E-commerce in Pakistan

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Pakistan's e-trading mainly involves buying and selling goods, and services using internet or telephone, through the use of electronic means such as computer, fax machine, cellular phone, automated teller machines (ATMs), and other electronic appliances with or without using the internet. Online banking, e-tickets, share trading in stock exchange are few examples of e-commerce of modern advancement. [1] With its potential, e-trading can reduce the cost per transaction, increase efficiency, support contest, lower prices and boost international demand. It can open new areas for business in the service sector like online education, medical services, consultancy, and data exchange. It can also provide expansion in trade through domestic and international market research, advertising and marketing. In the financial services industry, it can make simple and quick transactions and transfer of currency at a minimum risk. The unique feature of online trading is that an investor logging in from anywhere, can conduct transactions with nearly any device, via the internet. Inexperienced Traders are also able to familiarize themselves with helpful investment tools, which are widely available on the internet.

Contents

Electronic trading under e-commerce

The term e-trading (or electronic trading) covers a series of systems ranging from simple order transmission service to full-fledged trade execution. e-trade is location neutral and is scalable that mainly providing electronic orders executed from users to the system owned by the seller or manufacturer. Electronic distribution of offer with the provision of transaction details – i.e., description of the offer, quality, cost, guarantee, validity, discounts, quantity etc. – is carried out through automated trade execution. [2] Most commonly, three categories are well recognized under e-commerce, namely: [3]

(i) Business-to-consumer (B2C) e-commerce: customers deal directly with the organization, avoiding any intermediaries
(ii) Business-to-business (B2B) participants are organizations
(iii) Consumer-to-consumer (C2C) participants are individuals, with one serving as the buyer and the other as the seller

E-commerce is the name given to commerce activities, e.g. sale, purchase, transfer, or exchange of products, services, and/or information, conducted using electronic means and technologies. However, in the general sense, e-commerce is referred to as online transactions. Sometimes the terms e-commerce and e-business are used interchangeably but are distinct concepts involving three and four integrations, respectively. E-business is more difficult as compared to e-commerce. The E-marketplace is one of the forms of e-commerce organization with online trading and online shopping, where buyers and sellers meet to exchange goods, services, money or information or any consideration thereof. [4]

E-commerce in Pakistan was first started in 2001. With the ban of PayPal services in Pakistan, eCommerce business companies and merchants had to rely on cash on delivery, and bank payment methods. There was no dedicated online payment service operating in Pakistan, which was also not favorable for online buyers in Pakistan. However, the need was fulfilled to an extent with the launch of mobile payment systems in Pakistan. In October 2009, Telenor launched "Easypaisa" Mobile Account Service through which users could pay bills, transfer money domestically, internationally and even can save money in their Easy Paisa Mobile Account.[ citation needed ] [5] It is no secret that Pakistan has one of the lowest literacy rates in the world and is suffering from an epidemic-level education and learning crisis. Currently the literacy rate of Pakistan is around 59%. Its adverse effects can also be seen in the field of information technology. [6]

Scope of e-trading and e-governance

Asad Ali Shah, former provincial minister, speaking as a chief guest at a Student Seminar organized by the Department of Computer Science of Sindh Madressatul Islam University on “Future of E-Commerce in Pakistan” stated that E-governance is essential for effective governance and administration, and in Pakistan besides e-commerce, m-commerce means business through mobile technology is also growing rapidly, that is giving a boost to our economic and commercial activities in Pakistan. In his speech, Dr Muhammad Ali Shaikh, Vice Chancellor of Sindh Madressatul Islam, said that e-commerce is the future of the country. Earlier, Pakistan had witnessed two big revolutions; one was of telecommunication, and the second was of satellite television channels that changed the old Pakistani society. Now e-commerce is getting its roots in society, but there are also some obstacles in its way, that must be removed, he added. [7]

There is a lot of scope for E-commerce in Pakistan, and most companies (of all categories) are moving to the digital world; the study found that 84% of the organizations have an internet account. Survey statistics reveal that 59% of the organizations have either an in-house or vendor-supported Web server, and 67% of the surveyed organization have a homepage. [8]

Obstacles to e-business

Major obstacles in the way of e-commerce growth in Pakistan are: [9]

