Enemies at the Gate. Bas Kardo yeah pouchna kay PayPal Kab Aye ga?

There’s a lullaby for suffering

And a paradox to blame

But it’s written in the scriptures

And it’s not some idle claim


Every month, every week, every day, someone is hell bent on asking, probing or claiming something to do with a payments play. I say “stop it.” The answer is self evident. Like all good things its linked to patience and has less to do with payments and more to do with “Rails”. Remember that word…

I have read with interest the claims of how Ant/Alipay will redefine the game, how Pakistani Banks need to be scared. Headline news ‘chippy’ is that, Ant also bought into a Bank. Albeit not a 100 lb industry gorilla but the multiples it paid totally make it feel like that.

Minus the inconsequential independent players, not for their lack of trying, product, or smarts, but lack of burn capital, my sense is, that before there is real traction they will be long gone.

We also have the self professed successful entrepreneurs /VC wanna bees also trying to lend their name to other people’s dreams in hope of collecting when they build the user base, but at the moment all those efforts are really just that.  Efforts..

Fonepay 100k+ downloads, please shut off ad monetization, first make your app work. Keenu 50k+ Downloads, can’t find any real places to use the app really. SimSim just wont work, wont link won’t do much.100k+ downloads. Even if it’s in the next band of downloads, and combined the three market entrants in the private space that have prob done the most market dev activities dont have more than 400k Downloads combined, then this really is a non starter as I saw some of the folks discounting products to acquire customers like crazy. It takes roughly 2-3$ to acquire customers online. So 400,000 X $3 =1.2M  so if the aggregate customer acquisition cost is higher than this for the three, the writing’s on the wall already. Simply some one can build a better product and run ad-campaigns target people and in 5m$ if they have the tech they can acquire 1.6M customers give or take. One of the cheapest places in the world to drive online traffic atleast for now.

This is not a naming and shaming exercise but an exercise in introspection on the state of play. But not a single one of the wallets or payments app worked in the first go, some didn’t get a confirmation code, some couldn’t link to the bank account(if i cant add money i cant use it), others aren’t accepted anywhere besides random places where I would have no need to go, let alone do a cashless transaction. It’s just not fun the use case is there, but the traction is missing, because frankly with all the Wallets/Apps and products out there most are led/made/created/engineered by traditionalists(Bankers) in hipsters clothings Or guys who made stuff for the financial service sectors and decided to take a swing at this. We need a mindset shift of speak to the user as opposed to speaking at the user. Some of the CEO comments on FB have been short of respectful. Saying”your phone has an issue” etc etc. That wont win hearts and minds, the Play Store reviews tell the same story from a consumer perspective.

An other set of potential players are the old hard ware guys(Think Unisys, IBM, NCR etc) Some retired some not, they have the horsepower and the connections to the regulators and the old guard, they also have access to old money and access to the policy makers at large. Groups of these rat-packs are also surfacing up in conversations. They overlap in the “services to the banks” segment but they have grey matter and greenbacks. I just hope they speed up the game, some are as usual just busy at “Award Ceremonies/Local events” daily so its tough to tell how much of the real product work has been done.

What about our friendly neighborhood Banks you ask?  Here’s the CliffNotes version of it all:

HBL: Probably best aligned, gets the big picture, has had past failed attempts to do payments and is the 100lb gorilla that will ultimately build a walled garden for all its talk about openness. Is working in stealth on a new play.

ABL: PayPak and back nothing much seems to be going on, at least there’s no public narrative to a payments play

MCB: MCB MCB aye, they got an IPG going for them but besides that not much really happening, they seem to be happy to be a switch and to have a wallet app. 50k Downloads. Not impressive.

UBL: Omni was a confused product with no plans of growing up to be a payments services business. UBL digital is the new banking ++ app again with 100k+ downloads. They are busy building design centers with screens and areas to showcase UX/UI innovation. Too distracted by pretending to be something they are not, also fyi, by adding a picture of your new building to every piece of collateral you produce is just a tad much.

BAF: Monet, Monet,Monet, I guess they have run out of favours with their Sugar DUDS (Dadies under the Desert Sun). The Banks seemingly up for sale based on market “hawa” The MBILL app from days gone by 2014 has 500+Installs. I guess the Dhabi Group pulled the plug. Too focused on the fees driven models at large.

Faysal: Another contender looking for a suitor. Lost the cards lead, did not innovate to catapult in to mobile/payments space.  Wholesale management changes, seems like it had more marketers per capita than cards.

Meezan: Too much cash, no where to deploy, no focus on tech, also time for the foreign partners to exit. No one seems to be bullish on Pakistan long term from the GCC so thats 3 banks confirmed primed for a sale or partial offloading.

JS: Small scrappy, saying all the right big words, API storm up the ying yang, a lot of talk a lot of coordinated PR. Outcomes will determine the fate long term. How open will open be?

TMB: The luckiest F off them all bar some folks who got out too soon. Jury is out, Telenor is telenor its driven by ARPU , ANT could give a lesser F about ARPU. Short term lots of stuff to do to really build out the tech.

The common theme at most banks is a recipe. The recipe calls for one part ex-Telenor/Easypaisa resource + one part internal ADC + Ceo’s New Vision = Digital Play. Whilst Telenor and Easypaisa have helped create the brand and create consumer value, its dis service is that everyone claims to have been the “key” person at Telenor as they fish out to other banks. That combined talent pool barring a few extra ordinary people 5th , 6th level down staffers with no idea of the big picture.

From the looks of it, there is no promising marriage of masters of big data and global finance happening any time soon in Pakistan. There are unions yes, but not marriages yet. That needs a lot of work. I bet you, Google is eyeing this , even if from the sidelines. There is too much FOMO at Google. They missed so many markets in so many verticals, but they got into India on time. Their wallet is “THE” Wallet. Tez.. They have crushed Paytm which is backed by Ant. So now you get who the enemies at the gate are?

