Sci & Tech

Boon or Bust?

Boon or Bust?
Boon or Bust?

This week a Turkish company announced signing contracts with an Iranian partner to offer e-commerce payments to Iranian online consumers.

Is this a boon for the Iranian shopper or has the Turkish upstart just locked out the Iranian public from international competition like Paypal?

The Iyzico’s (pronounced Ieztco) deal with local platform PECCO lets customers process transactions from millions of cardholders that were until recently not linked to any financial system outside Iran, according to a Bloomberg report published earlier in this paper.

But should Iranian consumers be getting excited about being able to pay for items with their internal debit cards for the first time?

Maybe, maybe not.

The fact of the matter is that as Iran's banking system begins to open up, the local e-retailers need to be on an equal footing.

What this deal does is give the foreign company carte blanche to sell to Iranians who now have the ability to pay in any international currency. This could harm the local online business community if they are not ready for the huge wave rising over the domestic business landscape.

  Stymieing the Competition

"We’re fulfilling the role PayPal was providing in places like Germany where they were the preferred provider during that country’s digitalization phase," said company director, Barbaros Ozbugutu, which is good in one way because the American company could not enter the local market anyway due to ongoing constraints on US companies.

Iran's online payment methods have been hit or miss in recent years with many people still opting to pay for their online purchases through direct card-to-card payment much of the time, as well as cash payment on delivery.

The Turkish system could integrate with the local system if it were properly implemented and as they claim to be now able to interact with 231 million local debit cards, which is on average three debit cards per person for everyone in Iran.

Moreover, education for local retailers that this system brings along is also an important factor, so business is not lost to foreign competition.

Local retailers have been quick to understand modern payment methods, whether that be point of sale systems and other electronic payments.

Local e-commerce sites have been slow to respond to the announcement that pegs them against foreign competition while compelling them to directly face off their Turkish rivals.

Iran's largest e-retailer, Digikala, was contacted by Financial Tribune to ask them their thoughts on the new deal, the company CEO Hamid Mohammadi, said the Turkish company had not contacted them about entering the local market.

But, for companies like Mohammadi's and many other e-commerce platforms, they could muster 80 million customers more in the next Iranian year (starting March 20).

  Turkish Speakers Wanted

With this in mind, Iran's e-retailers could mobilize their northwestern brothers from Tabriz and Urmia for appealing to the broader Turkish-speaking market.

Another recent entrant to online sales, Leila Daneshvar of KTMA—an online medical supplies company, said, "If I can access the Turkish market on the same level as the Iranian market, then I expect to boost my sales significantly."

The CEO stressed that Iranian companies need to up their game with packaging "as Turkish consumers are particularly picky with packaging requirements".

Iran has historically never catered businesses to the Azeri-speaking population in the country's north, but it could possibly give a huge economic boost to that section and open direct business opportunities.  

Whichever way one looks at the potential disruption this Turkish startup may bring, the new payment system's entry means one thing: quick payment procedures and larger profits.