Dubai: Ask an e-commerce vendor in the UAE or the Gulf what their biggest hurdle is, chances are they will point a finger at the launch phase. The processes involved are many and certainly not limited to securing the technological knowhow. They can be time consuming and eat into a sizeable portion of the upfront costs before the actual launch of services, vendors say.
It may explain why there aren’t that many e-commerce ventures emerging out of the starting blocks in the region, with the virtual marketplace dominated by the early entrants and who have since been able to secure new rounds of financing from venture capital. Even cash-rich business groups with sizeable brick-and-mortar retail exposures looking to go online are the exception.
The global payments company MasterCard will want to change that perception.
“We recently came up with a product ‘Simplify Commerce’ that helps a business turn into a full-fledged online vendor in 2 minutes flat ... and it’s not a statement of intent on our part but has proved doable,” said Raja Rajamannar, the New York-based Chief Marketing Officer for Global Products & Solutions at MasterCard. Simplify Commerce has had a partial rollout in select markets, but a date on its likely introduction in the region was not revealed. (What it does is allow vendors to create a merchant account and a payment gateway into a single package.)
“It’s not true that as a payments company, our focus remains exclusively directed at the physical transaction. What’s true is that cash still remains the dominant transaction mode, in some markets making up well over 60 per cent of the total. That being the case, MasterCard cannot lose focus on the traditional payment mode.
“What we are doing is have a hybrid model where we straddle both the physical and digital sides of offering payments solutions. On digital we are getting there through alliances with some very smart entities as well as by running our own innovation labs.”
Another prickly issue
There is another prickly issue that global payments majors receive a lot of angst from the merchant community — that of processing fees.
According to sources at some local e-commerce vendors, the “ideal” solution from their perspective would be for such fees to be under a different slab compared with what a physical store operator has to pay up.
But Rajamannar, who was in Dubai for an internal brainstorming session of the company, believes this is not an issue for the payments vendor to deal in. “Merchants have to flag it with their banks and needs to be resolved at that level; this has been our consistent stand right through.”
Local online vendors, meanwhile, wouldn’t mind if a good majority of transactions are done using credit cards. Currently, payment on delivery seems to be the favoured option for buyers here, who prefer the sense of security this offers as opposed to giving their card details.
For vendors, this delays the receipt of payments due to them unlike with those done through cards. “The e-retailing marketplace is cognisant of the continued concerns over online security,” said Ahmad Zedan, Vice-President of Marketing at MarkaVIP. “It’s not a concern specific to any single portal but runs industry-wide.
“This is why MarkaVIP will continue to spread awareness to change consumer perception about security and how the industry is working on putting up the best defences on their individual financial data. The right of a buyer’s privacy will be honoured at all times — that’s the word we are getting out into the market.”
According to MasterCard, the optimum firewall against potential breaches will come when chips become commonplace for all cards. “Also, we have created a system of a “virtual number” each time a buyer does a transaction with a vendor online,” said Rajamannar. “This way, the original card details are not put out, but the virtual numbers that builds an additional layer of protection.”
These are all incremental steps, but in the e-commerce world such steps do leave deep imprints.
