Card transactions for e-commerce purchases increased slightly in August following a slump in July, when people were reluctant to place orders after it emerged that a few online platforms were scamming people.

Customers spent Tk 776.2 crore through cards on products and services availed from e-commerce sites in August, up 4.65 per cent from July and 59 per cent year-on-year, according to data from Bangladesh Bank.

In August 2020, people spent Tk 488.9 crore through cards on e-commerce purchases.

The transaction record in July was at its lowest in the last five months and 42 per cent less than the Tk 1,277 crore registered in June.

Earlier, the amount of card transactions stood at about Tk 1,184 crore in May and Tk 911 crore in April.

In terms of the total number of transactions, consumers placed 14 per cent more orders in August than in July. The total number of transactions through cards was 27.88 lakh in August, up from 24.3 lakh in July, central bank data shows.

After it emerged that some e-commerce platforms had collectively racked up thousands of crores of taka in dues to both customers and merchants by asking for advance payments but not delivering the products on time, buyers ended up going back to the tried and tested cash on delivery (COD) system.

However, online grocery delivery behemoth Chaldal has not observed any such trend.

 "As we sell food and groceries, we have to make faster delivery to our customers and so, we haven't witnessed such a trend," said Waseem Alim, founder and chief executive officer of Chaldal.

On the other hand, AKM Fahim Mashroor, CEO of Bdjobs and AjkerDeal, said that around 70 per cent of their customers would use the COD system a few months ago but after allegations of fraud surfaced in the industry, up to 90 per cent of payments are now made in cash.

Card transactions are a crucial aspect for the growth of e-commerce.

"So, the industry players and regulators should both work together to regain customer trust," he said.

Khaleda Rownok, chairman of Babycare, an e-commerce platform specialising in baby care products, said COD has increased by around 20 to 30 per cent for her platform.

"For that we are facing some problems. Now our money got stuck for few days to the logistics partners," she said.

"The people's trust in e-commerce has waned as people now want to be assured of getting their products and then make payments. Besides, there is always an obscurity over whether customers receive or refuse to accept the product," Rownok added.

Fatima Begum, CEO of aadi, echoed the same.

Bangladesh Bank introduced an escrow service in July amid widespread allegations against some e-commerce companies including Evaly, Dhamaka and e-orange for not providing either the products or refunds on time despite taking payments sometimes months in advance.

Under the escrow payment service system, a third-party payment gateway holds the payment until the customer receives delivery.

The local e-commerce industry had been growing over the last decade and the growth accelerated after rising Covid-19 infections forced people to stay at home and place orders online to buy goods and services.

Customers became cautious after a Bangladesh Bank inspection report on Evaly found that the e-commerce platform had a huge mismatch in its assets and liabilities.

The central bank found that Evaly had over Tk 400 crore in liabilities against its current assets of Tk 65 crore as of March 14 this year -- a gap that prompted the commerce ministry to ask for an explanation on the whereabouts of around Tk 338 crore that the platform owed to customers and merchants.

Law enforcement agencies arrested Evaly Managing Director Mohammad Rassel and Chairman Shamima Nasrin last week while top officials of another e-commerce platform, E-orange, were also brought under trial on charges of embezzlement.