It took Samain Abid, 26, nearly two years to scrape together the 120,000 rupees ($454) he needed to buy a PlayStation 5. Before he bought it, he combed through reviews and asked friends for advice. Finally, in January last year, he placed an order with ZipTech, a gaming equipment company that had by then become the supplier of choice for Pakistan’s gamers.
The company’s appeal was clear. It was cheaper than the competition, offering longer delivery times in exchange for below-market prices on imported goods. It also came highly recommended in the Facebook groups that make up the core of Pakistan’s ecommerce industry. It even had a celebrity endorsement from Junaid Akram, a comedian and streamer with more than 924,000 subscribers on YouTube. And finally, it had a charismatic owner, Muhammad Hassan, known in the community as Major Zippy.
Zippy was a huge figure in online gaming circles. In the Pakistani PC Gamers Facebook group—an online community with more than 130,000 members—“people trusted him blindly,” Abid says. “He was philanthropic, selling at fair prices, giving away free laptops and PlayStations, almost like a messiah.”
But a year after he ordered it, Abid’s PlayStation still hasn’t arrived. At least 260 people, according to a spreadsheet circulating in the Pakistani PC Gamers group, claim to have been scammed by ZipTech, to a total of 67 million rupees—around $290,000. Zippy, too, has disappeared. Calls to Major Zippy’s cell phone went unanswered, as did emailed requests for comment. “It was a huge betrayal,” Abid says. “He gave us hope and then took it away.”
The scandal has been gutting for many in Pakistan’s gaming community, but it’s also demonstrated how little attention the authorities pay to the security of digital spaces. Facebook groups and peer-to-peer sales over social media and messaging apps dominate in Pakistan’s fast-growing but largely informal online economy. The pandemic—and ongoing economic turmoil in the country—has moved traditional sellers online and led to more people looking for ways to make a fast buck. But as ecommerce has grown, so too have scams, frauds, and incidences of apparent mismanagement that have left customers out of pocket, threatening the integrity of the ecosystem.
“Everyone is hungry—on both sides. The scammers, and the scammed,” says Meenah Tariq, cofounder and CEO of accounting app Metric. “We are existing in a state of dread.”
For years, Pakistan’s digital economy has seemed on the cusp of dramatic growth. The country’s young, increasingly online population has attracted a flurry of startups and VC investment looking for opportunities to convert a largely cash-based, informal economy into a digital one. Studies indicate that nearly 60 percent of Pakistan’s economy is informal, with the majority of local companies undocumented and outside the tax net.
However, formal ecommerce platforms haven’t gained a great deal of traction in Pakistan because most transactions are cash-based. Studies estimate that nearly 95 percent of ecompanies in Pakistan receive payments for their online orders via cash-on-delivery—and a large unbanked population makes the transition to digital payments only more difficult. Smaller sellers also prefer to stay outside of the tax system, which means continuing to transact in cash rather than moving on to digital payment systems.