balance of units within the system. The proposed model could ease short-term liquidity pressures and lower financing costs by replacing high interest charges with a modest service fee. It could also expand business activity and support job creation. The participating fintech company, bank or NBFI would provide the digital infrastructure for supply-chain finance providers and their customers.

Product and service description

Digital Cash (dCash) is a proposed transferable digital instrument issued against receivables for periods of 30 to 120 days and up to a maximum of one year. Buyers would use digital units issued by a bank, financial institution or fintech company to pay for goods and services. A secure blockchain-based or digital ledger, controlled by the issuing company, would record transactions and maintain the integrity of the system. Subject to government approval, the issuer could eventually introduce physical digital-cash notes with expiry dates and holographic security features.
Each dCash unit would carry an expiry date linked to the expected cash-conversion cycle of the underlying receivable. If the original buyer failed to pay at maturity, the issuing or financing company would pay the holder and assume the buyer’s credit risk. When appropriate, the company could insure that risk. The system is intended mainly for payments arising from credit sales in both B2C and B2B markets.

Market analysis

Bangladesh has faced persistent liquidity pressures, with several Islamic banks particularly affected. A Dhaka Tribune report dated June 27, 2024, discussed the continuing liquidity crisis. Separately, the Daily Sun reported on November 4, 2024, that the Bangladesh Bank governor estimated Tk 2 lakh crore would be needed to recover losses caused by financial misconduct.

The proposed dCash system would help businesses obtain goods on credit and continue operating during the credit period without taking a conventional short-term bank loan. The seller would pay the supply-chain finance provider a service fee of up to 0.50% per quarter rather than interest. By comparison, the annual interest rate for a private company is about 15%, or 3.75% per quarter.

Lower financing costs could reduce production and selling expenses and, in turn, help lower prices. Increased business activity could also generate additional value-added tax (VAT) and direct-tax revenue for the government while supporting employment.

Marketing and promotion

The marketing strategy would focus on meeting customer needs profitably through direct outreach to individuals and organizations. The proposed technology would serve as an ecosystem for existing supply-chain finance companies that already have established customer bases. These companies could promote dCash through social, electronic and print media. Because the concept is new and practical, it may also attract media coverage, creating additional public awareness.

Competitor analysis

The proposed model appears to have few direct competitors because existing supply-chain finance companies do not currently use this type of digital instrument to address liquidity shortages. However, the competitive environment could change as banks, fintech companies and other financial institutions develop similar products.

Risk management

• Risk: Verifying the original buyer’s creditworthiness and credit history may be difficult.

Mitigation: The bank or fintech company would conduct know-your-customer (KYC) checks using the prescribed procedures and obtain all required supporting documents.

• Risk: The original buyer may default.

Mitigation: The issuer could require security from the original buyer, such as hypothecation of goods, a security cheque, credit insurance or collateral appropriate to the level and nature of the risk.

• Risk: Developing secure, reliable and user-friendly web-based software would require substantial investment.

Mitigation: Entering the market early could give the company a pioneering position. Development should proceed in stages, with adequate funding for security testing, system reliability and ease of use.

• Risk: Customers may be unfamiliar with the system.

Mitigation: Although dCash would be new, many customers already use smartphones, internet banking and other digital services. Clear instructions, demonstrations and customer support could help users adopt the system.

• Risk: The proposal does not specify a maximum financing limit.

Mitigation: The bank or fintech company would issue digital units instead of providing a cash-credit facility. The value of the units could be capped at 90% of the underlying receivable or invoice value.

• Risk: The system could face operational and cybersecurity threats, including hacking, fraud and service disruption.

Mitigation: dCash would operate through a controlled application and a closed transaction record, limiting transfers outside the approved network. The issuer would still need strong cybersecurity controls, user authentication, transaction monitoring, data backups and a tested incident-response plan.

The proposed Digital Cash (dCash) system could help businesses manage working capital while enabling financial institutions to offer a lower-cost form of short-term financing. If supported by effective regulation, sound credit assessment and strong cybersecurity controls, it could also improve transparency in commercial transactions, strengthen revenue collection and contribute to sustainable economic growth.