ISLAMABAD: The federal cabinet, scheduled to meet on Tuesday, is set to approve an e-commerce policy that will enable PayPak to process card-not-present (CNP) transactions domestically and internationally for online businesses.
At present, PayPal does not allow CNP transactions and consumers have to use cards of international financial services companies such as Visa and MasterCard for making online payments. Under the new e-commerce policy, PayPak will be able to process CNP transactions domestically. For international transactions, the possibility of co-badging of PayPak with international card payment solution providers will be explored by the State Bank of Pakistan (SBP) to allow its use by Pakistanis in other countries.
The SBP will introduce guidelines on banking services for operating online merchant accounts to make them attractive for local online platforms and retailers. It will be mandatory for online businesses to maintain a physical address in Pakistan. According to the guidelines, marketplaces will follow a code of conduct. The National Single Window Act will be promulgated for making the window function.
The Federal Board of Revenue (FBR) will develop the necessary infrastructure and technical capabilities to impose levies and collect customs duty and other taxes on e-goods. Online businesses will be registered with the Securities and Exchange Commission of Pakistan (SECP).
E-commerce refers to the production, distribution, marketing, sale and delivery of goods and services by electronic means. Globally, e-commerce has played an important role in the success of large organisations as well as small and medium enterprises (SMEs) as it helps to reduce transaction costs, explore niche markets and avoid intermediaries.
The emergence of e-commerce platform has paved the way for inclusive trade and economic development. Global e-commerce has been growing exponentially for the past two decades and recorded sales growth of 13% in 2017 with estimated sales of $29 trillion. In addition to that, the number of online shoppers grew by 12% and reached 1.3 billion.
E-commerce in Pakistan is at a nascent stage with modest internet retail sales despite 161 million cellular subscribers, 70 million 3G and 4G subscribers, 72 million broadband subscribers and total tele-density of 76.56% as of July 2019.
However, it is an emerging sector with a noticeable surge in the recent past in online vendors, e-commerce platforms and online payment facilities introduced by banks and cellular companies. According to the SBP figures, excluding cash-on-delivery sales, e-commerce sales stood at Rs18.7 billion by the end of June 2018 while the total size of Pakistan’s e-commerce market in 2018 was Rs99.3 billion. The number of registered e-commerce merchants has risen by 26 times and e-commerce payments have surged 23 times in a span of just 12 months.
Published in The Express Tribune, October 1st, 2019.