Two Pak companies set to establish digital payment gateway

Avanza Group and Premier Systems announced to invest over $5 million in the gateway, which will connect individuals with merchants and banks.

The companies will set up the joint venture as Avanza Premier Payment Services (APPS), reports a national English-language daily.

The size of Pakistan’s e-commerce market is estimated to be $1 billion, which should be $30-$40 billion in a country with a population of 207 million, said Mahmood Kapurwala, CEO of Avanza Group, which partnered with NCR, Avaya, Microsoft, and IBM. “We are looking at this gap as an opportunity,” he said.

Financial technology (fintech) will add about 4 million jobs, 93 million bank accounts and $36 billion annually to the gross national product (GNP), and $7 billion to the government’s net revenue by 2025, according to McKinsey and Company, a worldwide management consulting firm.

“Pakistan is at the cusp of a digital revolution and we are proud to be part of that drive,” said Arshad Raza, CEO of Premier Systems, an information communication technology (ICT) infrastructure provider, founded in 1993.

APPS claims to be the first fintech in the country to obtain payment system provider (PSP) and payment system operator (PSO) licences from the State Bank of Pakistan (SBP).

The regulator has issued these licenses on the condition that the company has raised a paid-up capital of Rs200 million.

APPS will serve as a shared payment system to work on any platform, similar to 1Link, which connects ATM machines of different banks.

It will move Pakistan towards digitising major institutions, such as merchants, schools, billing industries, mutual funds and other corporate entities by providing a digital gateway, said Adnan Ali, CEO, APPS.

Our economy is still reliant on the cash-on-delivery (COD) model, with our e-commerce industry consisting of 90% COD, indicating that Pakistan has yet to accept digitalisation, he said.

The newly-founded company plans to incentivise brick and mortar businesses with free online services, like building websites and digital marketing. It will only take a certain share in the profit that comes through online businesses.

It has been observed that the key reason why shopkeepers do not want to avail the presence of online platforms is that the providers of technology solutions demanded a share in total revenue, offsetting the shopkeepers, who had no experience in the online business.

Increase in e-commerce acceptance will also help grow the overall retail market when people will have the choice to buy products present in other cities, said Avanza Group CEO.

“If everything remains on track, earning a revenue of Rs400 million will not be a big deal,” he said.