Bangladesh Bank disconnects DGePay from payment switch over security concerns

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Bangladesh Bank suspends DGePay

Highlights

Bangladesh Bank disconnected DGePay from the National Payment Switch Bangladesh at 8pm on 29 October after finding the company provided payment services via an Indian vendor.
Despite DGePay’s two-year operational history and service to around 1,000 merchants, the central bank acted to mitigate security and transaction control risks linked to foreign-operated systems.
DGePay’s licence remains active as the central bank considers further steps, while the company now plans to localize its system in response to regulatory concerns.

Inspection findings and regulatory action

As reported by The Business Standard, Bangladesh Bank disconnected DGePay from the National Payment Switch Bangladesh after an inspection found the company was operating its services through a vendor in India, raising concerns over the security and control of financial transactions.

Arif Hossain Khan, executive director and spokesperson of Bangladesh Bank, said the central bank detected that the payment system operator's services were being provided from India rather than from within Bangladesh. He said the Payment Systems Supervision Department identified the issue and the service was disconnected as soon as it was detected.

Khan said DGePay's licence has not been cancelled. He added that further action will be taken after observation and additional procedures.

According to sources cited in the report, Bangladesh Bank disconnected DGePay's access to the NPSB at 8pm on 29 October.

Merchant exposure and company response

A senior Bangladesh Bank official said the main concern is that the Indian vendor could access the system while the payment service is operated from outside Bangladesh. Because many local merchants use DGePay's services, the arrangement poses a significant risk, prompting the central bank to suspend the connection.

The official said Bangladesh Bank does not want any company to suffer losses, but it will intervene whenever financial transactions pose risks and will take steps needed to protect customers.

DGePay Managing Director and CEO Rashed Mahmud said the central bank disconnected the service following an inspection. He said the company has been providing the service for two years, that none of its clients has lodged a complaint, and that it serves around 1,000 merchants.

Mahmud alleged the central bank suspended the service without issuing a show-cause notice. He also said other banks receive services from Indian vendors, but DGePay will now try to develop the system locally while acknowledging the regulator's authority to act on financial security concerns.

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