Excerpts from an exclusive interview with Giasuddin Khan, Head of e-Business Division, Orix Leasing Pakistan Limited.


Jan 27 - Feb 02, 2003 



Most of the business entities are keen in making e-commerce the way of life in Pakistan. Until recently, lack of proper legal framework and inadequate infrastructure were the two biggest hurdles. While the government has been able to address the first issue, the second impediment is expected to restrain the progress - the main reason being the capital-intensive nature for developing and maintaining the infrastructure. Orix Leasing Pakistan came out with a solution, which is gaining acceptance.

The e-Business Division of Orix Leasing Pakistan has established an infrastructure, whereby the financial institutions or any corporate entity can become issuer or acquirer of Credit, Debit or Loyalty Cards without making any investment, simply by using the prevailing infrastructure. On one hand, it provides a facility to the end users, and on the other hand, the transaction cost is also likely to come down due to sharing of the infrastructure by a number of users. The first client has been ABN AMRO Bank. The bank uses this facility for conducting transactions by its Debit cardholders. These cardholders can now make purchases from a number of vendors and make payment without paying cash.

The growth of credit card has remained stagnant lately as issuing credit card exposes the issuers to greater credit risk; whereas Debit Card involves no such credit risk as the user of this card utilizes his own money. All existing ATM card becomes Debit Card automatically without re-issuing them. This adds extra value to ATM cards. The ATM Cards population in the country is about 600,000. It is still a small fraction of the total number of account holders of banks.

Another scheme launched on the ORIX POS Network is PSO Loyalty Card Program, first of its kind in Pakistan embarked on simultaneously in Karachi, Lahore and Islamabad and later in Hyderabad. This was for the first time in Pakistan that an Oil-Marketing Company ventured into such scheme, which was only made possible because of the enabling environment provided by Orix. Besides, awarding points to PSO customers on filling their vehicle on PSO pumps the redemption of points is being done on-line. The on-line redemption feature is yet another first in Pakistan.



ORIX POS Network will also be used for the payment of utility bills very soon. This service would be very simple as existing ATM, Credit or Prepaid cards of the banks can be used for the payment of utility bills without reissuing them. This will bring the much-desired relief to the consumer of utility companies, as making payment of utility bills will become very convenient.

Pakistanis, both the buyers and sellers, love to deal in cash. However, lately there has been a change in the buying habits mainly due to credit cards. Compared to the total population of country, exceeding 140 million, only a very small percentage is availing the advantage through plastic money. However, with the launching of Debit Cards and conversion of ATM Cards into Debit Cards, the plastic culture will receive a big boost.

By the end of the first quarter, Orix plans to link thousands of merchants on its infrastructure. With more outlets being equipped with POS machines, cardholders will be able to use the cards more extensively. Both the ATMs and Debit Cards are aimed at reducing the customer traffic to branches. The banks term this as an additional service, but the implicit motive is to minimize cash handling at branches. Cash back feature, which is very common in developed economies, is a very useful attribute available at the POS Network.

Sharing a POS terminal by different banks is not a novel idea. The concept is already in use in case of shared ATMs. This infrastructure has been operating effectively and efficiently. In case of shared ATMs there are no transaction charges on on-us transactions, however, there are service charges on off-us transactions. However, this can also be interpreted in a different way customer paying a nominal fee for the convenience. With the use of technology getting common, one may expect these charges to come down. Orix has entered into a relationship with Standard Chartered Bank. The two corporate entities have joined hands in installing ATMs at various on-site and off-site locations.



The taste of pudding is in eating. Unless people use technology they cannot feel the difference between going to bank branch and carrying hard cash and convenience of plastic money. With the availability of this convenience on a 24-hour basis the need to withdraw and carry cash will become minimal which will result in creating a healthy float for the banks. The depositor will also get the benefit by earning extra income on their bank deposits.

To conclude I will say, "Orix has not started a business venture, but provide a service which was not available in the past. Our efforts are aimed at enabling the local banks to provide such services which are common in other countries, but were missing in Pakistan".