Let me spell it out for you, Its Google and Ant. Tez had 7.5m Users in India right off the bat. But then something more interesting happened. While the growing user-base is a decent indicator of the app’s early success, Google was even happier with the actual usage stats. At an event, Google’s VP of Product Management for the Next Billion Users program, Caesar Sengupta, said that the app has now processed a whopping 140 million total transactions. Not only that but the average transaction today is now four times higher than during the app’s launch period. In addition, National Payments Corporation of India (NPCI) data suggests that Tez accounted for 70% of all UPI transactions between October and November. Sengupta also proudly announced that there are now over 500,000 (“5.25 lack”) merchants on Tez, with more and more small businesses making and receiving payments through the service every day. Scale much? Caesar tweeted this on march 1st “From 17.6M (Aug) to 171M trans (Feb). 10X in 6 months! Amazing growth in UPI. “

As I was updating the post to publish, this just happened. To give you an idea of what real scale means. Compare the above data to the tweet below:

Albeit its Google but this is how do shit right. Starts with the “rails”. Google went in early and went in big, Not every thing worked but they had a plan.

So Ants rails are TMB, not any fancy tech, they have enough of their Alipay stuff hanging around to borrow a leaf, a page or a stack or say everything. TMB is the conduit to build AliPay Dreams on top. Ant got an operating license a local player, an astute management team and clearly Easypaisa the most formidable brand in the country powered by TMB. So can Easypaisa do 171m transactions today, probably not. Can Ant make it happen ? for sure it can. So Both Ant and Google have battled this out In India, Ant backed Paytm is doing 30% payments vs Googles doing almost 70%.

Build the rails everyone, so that the last mile delivery/delivery platforms/services/OTT/Biller aggregation/bill presentment/everything you want to be able to do is possible in an app or on a platform.  If some one can dream it they can connect to your rails.(API)

Gotta build the plumbing before you build a fancy house. If the plumbing is great everything flows through. Please dont ask when PayPals coming, it’s almost irrelevant. We need the enemies we have at the gates to faceoff in person so that the real benefit comes to the market. Google has surprised me personally. From its experience in India this market is similar yet they’re not even present on the ground in Pakistan. There is much talk but no action. Just market sensing using their stellar sales teams.

A multi 100bn$ companies only excuses is that they don’t have the might, muscle, man power   to be incorporated in Pakistan given potential legal issues. For all the lip service about inclusion and other things. Ant jumped in, feet first. Ant didn’t have legacy,  legal or taxation issues that Google has in relation to AD-Sales and dollars being exported out of the country(I’ve written about those challenges in the past extensively)

The Google GO-Jek style marriage is great for Pakistan. Google missed Grab but couldn’t miss Go-jek, there’s more to Go-Jek than ride hailing ….Its a Payments play and POS play and eventually rich data from malls, eateries, public domains, travel drop off points, offline to online attribution. If Google knows where you are going, what route you are taking, what transport type you are in, imagine the use case where in,  it predicts your fuel usage routes you to the nearest gas station, does deals with “energy suppliers”, knows that you like to buy candies before you pick up kids on the weekend from practice, it sends you not just digital mail it will eventually re establish direct mail, coupons either offline/online or hybrid, so it control the entire experience and best of all a share of grocery basket by adding those points of data and putting a mental marker/aka pixel on you as a person and your habits and locally predict what comes next in your retail and personal experiences.  You cant accuse Google of not doing its HW. See what Go-Jek is doing:

By going after it(Go-Jek) Google personified hyper local at its best, It had the maps and the online piece it now needs the hyper local pieces to weave the next generation narrative for the next billion users. Google recently got street level addressing in Pakistan also. Just fyi, its location services will allow it better economies of scale now compared to any other map provider.

Now we come to Ant, they have the other end of the spectrum figured out, they have payments and credit scores and lending, 95+Bn$ worth of it. They did what banks couldn’t do in 50 years. Case in Point below. Payments, Wealth Management, Credit & VirtualBank all rolled into one.



So their 150bn$ rock star Unicorn status is well deserved. They are the other party at the Gate. Neither Google nor Ant are our enemies, they are each others arch rivals. For us they are frenemies at worse, and economic agents of change at best. But our governments have been unable embrace or invite either. Ant came based on a strategic need to find consumers for products and expand to support OBOR. They could care less about issues related to opening offices, like Google and FB(I forgot, FB is also the Frenemy here) and their overly protective hovering helicopter parents in (Policy) . Ant has Alibaba going for it and with it, complete and unconditional access to China, its exports and goods and services, there is some talk about to setup a TaoBao style model with the potential acquisition of one of the local players just for ease of brand and export PK made goods overseas. Remains to be seen.

The Chinese came here of their volition they didn’t need to be cajoled and courted, they are entering emerging markets and need new users for their good services, technologies and beta testing. The Americans need to be invited, no one in Govt has gone to the likes of FB or Google and said, we welcome you, but I suspect that’s the expectation, if India is any cue, where in the Google Vps continually thank the Govt as its anchor partner and vice versa. There’s a lot of song and dance. Google employees 5k+ ppl in India. The whole NBU(next billion users) focus is in India. Even though Google won’t publicly admit but as can be seen by data that its Railway based Internet Tie up didn’t really work out as expected no less its space saver app and Tez are doing gang busters. So maybe there is hope for them coming to Pakistan and changing up the mix some what. But you have to come here to play you cant just use Android devices to collect Maps data etc and build services:)

FB is doing Whatsapp payments in India, it came late to the party too, but its a great use case for PK where in every one with a smart phone seemingly is on Whatsapp, no additional app needed for payments and you can get all the hyper local stuff you can with Tez  or AliPay for example. Google had to add messaging to Tez in India from what I can tell in a retaliatory market move with Whatsapp’s payments coming to town.

As of February 2018,  WhatsApp had 200 million Monthly Active Users (MAUs) from India that apparently make up a size-able chunk of its 1.5 billion global MAUs. Because of the numbers and its popularity in the region, India is the perfect location to test a potential moneymaker like the WhatsApp Payments feature.

