PayPal refusal

Published May 20, 2019

AMERICAN online payment giant PayPal will not be coming to Pakistan, a Senate committee was told last week. Despite the government’s efforts to convince the company, which is a widely popular system supporting online money transfers, the IT secretary said it is not ready to enter Pakistan “due to its internal working”. The announcement comes after former finance minister Asad Umar vowed to bring PayPal to Pakistan shortly after the PTI formed the government — a promise that had generated hope and excitement at home about the possible entry of a company of this stature. PayPal’s refusal has come as a blow to the local freelance community, which is said to be bringing considerably high revenue for Pakistan. These freelancers sell their services in the online marketplace for projects which are outsourced by international clients for development in Pakistan. A trusted and convenient payment gateway like PayPal not only makes it easier for local freelancers to receive payments for projects, but also encourages international customers to make these payments electronically to a system which is secure. Currently, PayPal operates in about 190 markets around the world and is a recognised gateway which is used to send money, make online payments, receive money or set up a merchant account. Many registered users place their trust in the digital gateway because of its efficient dispute-resolution system that avoids the conventional bureaucratic processes of banks which largely rely on tedious documentation.

Although PayPal’s refusal is disappointing, it should also push the government to make a renewed effort to expand Pakistan’s promising e-commerce industry. First, the government must share details about PayPal’s reluctance to enter Pakistan at this stage. If it is indeed due to its internal processes, the government should pay attention to the gaps in the system which can be filled to make Pakistan a lucrative and safe market for PayPal. Second, in the absence of PayPal, the government must support local e-commerce players by facilitating companies to innovate payment platforms which appeal to international clients. Traditional small-scale enterprises should be encouraged to sell online to international consumers, and international buyers should be provided a system they can trust. The State Bank’s high licence fee which discourages innovation in this space must be revisited. The outlook of the government should be geared towards boosting the confidence of local sellers — otherwise, it will risk losing out on revenue.

Published in Dawn, May 20th, 2019

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