Online trading

With the introduction of information technology (IT), e-commerce is producing new fast-growing areas like online buying and selling of financial instruments e.g. shares of public or private limited companies over the Internet, including the sale purchase of commodities, currencies, and gold. With the introduction of the World Wide Web, almost all transactions can be carried out using a computer or mobile phone through proprietary software. Customers have the ability to purchase a wide range of products and services from various industries. [10] Online trade [11] or e-trade is one of the fastest emerging electronic commerce markets globally, Pakistan is enjoying the drive of e-commerce through its youth, rapidly growth proves their competency over latest approach and strategy. Besides its other innovations, E-trading is extending opportunities in the overall retail segment irrespective of business size; not only retailers are entering into the market for sell of products by applying different web portals, telecast selling through different TV channels has also been added by medium or large firms for direct sell to the consumer in addition to their web stores

Online stores

To maintain the progress of active online customers, Pakistan’s pioneer e-commerce portal hosts more than 1.2 million distinctive visitors on its website every month and presents a selection of over 400 products and 16,000 merchandise. E-commerce is likely to develop at a fast rate if the challenge for customer satisfaction and operational efficiency is ensured at a marginal level. [12] Web or phone-based sell/purchase of grocery covers a vast area with good volume and variety. In the recent past, a number of different online grocery stores have started in Pakistan by selling domestic consumer items like rice, lentils, daals, oils, fruit, and vegetables, including household and personal items e.g. washing powder, shampoos, and toothpaste. [13]

Many other sites have been established with the aim of fashion-oriented exports. Today a number of small and medium-scale online stores are conducting business across Pakistan with the delivery of purchased items at the doorstep of their consumers. [14]

In Jan 2021 beginning, a joint venture, and online marketplace, namely leyjao claimed successful collaboration with the sellers during the covid-19 strenuous days, when shopkeepers were incapable of opening their shops during the lockdown, so they stepped in and support them to sell their essential goods, which were permitted during those days. [15]

Investment and finance

Shares trading in stock exchange can provide reward and investment in stocks may increase in value besides paying dividends to its investor. Shareholder receives rewards when the company performs well and the value of shares goes up. But if the company does poorly, the share price falls down and the value of an investment will be reduced. Among other issues, the performance of shares market, economic environment, and political stability are all responsible for an increase or decrease in the value of investments. Therefore, trading in the shares market is regarded as an investment in “risk capital”. Strength to sustain this risk with careful planning results in reward and shareholders can receive the prospective return on their investment as much higher than that on other investments. [16]

Shares-trading

All companies engaged in stock trading with or without on line trading platform are required to observe the Securities and Exchange Commission of Pakistan as the financial regulatory agency in Pakistan for their business. [17] Online share trading in Pakistan is available in 3 stock markets Karachi Stock Exchange (KSE), Lahore Stock Exchange (LSE) and Islamabad Stock Exchange (ISE). An investor with a minimum amount of Pakistani Rupees 25,000/ to 1,00,000/ (or equivalent) can open an account with broker and do stock trade online. Online trading can be availed by resident and non-resident investors, subject to meeting criteria prescribed by the regulatory authority. [18]

Government's support to capital market for e-trading promotion

To encourage the general public towards investment in stocks by availing online facilities, Government of Pakistan has taken some initiatives to have maximum domestic as well as foreign investment in Pakistan’s shares market. Listed below are some steps taken in this behalf:

(i) IPO: (Initial public offering) SECP has introduced the concept of e–IPO, i.e. electronic submission of subscription form, which enables the investors to make application for subscription of shares via internet. [19]
(ii) Financial Literacy: The Lahore Stock Exchange is proactive in encouraging financial literacy in the South Asian nation. In 2014, the LSE commenced an online training competition for participants to be trained and familiarized with the stock market. [20]
(iii) e-Dividend' service: Central Depository Company (CDC) of Pakistan Limited has introduced e-Dividend service for stock market. This service provides transfer of dividend warrant and bonus issue of certificates electronically which saves time and expenses, by crediting cash or certificate in the bank account or investors’ account with his stock broker respectively. [21]
(iv) Payment by Credit Cards: SECP has introduced in capital market payment of fee through credit cards with a view to promote the paperless environment towards its e-commerce regime. This facilitates stakeholders submit returns/forms online without visiting banks or affiliated offices of SECP [22]

E-banking

The rise of e-payment products like e-wallets, m-wallets, multi-purpose cards and smart applications evolved by new technologies like Near Field Communications (NFC) cards and non-bank players like Payment System Operators (PSOs) and Payment System Providers (PSPs) are incoming to the marketplace for joint manufactured goods or service modernization. The State Bank in its annual payment system review for the Financial year 2013-14 has disclosed that Pakistan shows its advancement towards quickly emergent international payments practices, with reasonable increase in usage of e-banking as recorded in Financial Year 2013-14. [23]