But with every new modification and addition to the product, WhatsApp Payments is certainly nearing a global rollout.

So as these enemies eye the prized Pakistani consumer, its anyone’s guess what happens next. If PayPal was really smart, they’d beat these 3 to the prize and get started. Just the brand equity would drive it to universal adoption. But that’s just my thinking could be a completely different scenario in reality. The first one to tie up Remittances and ACH+BCH will win hard and fast. The use case to be solved is: an App where a user, say in the the US, adds their credit card or their local bank account and selects a biller in Pakistan(say their parents electric bill) and pays it real time. That will be the game changer, not alliances with the payment transfer companies to do cash-outs, gotta remove as many middle men as possible and in the process build apps that can do real scoring models and get in to the micro lending model, if you can get Islamic finance built in to it, that will be the big differentiator that will make banks and cards completely irrelevant in Pakistan.

Most of all if the regulator was smart they would do away with this PSO/PSP stuff and figure out a quick model to initiate the global/local players.

If the domestic/international investors were smart they would consolidate their assets and see the news happening around them in the hyper local space. I.e Insurance companies making a play for the likes of Go-Jek with follow on investment after Googles. Smart money says, its time to bet now, and bet high.


Its Complicated. The curious case of Fintechs, Banks and Asma.

It truly is complicated, every one just graduated from MAU(Monthly Active Users) to AI (Artificial Intelligence) and now on to Blockchain. (Formerly known as Block Chain). We are still catching up on financial inclusion.

Before we get in to Artificial Intelligence lets talk about basic intelligence or due diligence. With news daily of X “local” company meeting Y “foreign” company and productive and constructive meetings + now news of strategic partnerships etc is very interesting, but has any one really looked at the fundamentals of taking financial services to the un banked? Or to grow financial services access beyond where they are.

To this date as an individual I cant plug in to any National Registry API to do citizen lookup or verification. So If I/any one else wanted to build an app to verify some ones ID, we cant actually do that. Happy to pay a service fee to do that lookup(Binary, Y/N). Why is that not possible? Why is public data not publicly available? For a fee of course, if it is, why isn’t this info public and being advertised nationally? Forget big data, we cant even get small data sorted out.

Data is going to be king even in Pakistan soon enough, so as a paying customer of the National Registry why can they offer enterprise services and access control and bio metric services? when I cant build my own, especially when as a citizen I’ve paid for the cost of building that system by taxes and fees. What happened to my right to access information and build services on top? Basically the state has decided it wants to be in that business hence it will not be good for the ecosystem long term(Discussion for a different day). But what that means is, innovation beyond the state paid actors and Telcos and Banks is really limited because the average App developer cant get to it via API or build innovative services that linked to identity in any way. Banks may/maynot allow you to interconnect with their APIs to run some of these verifications but that’s a walled garden approach. Rest assured, Scammers and the other lot don’t need API access they have and will continue to thrive by figuring out simple exploits. That truly is why its complicated, because it is fairly simple to counter these exploits but no one seems to be paying attention.

No less the real issue is with the floating copies of ID cards every where, god knows what happens to them when you give them to you bank or to you mobile operator or to the travel agent or where ever else you use the hard copy version(Schools/Clubs/Real Estate/Wills/Contracts, etc). Or what they can be used for.

Fintechs and Banks cant grow up and expand till there is absolute consumer confidence that your information is secure and a consumer protection agency is on the hook for it along with the regulators, because at best their (Fintech/Banks) tech is dated more so the mentality. There are good people every where. Every time I had the mis fortune of going into a bank branch and or try to open a domestic “wallet” account the experience is less than pleasant. My opinion will change when my experience changes.

Maybe the bottom of the pyramid market where they(telcos/fintechs/banks) intend to service customers is not yet aware, but soon they will be, and if this(financial inclusion) grows at any exponential scale, then the problem will become bigger to rectify.

My confidence in third parties is at all time low, you should try to do the following test, borrow a secondary phone number from a friend (say from Maybelink, UffPhone, CpecMobile) then take your own ID and try to open say an account in the most popular recently 45% strategically partnered branchless banking product. A little birdy says you will be pleasantly surprised that you will be able to open an account as the SIM to ID check is not where its supposed to be.

(Again all this is hypothetical and no one is encouraging you or any other member of the public to do some thing they shouldn’t and this is purely an academic hypothesis)

Meaning if you took say a number from the other 3 Telcos, used your own NIC or some one else’s, likely you could open a brand spanking new account, that you could use to send “Asma” as many loads as she wanted or you wanted. Because the Sim + ID combination seemingly is not being validated by Asmas service provider.

Do you see a problem with that? No “Asma” is still single and will gladly take your money. As will any one else who has your ID and an unused phone #(on an other network), they can open a (insert “Asmas” favorite product here) account using your name and hypothetically make transactions, receive payments.

You can potentially reverse the experiment and the carriers and the products but the central idea is, Asma remains single because the suitors all addressing the wrong problem(s).

Maybe with all this hype and PR is just in time, may be there is a dire need to bring in vilayati(imported) tech to fix digital payments/fintech/banking because truly its not ours to solve. Maybe Asma is also tired of all the local suitors, maybe its time for her to get serious and thats why she looked Eastwards to her Ant*.

The next 100 million users are ready? Are you?

TL;DR; NBU(New Bankable Users) + E-commerce + Payments + Logistics. Did the big guys really miss this? Move over ad-tech, the ride hailing guys may just have a better handle on this one.

Here are the thick big published statistics.

An addressable population of 210M+. Roughly 125M people under 30 years of age. 60M smart phone users and 50M Internet subscribers. 140M bio-metrically verified Sim cards and telco subscribers. A projected middle class of 160M in ten years. We see these statistics flashed every alternate day. What is the big deal, you ask?

Combine them with the following gems:

Total domestic ad-spend of $650M.

