Why did Citibank Pakistan discontinue ecommerce gateway services, and what systemic issues make banks reluctant to offer them?

Internet Payment Gateway Services are coming to Pakistan. It was not that the Banks were hesitant to provide such services, the business case just did not make sense at the time.

Here are some factors that contributed to the low use of online credit cards in Pakistan and for the numbers not working in favor of the business case

• The number of credit cards in circulation at the time were low
• Internet number for Pakistan were dismal at the time (circa 2002-2003, etc.)
• Debit cards were not prevalent at the time
• Risk mitigation systems, explicitly with respect to AVS, etc. were not working.
• IP mapping services were poor (think MaxMind)
• Business Rules for Fraud Mitigation were not defined well for this part of the world (they are now).
• Fraud Management Systems that would cater to market segments outside the West, were not widely available. If they were, they were not acclimatised to the local geographical variables
• Very few merchants were online
• Online shopping posed a huge challenge to the general online population on the whole
• The transaction numbers and the income from those, did not make a strong business case. The numbers were dismal with a few players and it really required a few 1000 active merchants to be in the space (which never happened)
• Infrastructure cost and payment gateway connectivity charges were very high, thus the per unit cost per transaction was very high

All of the above have now changed.

• Internet users are 30+ Million
• Facebook has transformed the online experience for millions
• 8+ Million Facebook users
• Per unit cost for hosting, infrastructure has gone down dramatically
• Banks are not well connected
• Large numbers of Debit and Credit card holders
• People are more inclined to making online purchases
• Over 650+ merchants online (still low, but nonetheless much better than what it was a decade ago)
• Ease of setting up an online presence
• Seasoned risk mitigation and fraud management services now available
• Large populous of technical talent in the IP space
• Rise of e-services (e-banking, etc.)
• Mobile usage, especially smartphones are pushing the case for online transactions
• Transaction number have improved dramatically
• Multiple payment gateway connectivity now available
• Geo-IP services have improved dramatically
• Business Rules for Fraud management, etc. have evolved
• Ease of connecting to EFT and Core Banking Softwares
• Bank's infrastructure is now more IP tolerant
• Connectivity costs have plummeted
• Market demand has improved

Statistics Source: Asia Internet Usage Stats Facebook and Population Statistics