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Card transactions have lost the momentum gained when coronavirus first arrived
People, it seems, are reverting to type, presumably on pandemic fatigue.
The onset of pandemic saw a surge in card use on fears that bank notes could be a source for transmission of the lethal pathogen, which has been spreading like wildfire all over the globe since January.
Now, it appears people have gone back to using cash for their day-to-day needs.
For instance, in February, when coronavirus was yet to arrive on these shores, ATM transactions through cards stood at Tk 14,327.5 crore. In September, it was Tk 14,246.6 crore, according to data from the Bangladesh Bank.
Similarly, point-of-sale card transactions stood at Tk 1,508.6 crore in February. In September, it was Tk 1,349.6 crore.
One area where card transactions have gained momentum is e-commerce, which itself is one of the beneficiaries of the pandemic. The platform allows payment through the plastic card, cash and mobile financial service.
In February, e-commerce card payments amounted to Tk 247.1 crore. In September, it was Tk 406 crore.
But the momentum seen between March and July is not quite there: in September, e-commerce card payments were down 17 per cent from the previous month and in August 23.8 per cent.
At the beginning of the pandemic, a number of customers avoided the cash-on-delivery (COD) option due to fear of contagion, said Asikul Alam Khan, founder and chief executive officer of Priyoshop.com, an online marketplace.
“That’s the reason for the rising trend of e-commerce card transactions. But now, the scenery has changed.”
About 21 per cent of Priyoshop.com’s payments are made by cards.
Customers still prefer the COD mode of payment as most of them are uneducated on card use and are comfortable handling cash, Khan added.
“Credit card and e-commerce transactions have fallen in August and September as people have gone back to their normal life and all businesses, shops and restaurants have resumed,” said Syed Mohammad Kamal, country manager of MasterCard Bangladesh.
In September, credit card transactions stood at Tk 1,244.8 crore, down 19.8 per cent from August.
In July, card transactions hit a peak, which Kamal attributes to spending centring on Eid-ul-Azha, the second largest religious festival in Bangladesh.
The largest festival, Eid-ul-Fitr, took place on May 25, when the country was still officially in shutdown, so the celebrations were subdued. To compensate, people celebrated Eid-ul-Azha with more gusto.
“After Eid-ul-Azha celebrations were over with, card transactions went back to its normal trend,” Kamal said.
Seeing that people have experienced the convenience of digital payments during the pandemic, now is the right time for the government to incentivise card transactions if it is serious about becoming a cashless society.
The government should provide a 5 per cent incentive for using digital payments to reduce the use of cash, according to Kamal. Of the 5 per cent, 3 per would be for consumers and 2 per cent for merchants.
“We have already proposed to the government and the central bank to take initiatives about the issue,” he said, adding that October was a much better month than the preceding two months.
The BB is yet to release October’s figure, but Kamal thinks it would be close to January’s figure.
Online purchase by credit card increased in March, April and May owing to the countrywide shutdown, said Abdus Sabur Khan, head of Southeast Bank’s card division.
Southeast Bank has about 1.25 lakh credit cards in circulation.
“Basically, e-commerce transactions by cards rise during various festivals including Eid. That’s the reason for the rising trend of e-commerce transactions in June and July,” said Emranul Huq, managing director of Dhaka Bank, which has issued about 2.7 lakh cards.
As of September, 2.3 crore plastic cards have been issued, up from 2.1 crore when at the end of February.
(DT)