Per quarterly reports, 61.7 million transactions through ATMs with an increase of 10.2% in ATMS uses have been witnessed during 2013. [24] The quarterly report of October–December 2014 also recorded 112.3 million of e-banking transactions with reported amount of Rs.8.8 trillion. Also users of internet and mobile banking hit 18.62 million in the period under reference [25]

Online complaints

The Karachi Police of Sindh capital with its plan to facilitate the citizens of Karachi to register online complaints that can be converted into First Information Reports (FIR) is another step towards online applications for the benefits of Pakistani people. This move by Karachi Police is replication of a similar project in Khyber Pakhtunkhwa. [26] The FIR registration for recording citizens’ grievances through the internet without visiting police stations is an exemplary initiative for other mega cities of sub-continent. [27]

Duplicate billing

In Pakistan one can now print or Download PDF copy of Electricity Bill or its Duplicate copy by entering customer/consumer Account Number allotted by the concerned Electric Supply Company, in addition to lodging online complaints against power failure/shut down or other matters affiliated with the relation between customer and power supplying company. [28] [29]

See also

Related Research Articles

E-commerce is the activity of electronically buying or selling products on online services or over the Internet. E-commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. E-commerce is the largest sector of the electronics industry and is in turn driven by the technological advances of the semiconductor industry.

<span class="mw-page-title-main">Stock exchange</span> Organization that provides services for stock brokers and traders to trade securities

A stock exchange, securities exchange, or bourse is an exchange where stockbrokers and traders can buy and sell securities, such as shares of stock, bonds and other financial instruments. Stock exchanges may also provide facilities for the issue and redemption of such securities and instruments and capital events including the payment of income and dividends. Securities traded on a stock exchange include stock issued by listed companies, unit trusts, derivatives, pooled investment products and bonds. Stock exchanges often function as "continuous auction" markets with buyers and sellers consummating transactions via open outcry at a central location such as the floor of the exchange or by using an electronic trading platform.

Business is the practice of making one's living or making money by producing or buying and selling products. It is also "any activity or enterprise entered into for profit."

Commerce is the large-scale organized system of activities, functions, procedures and institutions that directly or indirectly contribute to the smooth, unhindered distribution and transfer of goods and services on a substantial scale and at the right time, place, quantity, quality and price through various channels from the original producers to the final consumers within local, regional, national or international economies. The diversity in the distribution of natural resources, differences of human needs and wants, and division of labour along with comparative advantage are the principal factors that give rise to commercial exchanges.

<span class="mw-page-title-main">Dividend</span> Payment made by a corporation to its shareholders, usually as a distribution of profits

A dividend is a distribution of profits by a corporation to its shareholders. When a corporation earns a profit or surplus, it is able to pay a portion of the profit as a dividend to shareholders. Any amount not distributed is taken to be re-invested in the business. The current year profit as well as the retained earnings of previous years are available for distribution; a corporation is usually prohibited from paying a dividend out of its capital. Distribution to shareholders may be in cash or, if the corporation has a dividend reinvestment plan, the amount can be paid by the issue of further shares or by share repurchase. In some cases, the distribution may be of assets.

<span class="mw-page-title-main">Security (finance)</span> Tradable financial asset

A security is a tradable financial asset. The term commonly refers to any form of financial instrument, but its legal definition varies by jurisdiction. In some countries and languages people commonly use the term "security" to refer to any form of financial instrument, even though the underlying legal and regulatory regime may not have such a broad definition. In some jurisdictions the term specifically excludes financial instruments other than equity and fixed income instruments. In some jurisdictions it includes some instruments that are close to equities and fixed income, e.g., equity warrants.

<span class="mw-page-title-main">Financial services</span> Economic service provided by the finance industry

Financial services are economic services tied to finance provided by financial institutions. Financial services encompass a broad range of service sector activities, especially as concerns financial management and consumer finance.

<span class="mw-page-title-main">LSE Group (Pakistan)</span>

LSE Group, formerly known as Lahore Stock Exchange is a Pakistani investment company based in Lahore, Pakistan. LSE Group consists of three companies: LSE Capital, LSE Financial Services, and LSE Ventures, all of them are listed on the Pakistan Stock Exchange.

