E-commerce frauds hurt transactions through cards

The use of debit and credit cards soared after the coronavirus outbreak last year, but frauds and controversies besetting some e-commerce companies in recent weeks have dented people’s trust that negatively affected transactions.

Digital transactions crossed Tk 1,000 crore in May this year for the first time to Tk 1,183.6 crore, Bangladesh Bank (BB) data showed.

In June, e-commerce transactions through cards were Tk 1,277.4 crore but they slumped 42 per cent to Tk 741.7 crore in July, the BB data said.

The transactions rose slightly in August but were not satisfactory, industry insiders said.

Bankers said that the current volatile situation in the e-commerce sector is one of the reasons behind the lower trend of debit and prepaid card transactions.

Millions of people have been cheated by e-commerce platforms such as - Evaly, ringID, E-orange, Dhamaka shopping, sirajganj shop. These frauds have come to light in recent weeks.

These incidents negatively affected the entire e-commerce sector and the card business of banks and other financial institutions.

Bankers said that most clients made digital transactions through credit cards, debit cards and MFS operators like bKash, rocket and Nagad as public gathering was restricted amid the pandemic.

In August, debit card transactions stood at Tk 20,934.8 crore, down from Tk 21,783.9 crore a month ago. On the other hand, prepaid card transactions stood at Tk 179.5 crore in August, down from Tk 226.6 crore in July.

However, credit card transactions increased to Tk 1,674.4 crore in August, BB data showed.

Ahsan Ullah Chowdhury, Head of Digital Financial Services of Eastern Bank Ltd (EBL), told The Business Post that the e-commerce sector was facing an image crisis due to some e-commerce platforms’ fraud.

“This negatively impacted e-commerce transactions by cards, which would be visible in the upcoming days,” he added.

“The government, central bank, e-cab and other stakeholders will have to come forward to protect the growing e-commerce sector. The government has already taken the initiative to introduce a law for the sector,” he said.