Low financial inclusion hurts e-commerce

Sector has the potential to create job opportunities, strengthen economy

LAHORE:

The trend of e-commerce is soaring across all global trading markets as well as domestically. Pakistani entrepreneurs are continuously ramping up their expertise in this segment.

Unfortunately, as a country, Pakistan is facing many challenges while climbing this ladder.

To mention a few, low financial inclusion, weak digital payment infrastructure and lack of trust of global platforms in Pakistani online traders are among the major concerns.

Stakeholders said the domestic e-commerce sector was growing rapidly and had the potential to strengthen the country’s economy by creating job opportunities and linking remote areas to the mainstream.

Elaborating, they said it aimed to develop small and medium enterprises in order to help them utilise their ability to sell products and services digitally. The recent lockdown further enhanced the need for these platforms and growth of the sector.

The Ministry of Commerce, federal cabinet and National eCommerce Council are working on different streams of the ecommerce policy, one of which is financial inclusion and digitisation through payment infrastructure for domestic and international trade.

Officers of these departments said after receiving feedback and insights from various private sector stakeholders, they considered it vital to raise awareness among sellers and merchants of the currently available payment methods.

“Current and upcoming service providers in the market are in need of meaningful feedback from the industry and back-toback dialogue is also required to bridge the demand and supply gap,” said Badar Khushnood, head of P@SHA e-commerce committee and founder of fishery.com.

For the purpose, the SBP needed to play the role of a guide by developing favourable policies and regulations for financial institutions in order to develop suitable solutions aimed at promoting swift adoption of digital payments in Pakistan, he told The Express Tribune.

Currently, almost 90% of payments in Pakistan were being made through cash on delivery, he said. Although many platforms are now offering digital payments but banks and other financial institutions need to enhance their services to meet government’s objective of lifting this sector to the $1 billion mark.

Consumers in Pakistan prefer purchasing items with cash on delivery despite the fact that digital payments are a much easier process.

“One reason behind this is the lack of a digital payment mechanism, another is lack of satisfaction on the part of public, which wants the delivery of goods first before paying for them keeping in view the fact that refunds through digital means consume a lot more time than cash refund,” he added.

Fraudulent activities where traders dispatch fake or low quality products to their customers are another challenge, hindering progress of the country on this front.

Global platforms such as Amazon are not available in Pakistan due to these reasons.

According to Enablers Chief Executive Officer Saqib Azhar, the world still does not trust Pakistan’s digital payment mechanism and its traders.

“Fraudulent activity in this regard is considered cybercrime in Pakistan and there are a few procedures in place to deal with it; these processes are also quite slow,” Azhar said. He called for introduction of proper checks and balances for the e-commerce sector on a fasttrack basis.

“The trend of e-commerce is growing in Pakistan but we should investigate why Pakistan falls on Amazon’s negative list while the company continues to grow its market across the world,” he stressed.

“There should be a time frame for approaching such companies.” Amazon is available in 105 countries and Pakistanis are trying to reach this platform by opening offices in other countries because local addresses and credit cards are not accepted by such global e-commerce giants.

“Government needs to make formal efforts to make the e-commerce sector win its due place in the country as we cannot do much on our own,” Azhar added.