E-commerce market booms as Pakistan adapts to digital payments

The country’s e-commerce market has witnessed a year-on-year (YoY) growth of 78.9pc and 33.3pc in volume and value, respectively, in 2020, as the coronavirus lockdowns forced people to use digital payment systems, according to the latest e-commerce data by the State Bank of Pakistan (SBP).

According to a report by Business Recorder, the market experienced the boom as the coronavirus pandemic pushed businesses to evolve the ways in which interact with consumers, with many shifting towards online sales and social media marketing methods.

State Bank’s e-commerce data also points out that e-commerce revenue increased sharply by Rs2.3 billion to Rs9.4bn in Q4 FY20, bringing the yearly e-commerce revenue to Rs34.8bn.

According to the details, e-commerce transactions by debit, credit and prepaid cards in FY2020 increased by around 88pc and 18pc in volume and trade as compared to last year.

Such transactions were highest during the 2nd quarter of FY20 when customers did not physically visit the stores due to lockdowns and fear of catching the virus but fell after the lockdown was lifted in Pakistan, indicating the need to develop more long-term policies in the retail and banking sectors to support e-commerce.

Further, the number of e-commerce merchants registered with banks has also increased by more than 30pc, totalling 1707 as of June.

It is pertinent to mention here that most banks in Pakistan do not allow online payments through debit cards whereas most customers rely heavily on cash-on-delivery (COD) to avoid being scammed and paying higher taxes.

Moreover, traditional street-side businesses add an additional 2.5pc fee on the use of credit and debit cards, discouraging customers from shifting to digital payments.

 

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