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Freelancers disappointed over PayPal refusal to function in Pakistan

KARACHI: Pakistan’s freelancer community, which is considered to be the 4th biggest on the globe, has expressed upset over records of PayPal not extending its services to the country. PayPal functions a worldwide online cash system that helps online cash exchanges refused to begin its services in the country. The corporation operates in 190 markets across the world. There has been a frequent need from freelancers and e-commerce players to bring PayPal to Pakistan. Former financial minister Asad Umar had also shown commitment to facilitating its arrival.

On Thursday, a Senate committee was informed that the US corporation would not come to Pakistan. “PayPal did not decline because it has problems working in Pakistan, but their internal working is such that they are not ready to introduce services in Pakistan,” Information Technology Secretary Maroof Afzal had said to the Senate standing committee on IT. If PayPal comes to Pakistan it will facilitate around 200, 000 freelancers and over 7, 000 signed up small and medium enterprises ( SMEs). Besides, there are also thousands of e-commerce contributors who are not registered.

“PayPal is the de facto settlement mechanism abroad. What has happened in the absence of PayPal or an internationally recognized payment gateway is that freelancers and SMEs have hacked different ways of doing solutions and getting money from abroad,” Secretary-General of [email protected], Shehryar Hydri declared while speaking to Dawn. Explaining how these hacks work, he declared the SMEs had accounts opened abroad through their relatives or somebody they know and get payments there. “From the government’s viewpoint, this is a major leakage in the system when people are forced to keep their cash abroad,” he added.

About PayPal’s reservations overextending its services to Pakistan, Mr. Hydri regretted that a major drawback was that the point-of-sale system ( POS ) had not really taken off. “International companies such as PayPal look into exchange numbers and bank accounts when considering subscribing to a market. In Pakistan, POS and credit cards penetration is not healthy,” he declared. Based on the State Bank of Pakistan, the whole number of credit cards currently stands at 3 .6m whereas the share of debit cards is 52 .4 percent with 21m cards granted by business banks. By the end of 2017, the number of bank accounts has achieved 49m.

“To be able to move ahead, we need a worldwide recognized payment gateway like Alipay and a home-grown payment mechanism that benefits the economy domestically,” suggested Mr. Hydri. Given PayPal’s demand due to the easy-to-use mechanism, trust across the board and fraud prevention, the freelancer community, which is presently utilizing non-banking ( informal ) channels to receive payments, is faced with a host of problems. “The dollar price for payments at banks is extremely different from the open market. If the exchange rate is Rs148 for a dollar, we get the payment at Rs141,” declared Faiza Yousuf, founder of OuttaBox corporation in Karachi.

Faiza, who relies on multinational payments for financial operations, declared that relying on bank transfer and local channels meant waiting for days to receive payment. “With PayPal, one can send the invoice directly to the customer or through easy integration on the website within 2 mins,” she declared. Besides discounts and delays in payments, the choice of clients available to work with local start-ups and freelancers is also limited. “On Upwork ( a global freelancing platform), most clients refuse to work because they only trust PayPal for transactions,” she added.

In August 2018 , according to the SBP , Pakistan’s IT export crossed $1 billion tag for the very first time in history . The PTI government has chalked out plans to boost IT exports to over $6 billion by 2020 and $10 billion by 2025 , and has also emphasised on the digitisation of the economy and the IT sector . It has created a special task force on IT , comprising big names of the industry , to create jobs and facilitate exports . However , the e-commerce community believes that the government is not doing enough to facilitate the IT industry .

“PayPal never agreed to come to Pakistan in the first place. Pakistan’s industry capacity is bad enough for the American company and even the credit card penetration is less than three million,” declared the National Incubation Centre, Karachi director Shahjahan Chaudhry while speaking to Dawn. “We need to work on our value proposition to convince such corporations to come to Pakistan. We are not answering what they need,” he declared.

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