Why is Paypal not Launching its Services in Pakistan? – Here are the Reasons
Why Paypal is not Launching its Services in Pakistan? We are fortunate enough to live in a world where practically everything may be obtained at a moment’s notice. The digitalization of the globe is progressing, and individuals are finding that technology makes their lives easier. Introducing new technologies such as cellphones, laptops, and other electronic devices into people’s lives can bring about significant transformation.
The business world is increasingly moving toward cashless practices and the adoption of digital financial transactions. People were much more likely to utilize bank cards rather than cash. It is risk-free and without danger.
E-banking and other digital financial solutions are still adopted at a lesser rate in Pakistan compared to other countries. The poll findings indicate that just 21.3% of the general population makes use of banking services. Only 14 percent of those under this category use online banking or make digital payments.
This demonstrates that the digital payment ecosystem is not given a high priority, which may be due to traditional banking practices’ mindset, such as the usage of paper for checks and money orders, or it may be due to other structural issues.
People worldwide have started freelancing and earning money online thanks to technological advancements. The younger generation in Pakistan, which does not have access to many employment opportunities, has shifted its focus toward freelancing. As a result, Pakistan has been ranked as the fourth fastest-growing freelance market, with a 47 percent revenue growth in freelance (Payoneer, 2019). This growth rate places Pakistan ahead of other regional countries like India, Bangladesh, and Russia.
When doing business with customers located worldwide, the most critical question is how you will collect payment for the services you have offered those customers. PayPal is the most dependable and trustworthy platform that freelancers worldwide use to process their payments.
PayPal is an American firm that works in over 200 different markets and has 277 million registered accounts. It is the world’s largest provider of third-party services for monetary transactions and has high-tech account security and a top-notch financial management system. In addition to this, it gives its customers the ability to send, receive, and store funds in 25 different currencies.
Even though PayPal’s services are offered in less developed nations such as Kenya, Nigeria, Somalia, Comoros, Chad, Burundi, and Angola, the Pakistani community can still not use PayPal in their own country. Recently, a delegation from the Pakistani government met with management from Paypal to ask them to begin offering their services in Pakistan. However, Paypal management declined the invitation to start a business in Pakistan.
The failure of PayPal to provide its services in Pakistan can mainly be attributed to the following primary causes, which are listed below.
FATF Grey List
There is no tolerance for the act of money laundering within international payment gateways such as PayPal, Google Pay, and Stripe. Unfortunately, due to various legal loopholes, it continues to have a significant problem in Pakistan. Pakistan is still included on the “Grey List” of countries monitored by the Financial Action Task Force (FATF). This is the primary factor contributing to PayPal’s reluctance to begin offering its services in Pakistan.
Utilization of Credit Cards in Pakistan
The second possible rationale for credit cards is that credit cards have been the primary driver of the digital payment ecosystem. PayPal is concerned about the low rate of Point of Sale (POS) and credit card penetration in Pakistan.
Massive Amount Required for the License Fee to Begin Offering Services in Pakistan
The management of Paypal is not willing to spend a significant amount of money for a license fee, which is the third reason why the PayPal service has not been launched. According to the State Bank of Pakistan, the license price to begin providing services in Pakistan is approximately two million dollars, an enormous sum for businesses such as PayPal, which gets two to three percent from each transaction (SBP).
There are limitations on how long you can keep money in your PayPal account.
The fourth reason is that not long after PayPal began offering its services in India and Bangladesh, the company ran into significant challenges regarding holding any amount of money in a PayPal account due to the regulations imposed by the State’s Bank. Because of this fear, PayPal and other similar firms pondered whether or not they should have a presence in South Asia, particularly Pakistan.
Therefore, the Pakistani freelancing community is still required to wait till it is unknown when PayPal Services will be established. In the meantime, Pakistani freelancers are needed to use alternative payment methods.
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