Daily Times

KARACHI: Pakistan e-commerce market size has the potential to reach several hundred million dollars in the next five years from its current size of $30 million as the government is promoting financial inclusion at faster pace, GSMA study said quoting estimates of industry stakeholders.

The e-commerce industry is also at an early stage, with 70% of e-commerce activity based in urban areas: Lahore accounts for 21% of total e-commerce traffic each year, followed by Karachi with 20% and Islamabad and Rawalpindi with 15%, GSMA study “Building Digital Societies in Asia: Making Commerce Smarter”.

Pakistan has the foundations in place for digital commerce to take off but for providers to take advantage of the opportunity, key barriers still need to be overcome, including an informal and cash based financial system and lack of availability of a localised online platform that accepts all payment solutions.

It is no surprise that, according to the World Bank, the number of unique digital accounts lies at only 16 million, covering just 13% of the adult population. This is much lower than the average in South Asia of 46% and is one of the lowest in the world.

The government can develop consumer and merchant trust in digital commerce in two ways: by digitising their systems for access and payment, and by developing a supportive legal environment.

In Pakistan, there has been some digitisation of government payments but there is room for growth as the government’s Vision 2025 includes e-governance, e-commerce (including efficient digital payment solutions) and e-services (including education, health and enforcement of intellectual property rights).

The government could also digitise collections, such as payment of taxes, penalty fees for small offences and utility bills, to grow the P2G sector and increase account activity. Besides, digitising government payments, such as salaries and pensions, as well as social benefits, would create a source of funding for these branchless banking accounts.

On the legal side, there are four areas that are essential to increase user confidence in digital transactions: e-commerce transaction compatibility, consumer protection, privacy and data protection, and cybercrime.

Governments have a crucial role to play in creating an enabling environment for digital commerce, and ensuring it remains part of digital society initiatives. This includes developing a strong and competitive environment by fostering innovation and investing in research and development; building consumer trust in electronic transactions and ensuring consumer protection; increasing adoption and usage of digital accounts by digitising government payments (such as salaries, pensions and social benefits); and digitising the collection of payments (such as taxes, penalty fees and utility bills) to grow P2G transactions.

The study suggested the government designing an effective and actionable strategy based on a realistic assessment of a country’s readiness in terms of digital commerce. To develop a successful strategy all government stakeholders, such as ministries of commerce, finance, information technology and communications, as well as regulators from the corporate, financial and telecommunications sectors should collaborate with industry players as part of an inclusive and participative process.