Total digital ad-spend of $100M.

Existing M-wallets transactions at $2 billion.

Branchless Banking transactions at over $6 billion.

Two big players in the digital payments space (Jazz Cash & Easy pay) who are riding momentum of existing market share, ATL and BTL campaigns and a single decade old acquisition.

One of them, a case study of how little it takes to move the needle in Pakistan if you have cash, infrastructure and timing on your side.

Incumbent Banks with no net new innovation over the last decade that translates into a dramatically new, better or more profitable business model. They just can’t break out of the box or get anything with a real bite done.

Ability to get an e-money license or tie up with a Payment systems Provider (PSP) to launch new services.

A new universal connect in the works that will allow any telco network subscriber to connect to any other telco network subscriber breaking down the walls and the moats Telcos have hidden behind for two decades.

How do you monetize this army of young willing plugged in dis-satisfied users? Users who are ready for a better customer experience and for instant fulfillment. If you are still thinking ad-tech or ad-sales both your game and your mojo are out of date.

For a cash driven market like Pakistan there are only two words that you should be thinking of when you see the above stats. One of them is payments. The other is networks or systems. Take your pick.

60 million smart phones users doing a single m-wallet transaction every day for the next 40 years of their expected lives. What if its ten transactions per day? You do the math.

The incumbents, whether banks or Telcos have already blown the opportunity. Their best efforts over 5 years of product launches and onboarding initiatives translate into 2 m-wallet transactions a year on 50% of the accounts. The remaining 50% are in zombie mode.

Time for GO-Jek, Grab or Ant Financials to look at this ecosystem as there is a world beyond South East Asia where others are distracted or dis organized. Given the ride hailing guys have already made a play for POS/delivery/last mile/ad-on services and payment mechanisms all they need is a new market with a similar product market fit and go crazy with growth.

Essentially an ecosystem play.

The ride share boom has shown already that the Pakistani folk have an affinity for these services. If someone can build an ecosystem play it will only enhance that position. Careem to date has sadly missed out on payments, given the amount of “transactions” passing through its system (locally and regionally), it has either intentionally over looked or delayed getting in this space.

They won round one in raising half a billion dollars in funding and outsmarting Uber and the transport mafia in Pakistan but rather than building on that success, have gotten fat and happy. Round two, when it comes to scale, execution, consistent service quality and customer retention has been a disaster for them.

It may just be cheaper for their larger regional rivals to buy them out and do this right. They are already making all kinds of entries to build bolt on services on top of their respective platforms.

The Indian Story

For vanilla payments, the India example is a case study on the advantages we already have when it comes to building this out. The Indian market had to build out UPI (Unified Payments Interface), we are already ahead of the curve and by just a little tweaking could enable this using 1Link.

The key in India has been a PSP backend that maintains customer information, manages and issues virtual payment addresses (VPAs), resolves VPAs to user linked bank account for an incoming payment, maintains history of transactions, logs etc. Note that currently only banks and approved technology partners of banks are allowed to run their own PSP Backend in India.

The approved Technology partner is the golden nugget here. Same/similar holds true for Pakistan yet no one has capitalized on this in its true sense.

 As of now, only banks and approved partners can operate PSP Backend. 40 Banks currently operate their own PSP Backend, which is connected to NPCINet. (National Payments Corporation of India (NPCI) the settlement agency).

In our case 1Link could arguably do this today. If only a mature, willing hungry partners builds an OTT service. The Asians seem hungrier for scale, so much so, Google made a bet on one of them just recently.

Three non-banking entities, PhonePe, BHIM, and Tez, operate as technical partners of the banks in India. In addition to building user facing apps, players operating PSP Backend can also provide business solutions to enterprises by means of exposing PSP APIs/SDK. A replicable model, with most if not all the components existing today in Pakistan.

Our banks and PSPs are not going to expose anything, besides their admission that they are late to the party.

There may still be time so that the industry reorganizes it self and get the Central Bank on their side or at the very least start building open API stacks where third parties could deploy services today.

You ask why?

Because if only the likes of GO-Jek or Grab look west from SE Asia or the Ad-tech companies look east from Mountain view or Menlo park they will realize that based on the demographic stats and the market access numbers above it is a no-brainer to enter this market.

Actually if they had been paying attention to actionable intelligence on Pakistan’s payment dynamics they would step back and first look at the money movement stats/volumes alone and then decide if they too may have missed the boat on this.

Sometimes, people don’t know what they don’t know. It is time to change that. It is great to look at Pakistan as a net 100% growing market for ad-sales by everyone, but the bigger opportunity lies in payment, commerce and the logistics space.

Think about it. If you grow commerce and logistics, it is just natural that ad-spend on line will grow. As an ad platform what more can we do to seed growth for the next two decades?

Moving from JUST payments to e-commerce

Jazz has shown, how little it takes to move the needle in this space. All it takes is one well funded player that has platform and tech experience, they had the funding part down atleast.

This is not even taking in to account the fact if some one would roll out a service and then enable in-ward remittances; potentially every android phone becomes a vessel to ship cash back instantly.

We take this one step further. Imagine if an Ali Express type service rolled out on the back of this. The ecommerce – ecosystem has already publicly proven how well e-commerce works; when executed correctly. Imagine if GOSF (Great Online Shopping Festival) or some type of Express market place was a permanent feature and the payment method always worked.

In one clean sweep, the entrant will displace most of the bad press around              e-commerce, yet still use all the underlying e-commerce partners and help              e-commerce grow leaps and bound but have a guaranteed payment system powering their own store and could work with banks and others to build loyalty as opposed to discounts to incentivize users further.

It should be a position that the folks at GO-Jek , Grab and maybe even Careem should be lining up to exploit. They already have a lot of experience with both stored value systems and services and large consumer facing apps.

