Home Economics & Policy A breakthrough for Lebanese e-commerce?

A breakthrough for Lebanese e-commerce?

PayPal’s planned arrival raises hopes of online shopping boom

by Benjamin Redd

The Lebanese blogosphere lit up last week when PayPal announced at the ArabNet conference that it would begin offering services in the country later this year. A gaggle of online commentators welcomed the news, with responses ranging from excitement to mere relief. “I can’t tell you how much this helps me,” one commenter said.

PayPal is the leading global service that manages online payments. It is owned by eBay, the world’s top online marketplace, and rose to prominence alongside the site. But it has branched out and is moving rapidly into mobile technology and other new trends.

Yet until now, those Lebanese wanting to buy goods or services via PayPal have been unable to, or have been forced to use foreign cards. The reason, the company says, was strategic – Lebanon’s market was not ready before. Even now e-commerce is still in its infancy, with only 9 percent of Internet users active in it – the vast majority for online banking rather than buying goods – according to a new poll by Ipsos.

While PayPal’s arrival will make life easier for consumers, the real beneficiaries may be Lebanon’s businesses. “We’re definitely excited,” said Mohammed Bakhash, project manager for Mira-Clé, a business consultancy that also builds websites for e-commerce companies. “I know a lot of clients who are trying to get around the fact that PayPal isn’t available in Lebanon,” he says.

There are other services for online payments, but none stack up against PayPal, according to Bakhash. Currently, most e-commerce sites “get around this issue by creating an account and having a virtual credit card,” he said, adding that some banks offer payment solutions as well, but they’re “very complicated and they charge a lot.” PayPal, on the other hand, is simple, cheap and ubiquitous.

The timeline of the arrival is still unclear. Speaking to Executive, PayPal’s Business Development Manager for the MENA region, Francis Barel, said it will hopefully be before the end of the year, provided a launch in Egypt goes smoothly. We have said we’re planning to come to Lebanon in 2013 so we’re hoping it will be by the end of the year, but it’s a long process.”

The online spin-off of Lebanon’s leading bookseller Antoine already uses PayPal, but only for customers with foreign bank accounts or credit cards. “At first the [focus] of the site was to sell outside Lebanon,” says Cyril Hadji-Thomas, CEO and co-founder of Books Without Borders, which manages Antoine Online. But “now the positioning has changed a bit…the growing market is Lebanese customers.” Currently, around sixty percent of Antoine Online’s sales are in Lebanon, he says.

Hadji-Thomas thinks PayPal’s security safeguards and ease of use mean it will be popular in the market. “With PayPal you can link your identity and it’s secure. Most of the time people don’t want to fetch their credit card to pay… the whole process is easier,” he says.

He believes Antoine Online is uniquely positioned to take advantage of PayPal’s move into Lebanon as they have their own delivery service that is used to the chaos of Lebanon’s address system, while people can also pick up the product from in-store. This mix of physical infrastructure, combined with a lack of customs hassles, provides a competitive advantage over foreign e-commerce sites, he says. “We think we have a better offer than Amazon in the country.”

The missing link

However, PayPal’s introduction will only be a game changer if it coincides with changes in the Lebanese attitude towards online shopping, where poor infrastructure and low levels of trust prevent people buying online. “The main issue is having Lebanon get [used] to the e-commerce market as standard,” Hadji-Thomas says.

Part of the problem is that there is still no legal or regulatory framework for e-commerce in Lebanon. A draft law was shelved in 2010 after activists complained that it was so poorly written that it would have provided government bodies with sweeping powers over many aspects of online life.

Another draft law has been proposed to address these concerns and lay a basic framework for e-commerce regulation. A government official, speaking on condition of anonymity as he was not allowed to talk to the press, said that if enacted, “a lot of issues might be resolved, including logistics, security, payments, downloading, quality of software and protecting the rights of stakeholders.”

The law would also provide for transactions involving the government, the representative explains. For example, “when [the government] automated registration of trademarks, we had to resort to LibanPost to make payments and transport the documents. If we had this transaction law, everything could have been done over the web,” he says.

But whether the government moves on e-commerce or not, the private sector will continue to advance the field. According to PayPal, the lack of proper regulation is a hindrance, but the markets cannot wait for government action. As Barel said, “I think [Lebanon] is quite ready.”


Note: PayPal contacted Executive to clarify that while the company is aiming to have its services available in Lebanon in 2013, the exact timeline is still unconfirmed. Mr Barel’s quote has been changed to reflect this

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Benjamin Redd

Ben is a Beirut based investigative journalist. He served as Executive's resident data geek from 2013 to 2014, and as managing editor from 2014 to 2015.

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