DUE to its increasing and widespread use of Information Technology, most businesses around the world have already turned online. This online business refers to e-Commerce which has also moved into developing countries like Bangladesh.
Several E-commerce sites have grown. They serve like other business houses. Their payment systems are also similar.
The main problem faced by e-Commerce companies in Bangladesh is Paypal and the lack of customers who are ready to use debit/credit cards for payment against purchases. There are only 5.0 million debit cards and less than 1.0 million credit cards issued in the country of 160 million people. But only 1.0 per cent of the debit card holders use their cards through POS machines or online. The remaining 99 per cent activate them at ATMs only.
There are multiple reasons for that: low level of awareness and lack of customer-friendly infrastructure, high card fees and POS costs for merchants, the reluctance of banks to promote in-store and e-commerce transactions. There are also regulatory barriers. The use of tax ID is also required for credit card issuing, so the potential audience is limited to only 2 million people.
All these problems have led to only 5.0 per cent growth in credit card issuance in 2014. For example, in India where the payment market is much more saturated the number of debit cards has grown by 27 per cent and credit cards by 7.0 per cent. The ATM/POS activation ratio, at 95 per cent, is also higher there.
So Bangladesh market is still in a dormant state. However, the e-commerce market will rise up with increasing opportunities being offered.
Mohammed Salman Shadik
East West University