Now look at this from the point of the average e-tailer not funded by corporate cash, they would get guaranteed electronic payment/settlement and less reliance on COD, thus potentially reducing returns and increasing reach. If Walmart and Target think it can work, I am sure a lot of thought has gone into this. It also gives rise to the notion of Market place of market places, allowing localized/hyper local shipping and rural access to products and people and cash and to the player who comes in an opportunity unrivaled any where else. If they happen to be in the ride hailing space it gives them last mile logistics too.

Realistically all it takes is to stitch the pieces together. Ant financial continues to be in the news, no one knows for sure what will happen, their approach is to buy a financial service provider and enter the market that way. Our South East Asian friends could take the easier route and tie up and do a technical partnership. No government with half a brain, during election year would say no to expedite some thing like this.

Sometimes I wonder with all the mental horsepower that the big boys have, what happens to the in country intel going back to Menlo Park or Mountain View? It probably gets rolled up as an ad-sales number somewhere and then rounded down due to being insignificant as a subset of the region.

We just need a fresh approach that Grab and GO-Jek have capitalized on in this region. Kudos to the Central Bank for putting out hard data all it takes is to take some intelligent views on this to be in line to capitalize from a multibillion dollar opportunity.

The next 100 million users are ready? Are you?


Annexures – Sources and Methods.

Branchless Banking Transaction Volume total was 746,569,386,455 PKR or 6,734,055,865 USD. (Six billion seven hundred thirty-four million fifty-five thousand eight hundred sixty-five USD)


M-Wallet transaction stood at 228,810,886,060 PKR or 2,063,874,192 USD (Two billion sixty-three million eight hundred seventy-four thousand one hundred ninety-two USD).


Ad-Spend Data from an earlier post

Special thanks to Jawwad Farid for his input, additions and corrections plus all the other nice bits.


The Game of Assumptions. Road to Pakistan’s GMV

This is joint post by Jawwad Farid & Faizan Siddiqi *

Before we start let us all take a deep breath and try to ascertain what GMV means.

Gross Merchandise Volume

From Wikipedia

Gross merchandise volume or GMV is a term used in online retailing to indicate a total sales dollar value for merchandise sold through a particular marketplace over a certain time frame. Site revenue comes from fees and is different from the dollar value of items sold.

GMV or gross merchandise value for e-commerce retail companies means sale price charged to the customer multiplied by the number of items sold. For example, if a company sells 10 books at $100, the GMV is $1,000. This is also considered as “gross revenue”. In this case, the business model is based on a retail model, where the company basically purchases the items, maintains inventory (if need be) and finally, sells or delivers the items to customers. It does not tell the net sales or actual amount of audited services as GMV does not include discounts, costs involved and returns of products.

GMV Estimation

  1. In order to estimate GMV we could use three possible methodologies.A top down approach that starts off with a single piece of data from an authentic and well respected source and builds up an educated estimate on top of it
  2. A bottom up approach that tries to piece together the market size based on what we know of local market participants. We pick the top 20 players, add up the sum of their GMV, scale it up by a factor of 30% to 40% and voila we have estimate number .
  3. A forward looking approach that ignores current data looks ahead 5 years to see where our market is likely to be and work backwards from that figure for estimate number 3.

With all three approaches the objective is to keep the assumptions (moving parts) to a minimum and base the model on at least one authentic, publicly reliable data point.

In the absence of transparent market based disclosures, the true answer will likely be found somewhere in between using some exotic mix of all three approaches.

To illustrate the mechanics for purely illustrative and educational purposes we will use one approach to make a simple point. Any analysis we do at this point is going to be completely irrelevant a year down the road. Perhaps even sooner, but to have a conversation and to understand the real potential of the scale of what is to come.

Given the direction this market is going and given how this specific movie has played in other developing markets before us, the current market size or efforts to estimate it are useful for educational purposes only. You can’t put them to work or use them for deal making, acquisitions or valuations given the disparity you are likely to run into when it comes to projecting the next 5 years. Nothing is constant over 5 years let alone what we are about to project out. It can no less be a basis for getting in on the action.

Model One. SBP data set

Let’s begin with a look at the most basic of our collection of known documented facts. The source for all three statements below is the State Bank of Pakistan Annual review report of 2017.

  1. E-Commerce in Pakistan has 571 merchants offering their products online. During FY 17, 1.2 million transactions valuing PKR 9.4 Billion were processed through ecommerce[1]. Using the current exchange rate of 105.25 that translates roughly into USD 89 million – the share of the local ecommerce pie captured by credit and debit cards.
  2. There are 17.9 million debit cards and 1.2 million credits cards issued by the banking system.
  3. The 9.4 billion and 1.2 million transactions suggest an average ticket size of USD 74 per transaction.

Remember that these are all unadjusted figures. We can use them as is but its best to account for and adjust some items that may impact local market size estimates.

The likely case

We take the USD 89 million figure and trim it to account for local ad spend on Google/Facebook platforms. This trimmed figure then get scaled up since a large chunk of local e-commerce pie uses cash on delivery or COD. We put in a range of values for the distribution between COD and cards and generate our final total market size estimate.

There are two key variables.

  1. The adjusted figure that represents the share of credit cards in local ecommerce sales. We can round this up to total ecommerce sales using the second variable below.
  2. The share of COD in local ecommerce sales. If we know the dollar amount of card sales, we can use the COD component to scale up total sales.

We can plug in a range of values for both parameters and see the possible range for total market size. When we do this we end up with the grid below.

Here is how you read the grid. There are two bands that represent the two parameters. The row on top (US$) and the column on left (%) that we use for navigating to the estimated value.

The row on top gives the trimmed down estimated figure that represents the share of credit cards in total ecommerce sales. It ranges between values of US$ 30 to US$ 80 million. The column on left gives the percentage share of COD in total ecommerce sales. It ranges between 25% – 95%

The table below has 5 distinct colored bands. The one that we are interested is the light green 3×3 matrix with bold figures that represents values on which consensus can be built. Primarily because these are values that we see across vendors we track and talk to. Anything outside the grid is certainly possible but is not supported by credible, authentic, publicly available data points. If you have data that contradicts these points and are willing to share it, we will be happy to update this analysis.