The ex-dividend date is an investment term involving the timing of payment of dividends on stocks of corporations, income trusts, and other financial holdings, both publicly and privately held. The ex-date or ex-dividend date represents the date on or after which a security is traded without a previously declared dividend or distribution. The opening price on the ex-dividend date, in comparison to the previous closing price, can be expected to decrease by the amount of the dividend, although this change may be obscured by other influences on the stock's value.

<span class="mw-page-title-main">Securities market</span> Component of the wider financial market

Security market is a component of the wider financial market where securities can be bought and sold between subjects of the economy, on the basis of demand and supply. Security markets encompasses stock markets, bond markets and derivatives markets where prices can be determined and participants both professional and non professional can meet.

The phrase street name securities or "nominee name securities" is used in the United States to refer to securities of companies which are held electronically in the account of a stockbroker or bank or custodian, similar to a bank account. The entity whose name is recorded as the legal owner of the securities is known as the "nominee owner," and that entity has ownership rights in the security. The nominee owner holds those ownership rights on behalf of the true economic owner who is referred to as the beneficial owner.

An e-commerce payment system facilitates the acceptance of electronic payment for offline transfer, also known as a subcomponent of electronic data interchange (EDI), e-commerce payment systems have become increasingly popular due to the widespread use of the internet-based shopping and banking.

In finance, securities lending or stock lending refers to the lending of securities by one party to another.

<span class="mw-page-title-main">Stock Exchange of Mauritius</span> Stock exchange in Port Louis, Mauritius

The Stock Exchange of Mauritius (SEM) ; is an organization responsible for the operation of Mauritius's primary stock exchange located at Port Louis. The SEM operates two markets: the Official Market and the Development & Enterprise Market (DEM). There are 40 companies listed on the Official Market representing a Market Capitalization of nearly US$5.3 billion, the DEM presently has 48 companies listed with a market capitalisation of nearly US$1.5 billion as at 31 July 2012. SEM is one of the leading Exchanges in Africa and a member of the World Federation of Exchanges.

<span class="mw-page-title-main">United Bank Limited</span> Pakistani multinational commercial bank

United Bank Limited (UBL) (Urdu: یونائیٹڈ بینک) is a Pakistani multinational commercial bank which is based in Karachi, Pakistan.

<span class="mw-page-title-main">Stock</span> Shares into which ownership of the corporation is divided

Stocks consist of all the shares by which ownership of a corporation or company is divided. A single share of the stock means fractional ownership of the corporation in proportion to the total number of shares. This typically entitles the shareholder (stockholder) to that fraction of the company's earnings, proceeds from liquidation of assets, or voting power, often dividing these up in proportion to the amount of money each stockholder has invested. Not all stock is necessarily equal, as certain classes of stock may be issued, for example, without voting rights, with enhanced voting rights, or with a certain priority to receive profits or liquidation proceeds before or after other classes of shareholders.

SIX is a key financial market infrastructure company in Switzerland. The company provides services relating to securities transactions, the processing of financial information, payment transactions and is building a digital infrastructure. The company name SIX is an abbreviation and stands for Swiss Infrastructure and Exchange. SIX is globally active, with its headquarters in Zurich.

There are many types of e-commerce models, based on market segmentation, that can be used to conducted business online. The 6 types of business models that can be used in e-commerce include: Business-to-Consumer (B2C), Consumer-to-Business (C2B), Business-to-Business (B2B), Consumer-to-Consumer (C2C), Business-to-Administration (B2A), and Consumer-to-Administration

DEGIRO is a European brokerage company based in Amsterdam. It was founded in 2008 by a group of five former employees of Binck Bank to service the professional market. In 2013, DEGIRO started offering its stockbrokerage services to retail investors, which gives them online access to security exchanges. Investors can buy and sell such securities as common and preferred stocks, fixed income (bonds), options, mutual funds, warrants, and ETFs via an electronic trading platform or by phone.

<span class="mw-page-title-main">Securities market participants (United States)</span>

Securities market participants in the United States include corporations and governments issuing securities, persons and corporations buying and selling a security, the broker-dealers and exchanges which facilitate such trading, banks which safe keep assets, and regulators who monitor the markets' activities. Investors buy and sell through broker-dealers and have their assets retained by either their executing broker-dealer, a custodian bank or a prime broker. These transactions take place in the environment of equity and equity options exchanges, regulated by the U.S. Securities and Exchange Commission (SEC), or derivative exchanges, regulated by the Commodity Futures Trading Commission (CFTC). For transactions involving stocks and bonds, transfer agents assure that the ownership in each transaction is properly assigned to and held on behalf of each investor.

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