Still no PayPal

The past few weeks brought good news to Pakistan, particularly for the youth. Amazon has announced its decision to add Pakistan in its sellers list. This certainly is good news for Pakistan’s budding e-commerce sector. Now, Pakistani traders shall be able to export their products to all over the world through Amazon.

But to little avail is the branching out of Amazon into Pakistan, since the most trusted and secure method of online payment, PayPal, does not work here. PayPal is a financial technology company that allows its users to easily exchange money online. The company is fully functional in more than 190 countries with 361 million active users worldwide. With the coming home of Amazon, the freelancer community is demanding the establishment of a Pakistani extension of PayPal.

In 2019, a Payoneer index reported that Pakistan has the fourth largest freelancer community in the world. In 2020, the same fintech company reported that Pakistan is the world’s eighth fastest-growing freelancing economy. Currently, there are around one million freelancers in Pakistan and yet the Pakistani freelancers have no reliable payment options. The unemployment caused by the coronavirus pandemic has been among the prime factors behind this growing number. The number of freelancers could grow further once an operator such as PayPal enters the marketplace.

The unavailability of PayPal is hitherto the biggest plight of the Pakistani freelancer community. Almost all online job platforms have a PayPal option. Some accept only PayPal. There are other alternatives to PayPal such as Payoneer, Wise and UnionPay. But, the ease of user interface, timeliness and compatibility offered by PayPal makes it stand out among its competitors. Most good clients refuse to work with Pakistani sellers because they only trust PayPal for online transactions. This nullifies the proposition of a ‘domestic alternative’. PayPal’s absence is significantly felt, especially in the online working community.

The available payment systems sometimes charge as high as 30 percent of the transaction amount as their fee. PayPal, on the other hand, charges as low as 2.9 percent of the amount per transaction. It favours the seller as they manage to get the most in exchange for their services or products.

There are several unethical, otherwise illegal, means to access PayPal while existing in Pakistan. Users have to go at great lengths to open a PayPal account. But even then, in the majority of cases, the account is suspended because the area of accessing is easily traceable by such a fintech giant. As a result, the payment for completed work stays stuck in the account.

Pakistan has millions of dollars stuck in PayPal paid by foreign clients. Due to its unavailability in the country, that fortune cannot be availed. The unemployment bulge in the last two years has only added to that forbidden fortune.

The Covid-19 pandemic has left approximately 20.6 million Pakistanis jobless. Many have turned to online platforms for earning opportunities. In a poverty-ridden country, people will have no option but to try to make it in the online business. Therefore, PayPal will become extremely important in the future.

Availing PayPal services will eliminate the commission fee of a third party as it directly sends cash to one’s bank account for a nominal fee. It will also open a wide door for dollars to enter the country, increasing Pakistan’s foreign reserves.

Apart from PayPal exigency in Pakistan, the company itself has a lot to gain by extending its services. Currently, there are over 3.3 million registered small and medium-sized enterprises (SMEs) working in Pakistan, which is far greater than Bangladesh – a country where PayPal has been rendering its services since 2017.

In 2015, Pakistan made its first request to PayPal to render its services in the country. Another attempt was made in 2019 by the Ministry of Information Technology and Telecommunication. But no follow-up step has been taken by the authorities to bring PayPal to Pakistan.

A straightforward question: why has the government still not been able to bring PayPal to Pakistan, and why are other such companies, like eBay or Stripe, still not operating in Pakistan, even though they operate in similar countries? In 2019, the Ministry of IT stated that PayPal declined its request due to internal issues. Apparently, PayPal did not have these ‘issues’ with some 200 countries where it is functional. No official rationale for rejecting Pakistan has been made public by PayPal itself.

According to Sunny Ali, the founder of Extreme Commerce, the government of Pakistan had been unable to fulfil the demands of PayPal regarding the banking system. The banking system of Pakistan does not support overdraft, which is among the requirements of the PayPal mechanism. Some relevant laws regarding cybercrime are also missing. The decades-long conundrum of wretched governance never ceases to haunt Pakistan.

In order to bring PayPal to Pakistan, some serious work, as opposed to rabble-rousing, is required. The State Bank of Pakistan (SBP) should reduce its licensing fee for PayPal, which is $2 million. Acquiring a licence is yet another hurdle for foreign fintech service providers to take interest in Pakistan’s market. Getting licensed by the SBP is a fairly cumbersome process. Foreign companies should be provided with incentives to work in Pakistan. Investment-friendly policies must be devised for foreign investors like PayPal. Similarly, reforms in cybercrime laws are necessary to provide assurance to foreign investors.

If the government keeps on neglecting the need of digitization, the potential companies and individuals will start to invest abroad. This will primarily benefit foreign countries as the money will not be circulating inside the country.

The unavailability of companies like PayPal, Google Pay and Apple Pay makes Pakistan an alien in the international digital market. Pakistan cannot be recognized as a reliable entity of international market unless it is financially compatible with the rest of the world. Now that Amazon is here, the addition of PayPal can open all other platforms longed for by the service providers and traders of Pakistan. Unless we observe some action in the concerned departments, no hope can be associated with a Pakistani chapter of PayPal.

The writer is an engineer and a scholar of history and politics. Email: naumanahmadbhatti@gmail. com