The range in this specific grid is between US$ 100 to US$ 500 million per year. The likely answer for estimated GMV is somewhere between US$ 333 million to US$ 500 million based on this model.

Which implies that our trimmed down estimate for credit card share is somewhere between US$ 50 – US$ 70 million and our estimated COD share of total sales is between 85% – 90%. Market feedback suggests that the COD share could be as high as 95% but we are happy with our 90% estimate.

Now that we have these two values, we can dig a bit more and see if we can find additional data points that would support or challenge these assumptions.

There are also two new questions that we need to answer. Both deal with growth.

  1. At what rate is the ecommerce market growing?
  2. If it keeps growing at this rate for another five years what would be the total market size? Would it be large enough to be of interest to serious money?

These questions are of interest because they allow us to tackle the same problem from another angle. Where will things be 5 years down the road? From that specific perspective how attractive or unattractive does the current market or market valuations look right now?

This is the question we should really be asking ourselves. How big will the total pie be in 5 years? Using the midpoint of US$ 400 million from above and a 30% annual growth rate for the next 5 years we end up a rough estimate US$ 1.5 billion.

That is the limit of our current analytical tools. We are bound and married to data in the visible spectrum. When we stretch the visible spectrum our numbers become questionable.

Time to throw this analysis and this model out of the window for one simple reason.

We used a similar logical rational step by step model to estimate the projected future share of smart phones in the local market in 2009-2010. The objective was to project actual smart phone in use in Pakistan in 2015. Two of our smartest analysts and a data czar took part in the exercise. With hindsight our estimate was off by about 97%. It was good thing our analysis was not released for public consumption.

Model Two – The alternate forward looking perspective

When compared to our nominal GDP basis the figure of US$ 1.5 billion is not exciting. It looks great compared to your current size but it is actually quite depressing and unlikely for reasons that we will just highlight.

One hint is the metric that measures the size of the internet economy as percentage of total GDP. The G-20 benchmark[2] for this metric is 5.5% with some economies seeing values as high as 12%. Given the availability of 4G data, the affordability of smart phones, the increasing share of data enabled phones in local phone sale and the growth of online retailers in the local economy, our benchmark figure is likely to rise.

Before you flag or question the G-20 metric let’s take a look at G-20 membership. In addition to the developed world, the G-20 also includes the following countries – India, Indonesia, Argentina, South Africa, Saudi Arabia and Turkey. We are not just talking about North America or Western Europe, some of these markets are quite similar to our own in terms of cell phone penetration, population demographics, data usage and middle class growth trajectories.

Now back to the GDP. Our estimated GDP figure on a nominal basis for 2017 is US$ 304 billion. 5 year later in 2022 this figure will hit US$ 380- US$ 400 billion using the current growth rate of 5%.

US$ 1.5 billion in ecommerce sales represents less than 0.4% of our current nominal GDP. The G-20 benchmark by 2022 is estimated to be between 7% – 12%.

Our actual number 5 year later is likely to be at least 2%. Improving logistics, lower reliance on COD, higher consumer confidence, removal of payment system frictions, better service quality, more polished players, better supply chain management, higher fulfillment rates, growing middle class, increasing prosperity and spending power are all factors that will play a part in increasing the base rate.

Some of us in the analytics world think that since we have already skipped a few steps in ecosystem evolution, our actual share may be even higher.

But let’s not be too greedy. Let’s stick with that 2%.

That 2% translates into a market size of US$ 7.6 – US$ 8 billion in 2022.   At 4% you are looking at US$ 15 – US$ 16 billion. Our current “hand waving magical wand in the air” market size estimate is US$ 400 million.

What happens to a market when it jumps from US$ 400 million to US$ 16 billion in 5 years?

When a market jumps from US$ 400 million to US$ 16 billion do you really care if your original market estimate was US$ 400 million or US$ 650 million?

If you sold out at US$ 400 million and the market jumped to US$ 16 billion… Let’s not even go there. You would be what we would define as a sucker.

If you have the staying power for 5 years, I think it’s time to buy some online real estate. If you had the foresight to buy it and have credible business management skills, it’s not time to sell, it is time to hang on to it because you are in for the ride of your life.

In English, please.

So here is what all of the above means in simple English. In case you don’t like spending too much time with tables or on numbers.

The current numbers out there, made popular by the usual suspects range between 110$M TO 170$M. The state owned official nice to have figure is 1 billion by 2020[3] subject to usual qualifications.

The question to ask your self is, if you were pitching those numbers because you work at an ecommerce store/ allied business, would you really be dumb enough to get out now or do you just need an exit valuation so you don’t get past the hype cycle you created yourself? Bonus pool? Contract renewals? End of the line?

The time is now. Raise capital and stay afloat. Sit down and plan out the long game. There is no point to get out now, as you are in the driving seat or at least have a shot at it (you know who you are). If you are cash rich it is time to diversify. Buy some of the really crazy plays out there. 500 odd players is not large enough for a country of this size and the volume we are talking about.

Imagine getting into DHA Phase 8 in 1997-98. Everyone was selling, the city was on fire, valuations were crap, sentiments and basements were both underwater and people laughed at you if you even mentioned buying real estate in Karachi. And then to make matters worse dollar account were frozen and sanctions were in place.

If only you had listened we wouldn’t be having this conversation right now and you wouldn’t need to work today.

This promises to have the DHA/Bahria style returns the average saiths are looking for – Not 10X but 100X if you call it right and have staying power. If you know what you are doing and you have the right people on side to help you scale and sustain. This isn’t for every one. Most people will die due to inexperience, greed and timing challenges. Only a few will survive.

Here is another kicker for my many friends shopping for exits and posting pictures with our esteemed friends from China. What we must all realize, is that if a Daraz type transaction goes through, it does zero for the ecosystem.

