Alipay entry will tap great potential of Pakistan e-commerce market

By Daniel Hyatt
0 Comment(s)Print E-mail China.org.cn, December 17, 2018
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A booth of Alipay is seen during the Alibaba E-commerce Expo in Sydney, Australia, September 21, 2018. [Photo/Xinhua]

Alipay, a subsidiary of Hangzhou-based Ant Financial, has been cleared by the Competition Commission of Pakistan (CCP) to acquire a 45 percent stake in Pakistan's Telenor Microfinance Bank.

The investment of over US$184 million will expedite widespread adoption of digital payments in Pakistan. With internet penetration continuously on the rise, there are an estimated 60 million subscribers of 3G and 4G in the country that can become potential users of the service.

Several mobile payment services are presently operating in Pakistan. Primarily, these have been offered by telecom operators with a large number of cellular subscribers. However, limited international application has kept the penetration rate of the payment portals relatively low. Entry of Alipay, the world's largest mobile payment platform, will intensify competition higher, improve the quality of service and reinvigorate the entire landscape of the industry.

Pakistan's growing young population makes it suitable for embracing cashless payments on a large scale. People under the age of 30 form 64 percent of the population who are always the most likely to take up any new technology. On top of that, high cellular phone use will be a facilitative factor, since the mobile-first strategy for internet-based businesses is very valid in Pakistan.  

Commencement of Alipay's operations in Pakistan will also provide a major push to e-commerce. eBay CEO Devin Wenig recently identified emerging economies like Pakistan as the fastest growing e-commerce hubs of the world. The trend is spreading like wildfire across the country with new online shops emerging constantly. A reliable e-payment gateway with worldwide collaborators is all that Pakistanis need to streamline their online transactions.

Alibaba had already acquired Pakistan's leading e-commerce platform Daraz. Utilizing the reach of Alibaba, Pakistani sellers will now be able to connect with global buyer.  

The digital payment boom will be most beneficial for small and medium-sized enterprises that form the backbone of the national economy. Many of these businesses face difficulties in financial transactions due to being located in rural areas. Alipay might prefer to focus on them as the Pakistani government wants to reduce their business costs and difficulties.

Across the border in China, a new policy is on the cards to increase e-commerce purchases from overseas. Around 63 additional categories are being added to a product list of what can be imported duty-free through online platforms. Moreover, 22 cities, such as Beijing, Nanjing and Shenyang, are also being included in e-commerce pilot zones.

With several food items in the revised e-commerce import list, there is much potential for Pakistani farm produce. Fruits like mango and the mandarin hybrid kinnow can gain extended reach in the Chinese food market and the recent push to increase meat and poultry production could further boost Pakistan's exports.

The targeted online shoppers in China are increasingly focusing on foreign brands. Large businesses and premium brands from Pakistan can reach out to these buyers through Tmall Global – another Alibaba operated e-commerce platform allowing Chinese consumers to purchase products from abroad. Pakistan's small to medium businesses might not have the logistic prerequisites for this platform, but international-standard large companies certainly can.

Ant Financial is coming to Pakistan at a time when trade between Pakistan and China is touching new heights through the flagship project of Belt and Road Initiative (BRI) known as China Pakistan Economic Corridor (CPEC).

Pakistan's logistics and communication infrastructure are witnessing a complete revamp under CPEC with direct effect on its trade capacity. And the most suitable medium of transactions for Pakistani businesses with their country's largest trade partner would be none other than Alipay.

As a result of CPEC, there has been a substantial increase in business and leisure travelers from China accustomed to using their trusted mediums of payment. Now that Alipay is to launch operations in Pakistan, these visitors will be more comfortable in their monetary transactions and can be expected to bring more revenue to Pakistan.

Alipay is entering the Pakistani market when there is an open playing field in the absence of international payment companies like PayPal. Governments of both countries have already abandoned the U.S. dollar for mutual payments and trade among the two is progressing well. The fresh air that Alipay is bringing will have a positive impact on Pakistan's economy and provide new avenues of foreign direct investment.

Daniel Hyatt is a Pakistan-based freelance journalist and commentator.

Opinion articles reflect the views of their authors only, not necessarily those of China.org.cn.

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