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E-motional blackmail: who’s really afraid of a little online business?

E-motional blackmail: who’s really afraid of a little online business?

Fraud and identity theft are not enough to keep consumers from choosing to shop online. But heavy bank charges might do the trick if banks are allowed to carry on.

January 8, 2012 3:13 by



HSBC has a long running promotion for its Advance credit card users. The promotion allows the cardholder to get one complimentary ticket for every movie ticket they purchase (up to 3 free tickets depending on the credit card category).

The peculiar catch to this promotion is that creditcardholders cannot avail of the same promotion online. So you’ll still have to go through the long queues at the cinema to avail of the promotions.

At the counter, when we asked why we couldn’t avail of the promo online, we were simply told that it was “what the bank wants”. Although of course we can’t know for sure.

What we can tell you is that it’s not just HSBC that does not extend its promotions with VOX to online purchasing. Other banks, Emirates NBD and Najm, as well as payment merchant Visa all require its members to queue up to avail of their individual promos.

So what’s the deal? Why not incentivize people to buy online? It will make processes more efficient and lessen the need for unnecessary handling. And we’re pretty sure the proper checks and balances are available.

In just four years, online purchases in the Middle East is expected to double in value to $2 billion, according to a Euromonitor survey that covered the UAE, Saudi Arabia and Egypt.

Consumers in the UAE alone have spent $226.8 million last year—a figure that is expected to grow to $270 million this year. The increase, according to Euromonitor’s Sana Toukan, is attributed to an increase in credit card subscription and a slight increase in home-computer use in the Emirates.

With current numbers summing up to the tune of more than a billion dollars, it looks like anyone involved in e-commerce won’t even have to wait until 2016 to get a sizeable benefit from the market.

Easy pickings? Think again.

There’s actually an underlying tug-of-war going on between online retailers who want to push the online market forward and the banks which are unsurprisingly still struggling to find its proper place in the online purchasing process.

This isn’t a new battle. It’s something that’s been brewing for more than a decade now. Bankers are saying people are still afraid of fraud and identity theft online while retailers are saying that’s not true anymore and that the only thing standing in the way of rapid e-commerce growth are excessive bank fees and convoluted payment processes.

“Banks, I cannot describe the commissions they charge,” Julien Pascual, chief executive of Emirates Avenue.com, was quoted in The National, talking about how high the credit card fees for online purchases are in the UAE. The site still deals through cash-on-delivery because of heavy bank fees eating into margins. Pascuals says the banks charge up to 6 percent for online transactions.

I recall when Living Social (then GoNabit) was born in 2010, one of its co-founders, Dan Stuart, shared a story about how they had to come up with their own new payment process that was then put in place in the banks so that online group purchases was possible.

So are banks just too slow to catch up to the online purchase trend, even as we enter the year 2012?

Let’s face it, fraud and identity theft will always be there. But the truth is, with the success of global shopping brands like Amazon.com and even fashion sites like net-a-porter.com combined with the undeniable tech-savvy of the youth in the Middle East, it’s getting pretty hard to say with a straight face that online purchase is still a ‘relatively new concept’ in the region.

It’s always been here. People just didn’t have a choice but to turn to global sites because there were no local options to buy online. It’s only recently that businesses are finally getting clued in and actually presenting local option to buy online (—thank you, group-buying sites!). And now banks have no other option. They just have to face the music, just as much as other brands have had to cope with the immediacy and efficiency of online processes.



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