Pakistan’s Minister of State for Information Technology and Telecommunication said that e-commerce and e-payment facilities are an important force for economic development.
On Monday Anusha Rahman, Minister of State of Information Technology and Telecom said that a gateway between e-commerce websites and financial institutions is vital for Pakistan and pledged the support of the IT ministry to the industry, according to APP.
Government calls for cooperation to create strong e-commerce sector
“The IT ministry will continue supporting and facilitating e-commerce and e-payment gateway in Pakistan,” said Rahman during a meeting of the Inter-Ministerial Committee for establishing the e-payment gateway in Pakistan. “E-commerce being a major component of economic development is a vital element of national economic policies across the globe,” she continued.
It is up to the government to provide the conditions in which such a gateway can operate. “For successful establishment of an e-commerce gateway, a comprehensive e-commerce policy, comprising guidelines, rules and regulations along with dispute resolution and remedial mechanism for consumers, is a must.”
Rahman called on all stakeholders to work together in creating a functioning e-commerce environment in Pakistan. After the State Bank of Pakistan (SBP) Payment System Operators and Payment System Providers, Rahman believes that the Ministry of Commerce should work with international companies including PayPal and Alibaba.
Pakistan can now welcome PayPal, Amazon and others
Representatives of the SBP told Rahman that it had issues four licenses to major financial institutions allowing them to operate branchless banking services around the country. Other banks have also applied to handle domestic transactions outside of branches.
“Our export-based remittances as reported by the SBP are not representing actual figures,” said Rahman. She pushed the SBP to ensure that real figures were reflected.
Rahman announced that Pakistan now fulfills anti-money laundering and counter-terrorist financing requirements set by the Financial Action Task Force (FATF). The country was previously on the organization’s grey list, which prevented international tech companies from doing business in Pakistan.
Now that Pakistan is considered safe to do business, international tech giants such as PayPal, Amazon and eBay will be invited to start operations in Pakistan. The initiative is part of government efforts to ensure that information technology is used to drive economic growth and benefit the Pakistani population.
Encouraging trends for future of digital business in Pakistan
Of course the rise of digital commerce in Pakistan depends heavily on rates of internet access, as well as collaboration among mobile operators, e-payments companies and government departments. Telecoms companies have recently been investing heavily in infrastructure which means that by 2020 3G internet will be accessible to 90% of the population, and mobile broadband will reach 40%.
As it stands nearly 50% of Pakistani adults have access to a cellphone but do not have a bank account. This increases the importance of mobile money, or the aforementioned branchless banking, in the country.
While e-commerce looks set to grow in Pakistan there is great potential for government payments to be digitized. However in order for this to happen the costs of delivery and rate of use of branchless banking need to improve.
The GSMA recommends that fintech companies should partner with branchless banking operators to create products which target different sections of the population. With greater cooperation there is a huge potential for growth in the industry in the country.
E-commerce potential waiting to be tapped
On the commercial side there has recently been a huge boom in online shopping, despite the fact that Pakistan lags behind neighbors China and India. According to the data, spending in Pakistan’s e-commerce market will reach $600 million by 2017.
There are plenty of new online ventures being founded, and those which already exist are growing rapidly. However for the market to reach its full potential there remains a lot of work to be done.
With increased rates of internet access comes greater exposure to social media such as Twitter and Facebook, which impact marketing trends and how opinions are formed. Life in Pakistan will become increasingly digital, especially given the trends in smartphone use.
While 73.2% of Pakistanis have a cellphone, there are now an estimated 9 million that now use smartphones. Internet usage increases with smartphone ownership, making online business far more accessible.
The growth of digital business in Pakistan has been made possible by the improvement of many different factors, with the security situation being one of the most important. By demonstrating to the FATF that the country is no longer a haven for money launderers and terrorist fundraisers, the Pakistani government has allowed for a new period of growth.
Online payments have the potential to drive economic growth for a new generation of entrepreneurs, and it is an exciting time for Pakistan.