What alternatives exist to 2Checkout for Pakistani ecommerce businesses facing high cross-border fees?

Not many. But when you factor in the have versus the have-not, even costly makes sense. Paying near 5% for 3rd party processing where you are not being underwritten, etc. is not a bad number. Try getting it from the local merchant account providers and then you will find out, the differential is marginal. The conversion part, 2CO has no say in it, it is the correspondent banks and your local bank's conversion rates that make the currency cut as is.

But it you treat this as an incoming remittance and obtain a PRC (Proceeds Realization Certificate) on it, the income is tax free, so even a 7% conversion is worth it.