KARACHI: Alipay, the China-based third-party digital payments platform, will commence operations in Pakistan by the end of this year, according to Irfan Wahab Khan, CEO of Telenor Pakistan. 

Ant Financial, the parent company of Alipay, AliExpress and Alibaba, is currently completing legal formalities, including approval from regulatory bodies such as the State Bank of Pakistan (SBP) and the Competition Commission of Pakistan (CCP), officials told Arab News.
In March, Ant Financial purchased 45 percent of Telenor Microfinance Bank for $184.5 million “to bring mobile payment and inclusive financial services to individuals as well as small and micro businesses in Pakistan,” Khan told Arab News.
Alipay, which has 520 million global users, is expected to bring innovative ideas and payment solutions to Pakistan where more than 100 million Pakistanis have no formal access to banks. 
“27.5 million Pakistani adults cite distance to a financial institution as a barrier to opening a financial account,” according to a World Bank report.
With the rise of Internet and smart-phone usage in Pakistan, there are now 58 million broadband subscribers in the country, with huge potential for further growth.
According to the Pakistan Telecommunication Authority (PTA), there are now 56 million 3G/4G subscribers, a penetration rate of 27.18 percent, and 150 million cellular subscribers — 72.81 percent penetration.
According to World Bank reports, Pakistan is leading the way in South Asia in digital finances and branchless banking, with 6 percent of adults having mobile accounts compared to South Asia’s average of less than 2.6 percent. But many Pakistani consumers still prefer cash instead of digital payment methods.
“Our economy is still reliant on the cash-on-delivery (COD) model, with our e-commerce industry consisting of more than 90 percent COD, indicating that Pakistan has yet to accept digitalization,” Mahmood Kapurwala, CEO of Avanza Group, told Arab News. Avanza recently launched the Avanza Premier Payment Services (APPS) online payment gateway.
Pakistan’s rapidly growing e-commerce market is currently estimated to be worth $1 billion.
According to the SBP, “Various benefits such as comfort, wider selection variety, ubiquity (24x7 service), and interaction possibilities to make an informed decision are the main sources of attraction to the consumers. Businesses, meanwhile, are venturing into digital platforms to increase their reach (relative to brick-and-mortar stores).”
Alibaba, China’s e-commerce giant, recently acquired the online shopping portal, Daraz.pk — another sign of increased Chinese interest in Pakistan’s financial sector, along with various mega-projects that are part of the China Pakistan Economic Corridor (CPEC).
While several companies have already established themselves in Pakistan’s e-commerce market, there is still enormous untapped potential and room for newcomers, particularly for a payment gateway that caters to mobile-wallet holders looking to pay for small-value transactions.
According to the SBP, “The regulatory environment is also facilitative, as SBP has offered intensive guidelines for authorized financial institutions and potential domestic third party service providers to build an exchange medium. This would not only lower operational costs relative to comparative foreign operators, but would also help tackle arbitration issues more efficiently.”