– Still living in the good old paper money days –
Yesterday, Habib Haddad, –a celebrated tech entrepreneur and an advocate for starting your own business– decided to harness the power of the internet to help the victims of the Ashrafieh building collapse.
Volunteers immediately helped him set up a bank account to gather donations for the victims’ families. The possibilities were endless: Haddad has more than 10,000 followers on twitter, and his followers also have tens of thousands of followers. If the message catches on and people could pitch in a dollar or two, the campaign could have made a significant impact on the lives of the victims. There was a problem though: There was no simple and easy way for people in Lebanon to donate 1$ online.
Joumana is a talented Lebanese comics artist (Disclosure: She’s a friend). The quality of her work rivals that of best selling comic artists everywhere. But when she decided to sell her work online, she was frustrated by how little options she had to get paid. In the end, she resorted to a workaround that is far less than ideal and that involves paying family members who live abroad.
I only became familiar with how difficult this problem was when I started an advertising platform here on Beirut Spring. To actually get paid in Lebanon, the only solution I could find was for people to wire money to a bank, a rather laborious process that is all but “simple and easy”.
Why this is important and how it can transform Lebanese politics:
The examples above show how much potential a simple, secure online payment system in Lebanon has, but it hardly scratches the surface of its transformative powers.
Think of what it can do to Lebanese politics for example. The Lebanese all over the world would be able to make small donations to politicians and candidates who espouse their causes (think the environment, women issues ..etc). With social media the amounts now can add up and real change can happen. Young and ambitious politicians will no longer feel beholden to rich heads of election lists, small political parties will start thinking more about policy and less about political deals with their rich allies who have different ideological priorities. This has the potential to fundamentally change the fabric of Lebanese politics.
There are endless examples on how online payments could help with ecommerce, publishing, freelancing and professional services, but the effect on government could also be significant: Imagine how easier and more efficient the world would be if you could pay your utility bills online.
Why is this so difficult ?
Established politicians will resist supporting a technology that could eventually erode their grip on power, but the immediate problems are technical and financial.
I spoke with a banker who is intimately involved with issues related to credit card innovation and solutions. He told me that Visa and Master card have recently increased their margins for online payments to such an extent that you will need a very large client base for it to be worthwhile for companies to offer the service. He told me that our Middle Eastern markets are too small to have economies of scale.
Many third party solutions solve that problem. They are known as “online payment processors” and Paypal is the most famous example. But they have so far largely avoided Lebanon and the region (to the chagrins of many people), possibly because they are concerned with potential donations made to parties like Hezbollah and Hamas.
An Opportunity
Wherever there is a problem faced by many people, there is always a business opportunity. The Lebanese now have a better internet connection, and the wish to benefit from it will only grow louder. A solution will eventually be found to online payment, but who will get there first? Who will be the Arab world’s Paypal?
To the victor, the spoils will go.
Twitter
Facebook
RSS
I hope they finally fix this mess about online payments in Lebanon. It really sets back a lot of development and innovation
I live in Kuwait and I have been using Paypal here for years.
I’m sure a bright young mind could start a company in Lebanon to provide this service.
But does legislation support the creation of anything like this? It is not just about economics and finance, it is about the laws. Laws have to be drafted first to do this. Since that is too difficult, i suggest a this for lebanon, as a first step: Extend the number of things you can do with your bank account. You can recharge your phone, pay some bills now, yes, but they can create, as a first step, a system for interbank payments using the internet , one that is far more extensive. you can use it to pay income tax, fines, fees for paperwork, book airline tickets, buy good, etc., from your bank account directly. this is easier because the infrastructure is already there for payment verification, even if it isn’t restricted to lebanon. but something like an Arab paypal would be more complicated. if a bank does it, supervised by the central bank, then the problem of dodgy payments would be solved, more or less.
What an irony that the ‘banking system’ is our ‘proudly national product’, and we still can’t process online payments. A side note which deserve a dedicated post: our banking system is a pure rip off. They charge you unrecognised fees on your current account without justification, and when you challenge them: they apologize and remove them. This is a widespread problem with all big Lebanese bank names. One more thing, of course you can’t complain to the watchdog, can you?
Another irony is we just entered the 1990s age with some sort of a descent internet in and around the capital (only) which you need for all this, the online payments. In other countries, you even pay as little as $2.01 for your coffee with your credit card. Paypal and the rest are given. Ppl split their lunch bill from the phone app within seconds. I live outside Lebanon, but my friends in Lebanon ask me to buy for them from eBay because they can’t do it from Lebanon! Did I say descent delivery of post, and rational numbering system for addresses?
I completely agree with your post. But what a shame, because we always say we want to compete. Still far from it.
Mustapha, I know that this isn’t the issue you’re talking about, and this is going to sound like an ad, but there is a worldwide online money service that works in Lebanon: MoneyBookers.
I had the same issue with Paypal not accepting any lebanese credit cards, and I needed to get paid for my writing and editing work on a few sites. Luckily, one of the sites offered Moneybookers as an alternative to Paypal. I had never heard of them so I looked around on their page and it seemed like it would work. I went ahead and set up my account.
They can take money from our local credit/debit cards, but they can’t wire money to them. To retrieve money, u can set up a bank account transfer. I do it every month and get charged like 10$ by our local banks here and like 1 or 2$ by Moneybookers. It’s fees, but it’s MUCH better than having to rely on relatives abroad.
Plus, Moneybookers works on ebay as well, some sellers offer it as an alternative payment solution.
A friend of mine has been desperate for YEARS to set up a Paypal account, I told him about Moneybookers a few months ago, and he set up his business with them. He’s quite pleased.
It may not be as universal as Paypal, but again, it works here without any major workaround, so it’s something.
If I’m not mistaken, you have written a blog post about it, and I have read it and did end up using Moneybookers. If I remember correctly, it’s slightly difficult to start, but i gets easier. I think they changed their name..
Funny I saw this post by coincidence after having to research for alternatives to Paypal.
I think Moneybookers is a good option too, although I agree it was a bit hard to set it up first.
After the rebranding to Skrill, I think they might be working on the UX a bit too because it already looks more minimal now than before.
Actually I came to know Moneybookers when I wanted to buy Skype-to-Phone credits, so it’s relatively safe to use it too.
Any Idea about Google checkout (I didn’t find much info about it or how widespread it is)? or AmazonPayments (which seemed very complicated)?
This is indeed a very big deal. We need changes to our laws AFAIK first and then you’ll probably see a good dozen of startups like we saw with the Groupon clones last year.