Most if not all the money exchanges hands out side of Pakistan and no value is created till such time that a new operator/player is fully involved domestically. All they buy is a brand and a functional site, albeit well known and mostly with other sister properties regionally. A regional/geographic play for the buyer and if the price is right, a fantastic one in 5 years.

Yayvo and the lot, if a transaction does go through, the buyer actually buys a really big tongue twister. A race to the bottom with out VC money to burn. Race to the bottom (cutting price) type outfits are really not needed.

The data in its true form shows that you don’t need to underprice to deliver. Investors must ask what is the rocket science in selling product at steep discounts funded by their dollars? It is the oldest question for sales team – anyone can sell at a discount – why do we need you?

The market has the appetite for real players with real service. More so if you own data, fulfillment, delivery, service quality and warehousing. Beyond self-promotion on social platforms and hashtags the substance is lacking or lost in translation. If hashtags were GMV all these social media types would be billionaires.

All others who aren’t in a race to the bottom or a rush for quick exits in the end will do better. Write this down on a piece of paper and look at it when people mention exits. Just two words, two syllables. Long Term.

A small slice of a US$ 15 billion dollar pie goes a long way. Not everyone will make it to the table or have the appetite to sit or stay on it. Those who do will all have one thing in common. A healthy respect for other people’s money and the ability to play the long game.

* All the nice informative bits in this piece including the easy to read tables in color were crafted by our resident numbers guru Mr. Jawwad – ask the right question – Farid. I would recommend a google search, if you haven’t met the gentleman or crossed his path. He is even more polite than his prose in real life as long as you don’t mention funding or short term exits in his presence.

All the other nasty, waspy, brutal parts that will eventually piss of the ecom/bankers/transaction types were crafted by yours truly.

[1] State Bank of Pakistan, Annual Review, 2017. Page 25. This is the first year that this number was tracked and reported by the central bank. That by itself is a market action trigger.

[2] The Internet economy in the G-20, Boston Consulting Group, 2013-2014

[3] Source PTA Annual Report, 2016/17

Pakistani banks have nothing to fear when it comes to Fintech!

You read that right, but what you missed was that they are barely mobile and or digital to really fear the paradigm shift that is essentially Fintech.  Fintech wont take down Pakistani banks, they will try to totally blame that(in time), but what will take these banks down are the 50-60 Yr old CEOs lack of understanding around what digital is or means and the industry hero worship around “aray falanay sahab to baray puranay IT kay admi hain” 🙂 .

Exactly my point, you cant teach a “Purana admi” new tricks.

This lack of understanding also extends to the board members of these banks too. You ask why? because these guy do not use their own services digitally(ever), they are not the net new consumer so they can never understand why it sucks so bad. They call their admin, who calls the bank manager…you get the picture.

The first step to solving any major problem is the recognition that a problem exists. In the case of these mis guided banks and many other tech centric businesses in Pakistan is that they compete with each other and do not get out of their own comfort zone. Or they buy technology from global vendors without knowing what it is, because every one of their peers are doing the same.

When you compete with at the bottom rung of the ladder in terms of innovation and technical innovation all you end up with is a site/app/system whose success is measured by how many times your CEO sees the AD on TV about his/her product. Mis guided benchmarks about mis guided items demonstrated by more misguided people.

The best story I ever heard as to why the chief digital officer of a bank refused to buy online ads was as follows. He told me, that they wanted to go and acquire female customers between the age of 25-45 and ran an online adwords and fb campaign across the networks in Pakistan. Their CEO called and said you have spent 50k USD on this, I have browsed every major site in the country all week yet to see a single ad online but I see ads for “unani nuskhas” all over the internet, any site that I go to. The irony of targeted marketing was lost on the CEO. Where in both Google and FB delivered on those campaigns the CEO didn’t understand why he didn’t see the AD because he always saw it when he spent 50k USD on TV. Has any one ever measured how many millions of customers have banks signed up after every major TVC?

I will stay away from acceptable service levels of the technical initiatives of the banks but what I will talk about is the thinking behind digital and what is an acceptable baseline  by way of mobile banking in the year 2017. I will further not go down the security exposures rabbit hole,  because that doesn’t warrant a public disclosure of the weakness of the systems in place (of which there are a few dozen examples if not more). We will focus on the basic nuts and bolts of their front end customer sites/ digital customer engagement and the evolution of mobile banking or the lack their off.

I am selecting these banks in no particular order. Lets start with the mind set of digital and servicing banking customers in the age of technology.

Let me demonstrate how UBL is handling customer engagement on the Google Play Store.


This has to be a world first, an Eid Mubarak message within play store comments responses. Before the trolls start about oh we should be proud of Eid and whats wrong with wishing people on Eid, absolutely nothing. This just demonstrates the mindset of the person replying to these messages and the mind set of the folks who run or comprise  the digital function at UBL. Perhaps its not their fault either as the strategy arms of these banks are forcing down digital as a department vs trying to instill digital across the enterprise as an activity of transformation.  The image that comes to my mind is that of a an uber sweet 50+ uncle at UBL who has been assigned the task of responding to these messages after 30 years at the bank(BCCI Era) and with a view to give him his final pre retirement role. You dont believe me? See the an other example below.

A lovely message before Sehri. I mean talk about keeping it professional. What I am trying to get at is the fact that before Fintech destroys traditional banking in Pakistan, the traditional banking IT/Digital/Strategy guys would have already helped the cause fueled by their respective CEOs desire to “be digital” without knowing what the hell it means.

In the year 2017, the least I’d like to see is a functional mobile site. Lets see Bank Al Falah’s latest and great foray into this space. First of all half the text on the site is not legible due to bad font selection and sizing. Secondly the site barely cuts as a responsive site. Let us not even get started on thematic and lay out mistakes and the color red.


Trust me there is no way you can read the font the arrows are pointing towards. In this day and age of responsive, this design in it self is circa 1998 at best. Who makes sites like these? let alone banking site, where consumer education is key and information clarity is the difference between engagement only and engagement + conversion. This truly sucks.

