E-commerce has a long way to go

JEDDAH: E-commerce is struggling in Saudi Arabia because of a lack of regulations controlling the industry.
In the last 10 years, businessmen wanting to invest in the field have been deterred by issues relating to intellectual property rights and online payment methods.
Arab News interviewed Yousef Al-Rasheedi, owner of an online shopping network who has to rely on the good will of his customers to pay him. The reason, he said, is the lack of effective online payment methods.
“Most people here don’t have credit cards or don’t know how to use them,” he said. One way to make an online payment is through the SADAD payment system set up by the Ministry of Finance in cooperation with Saudi banks,” he said.
But Al-Rasheedi said SADAD charges a high commission and caters to large companies. Besides, they have stopped signing up other companies lately,” he added.
“Rechargeable cards are one way to make online payments but not many people know about them and the commission charged is relatively high,” he said.
The most popular online payment method used by people is the direct transfer of money between bank accounts, which Al-Rasheedi claims is insecure.
An inefficient and slow mailing service is also responsible, as customers want fast delivery of goods to their doorstep.
Al-Rasheedi says current service is limited to shipments between companies and a customer still has to pick up his or her purchase from the company. “Plus there’s no guarantee against loss or damage,” he said.
The lack of regulations in the Kingdom to protect intellectual property is a threat to the future of the business.
Al-Rasheedi said: “There are no laws currently in place. I spoke to the Ministry of Information and was advised to register my online business in another country, like the United States, to protect it. It seems unlikely this issue will be resolved soon.”
The absence of consumer protection against fraud is another major problem. A cyber crimes law was passed here several years ago but Al-Rasheedi says it only pertains to defamation and blackmail.
“The law doesn’t deal with electronic trading fraud. Add insult to injury by making it easy for fraudsters to obtain untraceable phone numbers,” he said.
Lots of Internet users access from tablets and mobile phones. Consumers are tech-savvy but the shortage of qualified IT specialists here makes it difficult to keep up with a fast-changing technical world.
Al-Rasheedi said there are no official stats on e-commerce in the Kingdom, which makes investing in this field risky until changes are made.
He admits depending on people’s good will is dangerous but it leaves a lasting impression on his customers. “Trust is a big factor in our business,” he said.
He remains positive the e-commerce culture will develop and grow in the Kingdom in the near future.