KARACHI: Fonepay, one of the three online payment solution companies which recently got permission from the government to operate in Pakistan, has so far been connected with 50,000 shops for QR code payments and expects to grow five times by the end of 2018.
“The fintech expects to engage 250,000 shops across the country by the end of 2018,” said Muhammad Ziaul Haq, Head of Acceptance Inov8 Limited – the parent company of Fonepay – while talking to The Express Tribune.
According to a conservative estimate, Pakistan has about four million shops so the market for consumer goods is huge, but people here love to pay in hard cash, Zia said. “Despite the preference for cash payments, we have so far received a good response,” he said.
The other two electronic payment processing companies – Monet and TPL Rupya – are also preparing to capitalise on the rapidly growing financial sector of Pakistan, according to a quarterly report of the State Bank of Pakistan (SBP).
Business-to-consumer e-commerce (e-B2C) is on the rise in Pakistan. Growing incomes, coupled with advances in the communication technology sector and expansion of internet access and branchless banking, have been propelling the sector forward, said the SBP report.
Online transactions are spreading globally and Pakistan’s market is slowly but surely adopting the trend. Transactions worth Rs20.7 billion were carried out by consumers on international e-commerce websites during FY17.
According to the SBP, 571 local e-commerce merchants were already accepting payments through banking channels as of end-June 2017, with cumulative annual sales of Rs9.8 billion. However, cash on delivery (COD) is still a significant part of online transactions.
More than 90% of online orders were fulfilled using COD during the past fiscal year, said Pakistan Telecommunication Authority (PTA) in its annual report for FY17.
Looking at the behaviour of Pakistani consumers, Fonepay adopted the QR code payment method. In this case, the customer first takes the product in his hands and then pays for it unlike buying online which is the case in other parts of the world. Fonepay has signed a deal with 38 banks which include microfinance, investment and commercial banks, said the head of the Lahore-based IT company.
Fintechs will add about four million jobs, 93 million bank accounts, $36 billion annually to the gross national product (GNP) and $7 billion net to the government’s revenue by 2025, according to McKinsey & Company, a worldwide management consulting firm.
The e-commerce market of Pakistan is close to $90 million with QR code payments amounting to between Rs8 and Rs10 million. Zia expressed confidence in increasing this to Rs500 million by the end of 2018. “I see the end of 2018 to be full of wonders for the IT sector of Pakistan,” he said.
Published in The Express Tribune, February 28th, 2018.