One could over look a few UI/UX items but this site is riddled with them. No call to action any where, when a consumer comes to the site they come online to BANK or to Interact with the services. The drones who are building these sites are using them as a corporate/marketing site. There in is the issue, these rock stars of digital have not figured out the difference between a corp site and a consumer site.

I think a basic pre-requisite should be spell check.

But I digress. See this:)

In the year 2017 it should be a crime to have an info scroll menu being cut off (see the arrows).The slider box contents have to slide right to be displayed on mobile. I rest my case, if you cant pass on your information on a mobile platform let alone in a single interaction, why are you even in business? Is no one asking what the cost of rolling out these sites + the cost of the digital departments is, in relation to the online conversion and reduction to 1st level call center support. They should be directly proportional, first call resolution services should see a decline of 20% if an online site is capable of doing that for consumers.

But the best is yet to come.

The award for sloppiness, and lack of imagination goes to this main page, which has not one 1 menu, but see the arrows, 2 menus. Had the bank like a billion new exciting digital features that they wanted people to discover I’d get excited about this cardinal design sign. But it even the content is the same/similar in both menus.

Head of digital much? This is a question for basic common sense.

This stuff didn’t happen over night, nor can it be fixed over night. Banks give rise to  the most un imaginative breed in this country. To look at mobile evolution, you have to look at web evolution. I couldn’t resist going back to way back machine and look at HBL. I will let you decide, how far they have come in their evolutionary journey.


From 2008-2013 literally nothing changed online for HBL.

Lets look at 2017

Not much has changed either visually or operationally, same center image construct, with a menu on the right/in this case its kept with technical advancements:), same/similar top menu. So since 2013 what is the innovation that happened here? How can the largest bank in Pakistan innovate if the custodians of digital cant even get the basics right.

They arent doing any better on the Mobile banking side either.

As a consumer, when I come online to the Banks site the first thing I should be able to do is login to my account. Every single one of these so called digitally innovative or leading edge banks have failed at the first call to action(Login). I wonder how their CEOs judge the KPIs of their digital folks. How can you in this day an age build a banking website that doesn’t have a logon item front and center.

Interestingly as I browsed through various banking sites in my effort to find one decent example, I wasnt let down. Perhaps there are many others, but in terms of size scale and resources Summit bank actually had a call to action/LOGIN and an URDU button visible on mobile + their UAN and email address.

Alfalah and HBL both had it post one click meaning within an other menu. Summit also had the 2 menu problem(see next to the Urdu icon) but luckily one menu is just a CSS mistake and doesn’t do much on responsive:) But clearly there is no QA any where.

Coming back to UBL. They seem confused, their site opens up with a site selector on mobile to select region. It clearly doesn’t look responsive, it looks like a mobile ready site no less:) from 2001.

It should pick up your ip and take you to where you need to go, that stuff is free to implement and reduces one click.

When you do get to your so called mobile site, the following disappointment awaits you.

I mean look at the dead space. This has to be criminal in this day and age to have a mobile site that looks/works like this.

This stuff is followed up by the following stunts and I quote from the Banks own PR. http://bit.ly/2y0YIKt

KARACHI, PAKISTAN – 21 August 2017: IBM (NYSE: IBM) today announced that United Bank Limited (UBL) has selected IBM to support its digital transformation journey by establishing a Digital Design Lab, the first of its kind in Pakistan, to weave a seamless digital banking experience into customers’ daily lives. The lab will provide an environment for UBL’s interdisciplinary teams as well as its network of start-ups, fintechs, ecosystem partners, and academia to develop personalized and engaging digital customer experiences.

I dont know who should be more ashamed, the Banks CEO, IBM(for being an opportunist) or the banks Head of Digital, if they have one. For a bank that cant make decent responsive website the above sounds like hot air at the least and misguided adventure at best.

I hope the bank sees the irony in the disconnect. IBM Pakistan must be lauded for their foresight to make some money off folks who are clueless about what the digital journey means. This market and these banks are ripe for the taking.

In the same spirit. Lets talk about speed and some basic form of technical serviceability bench marks. In the mobile space to leapfrog from mobile to fintech to consumer fintech the one thing every one must get right to get the unbanked on to your platforms and services is speed and delivery of your technical site(payload)/service in the least amount of data streams as the consumer is conscious of their data spend. Lets look at how most of the banks in the country perform on the speed to performance co efficient. In no particular order.



Lets not go too far to compare. The first bank that came to my mind in India ICIC bank. I ran the same test on.


It has a 30 + point lead as compared to our banks on average. Its a mind set thing, you don’t have to be 100 on the scale to be great. You just have to work towards improving. What I have seen so far is a lot of mis guided non sense labelled as digital strategy.

I dont claim to know every thing, heck the intent of this blog post is from the point of a consumer who wishes to use mobile banking, I am happy to sit down with any one who has the wherewithal to recognize that a problem exists and then work on trying to find a solution so that this eco system of Fintech’s can actually benefit from the banking players(due to regulatory hurdles), who at this stage first need to get their own house in order to even remotely be competitive as banks let alone against Fintech companies.

Its a matter of time only, as the regulations ease out, the Fintech’s wont need the banks, the banks will be a dying breed looking to partner with Fintech’s to stay alive. Right now the banks have an unfair advantage viz a vi regulation, it is their hour to exploit it to their benefit. Sooner rather than later all this Digital strategy stuff will go down the drain and shareholders of these banks will be left without knowing what hit them.

If you are the head of digital at a bank, hopefully the CEO of your bank doesn’t read blogs and you can dismiss this as what ever you want to dismiss it as, if you are the CEO of any of the banks I mentioned, you need to sit down with your chieftains and figure this basic stuff out, before you are mis led in to believing numbers and indexes and kpi’s that were invented to make these digital types look good, you have a real issue on your hands. If you dont innovate fast enough its over.