E-Commerce Reforms in Developing Countries

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E-Commerce Reforms in Developing Countries

In order to bring the same level of usage of internet and ecommerce in the developing countries as it is in a developed country, there is the need to address regulatory, economic as well as social issues. It is easier to make consumers realize ecommerce benefits if the political and regulatory barriers are overcame. The above-mentioned barriers are easier to overcome as compared to socioeconomic barriers. From previous literature, it is evident that primary factors negatively affecting ecommerce adoption and growth are low internet usage, high costs of using internet, inefficient delivery systems and low penetration of electronic payment modes such as credit cards. These factors are critical in relevance to developing economies. It is clear that there is need of the mechanism that supports electronic payment which means there needs to be strong link between the financial institutions and ecommerce development if the ecommerce business is to be promoted. Such electronic payment system needs to be efficient in order to facilitate the adoption as well as diffusion of ecommerce. Previous literature also reveals that there is strong need of high security so that clearance and authorisations can be trusted. The method of cash on delivery that is utilised by many ecommerce businesses is not effective when the business is online.

The need of electronic payment system is evident in the case of business to business transactions if cost effectiveness as promised by the service provider is to be achieved.  Another area requiring attention is the security of financial transactions where liability must be clearly identified and practiced. Use of credit cards varies in the countries as in China; consumers avoid audit trails possible through credit cards. On the other hand, in Taiwan, consumers fear theft of identity and unlimited liability in case of fraud that makes them unwilling to use the credit card for online internet transactions.

Another obstacle in ecommerce business success is the absence, of any central bank or financial institution payment mechanism that can monitor ecommerce transactions in order to ensure full efficiency. In order to allow on time delivery through ecommerce, it is necessary that the transactions are authorised in real time between the payment institution and internet business. There is the comparatively, lower institutional risk if the time between authorisation and actual payment is shorter. Lastly, there needs to be an effective delivery system that can enable faster development to ecommerce. This is because of the prime benefit of ecommerce is speed and thus just-in-time processing is the key to success. If there is the absence of efficient physical delivery and distribution system, then ecommerce cannot sustain.

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