Fashion houses in Dhaka riding the wave of digital payments for Eid shopping

Many customers prefer transactions through cards or mobile financial services to cash

Digital transactions are increasingly becoming the norm in Bangladesh, particularly among the fashion retailers in Dhaka. With a significant proportion of customers opting for payments through mobile banking or cards, especially during the Eid shopping season, the shift towards digital payments is palpable.

The fashion houses say ‘50 to 70 percent’ of the total transactions at their outlets around Eid are made digitally.

They also entice customers with a range of discounts, cashback offers in collaboration with the MFSs or banks.

This move aligns with the government's vision of establishing a 'Smart Bangladesh' by promoting a 'cashless society'. Since January 2023, the government, spearheaded by Bangladesh Bank, has been actively working towards converting 75 percent of the nation’s financial transactions to digital formats within four years.

Customers like Mokhleshur Rahman Shaheen have embraced credit cards and mobile payments for convenience and the perks they offer. He has been shopping on credit cards for two years in the Agargaon area of Dhaka.

He also took the help of MFS company bKash and cash for shopping.

"It is more convenient to pay by card than cash when buying clothes, shoes and other products. Again digital payments have some offers. That's why I regularly take help from various digital payments for shopping in superstores. Still there are more cash transactions in tea shops and kitchen markets,” said the government official.

Bipul Islam, founder and CEO of Fashion House Plus Point, said 70 to 80 percent of their daily transactions are now made through bKash, Nagad, debit or credit cards, or other digital means.

In 20 years of business, Plus Point has 32 outlets across the country, including 14 in Dhaka.

“People are leaning towards this [digital transactions] now. We are fixing the MRP keeping that in mind. This makes business transactions easier than ever."

This trend is echoed by Soumik Das, CEO of Rang Bangladesh, who has witnessed an exponential growth in digital payments post-COVID. According to him, half of their transactions are made digitally.

Before the start of the COVID pandemic in 2020, digital transactions were at a very early stage, he said. The rate of digital payments has been growing exponentially in the last four years.

“It has increased the most in the last two years. Banks and other institutions have brought many new technologies during this period.”

All 20 outlets of the fashion house have digital payment facilities.

At least 60 percent of the buyers of the fashion house Anjans, which started its journey almost three decades ago, have become accustomed to regular digital transactions, according to Shaheen Ahmed, who runs the organisation.

He told bdnews24.com that digital transactions through bKash, Nagad, Rocket or bank cards are beneficial for both buyers and sellers.

“Digital payments have progressed quite well in the last 3-4 years. During this period, many companies have prepared themselves for digital payments. Many modern technologies have also been added to these services.”

Recalling the introduction of credit cards for shopping 25 years ago, he said, “At that time, credit card bills had to be prepared by phone and approved by the bank. Now the technology is quite modern. Payment is done very easily. The customer no longer has to carry around money. We also do not have to go to the bank again and again. The government is also getting its revenue properly.”

WHY DIGITAL TRANSACTION IS BECOMING POPULAR

Many people see it as a risk to travel with money in their pockets while shopping together.

They say that there is no fear of money being lost or stolen in cards or mobile banking. There is no hassle of counting the money. Transactions also take less time.

Also digital transactions often have discounts or cashback offers. These factors have made most of the customers comfortable with digital payments.

Israt Jahan, an employee of a private company in the capital, makes digital payments whenever she goes shopping in the market.

He told bdnews24.com, “There is less risk of money being stolen or lost. Again there is a kind of transparency in transactions and payments. Companies are no longer able to evade VAT after collecting it from the customer.

“Carrying money is very risky. In that case, digital transactions seem more convenient. And there is no need to count the money. Many times the calculation goes wrong if you buy more. In digital transactions, people do not face that problem.”

Farhan Ahmed, a banker, said, "If you want to go shopping, you have to go to the market with a lot of money. There are always concerns over the money being stolen in crowded shops.

That's why I pay digitally.

“It allows shopping in comfort. Paying money by card seems easy. And in cases where there is an offer on bKash payment, we pay through bKash. It allows worry-free shopping.”

Card payment seems easy to Mirpur resident Abu Hanif. He commented, "When buying something, you can pay even if you don't have money with you. If needed, money can be easily fetched by calling someone.

"This time I didn’t have the cash I needed for shopping. I paid the rest from my card. Without this facility, I might have had to withdraw money, wasted time, or not bought at all.”

However, MK Rumi, a resident of Mohammadpur, said that he personally got into some trouble by shopping on credit cards.

“Credit card bills pile up at the end of the month because I buy things even if I don't have the money. Then comes the tension of repayment – I feel like not making purchases on credit cards anymore."

"But after a while, or while shopping, I don't remember that," says Rumi.

PROGRESSES IN DIGITAL TRANSACTIONS

AKM Fahim Mashroor, chairman of the Standing Committee on Fintech and Digital Basis of Bangladesh Association of Software and Information Services (BASIS), believes that cashless transactions in urban areas such as fashion houses, superstores, e-commerce platforms and some other institutions have progressed well, but overall it is not more than 5 percent of total payments made in Bangladesh.

“Many small shops and entrepreneurs are yet to come under this facility. The cost of getting digital services for them also remains a bit high. The main challenge is – it [digital payment] still centres on credit cards. Every bank has a mobile app, but the app payment system has not been implemented. Bangladesh Bank has introduced Bangla QR. But banks have not started using it yet.

"Don't just rely on cards. Transaction costs should be further reduced. That is why the taxes should be reduced by the government. Incentives should be given if necessary. When small traders come under digital services, they face VAT and taxes. That’s why small merchants should be kept out of the ambit of VAT.”

The government has set a target of making 30 percent of all transactions in the country cashless or digital by 2025.

BASIS recently organised a workshop to explore ways to increase cashless transactions. There were several recommendations in the workshop to enhance cashless payments.

These include introducing incentives at both the consumer and small shopkeeper levels; imposing additional charges on cash transactions where necessary to reduce the use of cash; expanding the work of banks to Upazila and village levels instead of working only in big cities; popularising Bangla QR Payment, and launching mobile apps in all banks for their customers.