Bangladesh’s economy is still heavily reliant on cash, with only eight million people using debit cards and fewer than one million using credit cards in a country with over 100 million adults. However, this dependency is gradually changing, driven by the ongoing “Digital Bangladesh” initiative and the growth of e-commerce. As the country moves toward a more digital economy, the potential for rapid growth in e-commerce is vast, presenting opportunities to further embrace technology and create a seamless and secure digital commerce experience.
The e-commerce industry in Bangladesh is projected to grow significantly, with the eCommerce Association of Bangladesh (e-CAB) expecting it to increase by 40 percent per month over the next three years. While e-commerce in the country started in the 1990s, it faced early challenges such as a lack of online payment facilities and low internet penetration. The introduction of online payments by Bangladesh Bank in 2009 and 2013, allowing debit and credit card use for online purchases, was a game changer for the sector.
Originally focused on Business-to-Business (B2B) transactions, e-commerce in Bangladesh has expanded to include Business-to-Consumer (B2C), Customer-to-Customer (C2C), and Business-to-Employee (B2E) models. However, the ecosystem is still evolving, and challenges remain in fully realizing the industry’s potential, which could significantly contribute to the country’s economy.
Key areas needing intervention to support the industry include improving delivery mechanisms and infrastructure, increasing merchant acceptance, boosting consumer adoption, facilitating mobile and online transactions, and securing systems against fraud. One of the biggest challenges remains the widespread preference for cash, particularly for payments through cash-on-delivery (CoD), which still accounts for 95 percent of e-commerce transactions. While CoD is convenient for consumers, it’s costly for sellers, especially when it comes to handling product returns, which occur 35 percent more frequently in CoD transactions.
Cash handling adds complexity to the supply chain, as sellers need to collect and transfer payments, which lengthens settlement periods and increases the risk of theft. Additionally, payments through bank/wire transfer, bKash/Ucash, and credit cards remain far less common.
Low financial literacy, security concerns, and a lack of user-friendly interfaces further complicate the widespread adoption of electronic payments in Bangladesh. As e-commerce increasingly shifts to mobile devices, creating an infrastructure that supports innovative payment solutions is crucial. Companies like Chaldal.com, Easy.com, Meenabazar.com, Ajkerdeal.com, and Foodpanda.com are already seeing success, but more needs to be done to drive digital payment adoption.
To foster a cashless society, consumer confidence in e-payments needs to be strengthened through collaboration and education on the convenience and benefits of digital payments. Developing user-friendly interfaces and improving the mobile transaction experience will also propel adoption. Additionally, universal access to robust telecom and internet connectivity will accelerate the growth of e-commerce.
Merchants in high-usage sectors such as utility payments, government services, and online shopping must be encouraged to accept digital payments by simplifying the onboarding process and offering incentives. Facilitating online payments for government services like taxes and waiving extra charges for digital transactions can further drive awareness and adoption.
To overcome security concerns, the industry must adopt second-factor authentication (2FA) to enhance user trust and prevent fraud. It is also critical for the payments industry to adhere to the highest data security standards, such as those set by the Payment Card Industry (PCI) Security Standards Council, and adopt point-to-point encryption technology. A strong fraud monitoring framework must be in place to ensure accurate fraud detection and prevention.
Ultimately, a collaborative effort between the industry, financial institutions, merchants, regulators, and payment facilitators will be necessary to address the gaps in electronic payment adoption for e-commerce in Bangladesh. As the country becomes increasingly integrated into the global digital economy, ensuring access to international e-commerce markets and a robust digital payment infrastructure will be key to ensuring the sector’s success and contributing to economic growth.
