❊ Lebanon’s “Paypal Problem”

— 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.