Why Paypal is not Launching its Services in Pakistan?

TrickPk 6/6/22  Recently , Updated

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We're live in a world where practically everything is available at our fingertips. The world is becoming more digital, and technology is making life easier for people. The availability of smartphones, laptops, and other electronic devices has revolutionised human life. The business community is embracing digital financial transactions and implementing cashless practises. People chose to pay with credit cards rather than cash. It is less dangerous and safer.

Pakistan still has a long way to go in terms of implementing E-Banking and Digital Financial Solutions. Only 21.3 percent of the population uses banking services, according to the report. Only 14% of this low percentage uses digital payments and E-Banking. It demonstrates the low attention placed on the digital payment ecosystem.

People began freelancing and earning money online as a result of technological advancements. Pakistan's young generation, who are unable to find work, has turned to freelancing, and the country is now ranked as the fourth fastest-growing freelance market in the world, with a revenue growth of 47 percent (Payoneer, 2019), outperforming regional countries such as India and Bangladesh, as well as Russia.

When you're working with customers all over the world, the most important issue is figuring out how to get paid for the services you've delivered. Paypal is the most reputable and trustworthy platform used by freelancers around the world.

PayPal is an American company that operates in about 200 markets and has 277 million registered accounts. It is the world's largest third-party services provider of monetary transactions, with high-tech account security and a top-notch financial management system. Customers can also send, receive, and retain funds in 25 different currencies.

Paypal services are available in developing nations such as Indonesia, Kenya, Nigeria, Somalia, Comoros, Chad, Burundi, and Angola, but the Pakistani community is still unable to use the service. Recently, a Pakistani government delegation met with Paypal management to invite them to begin operating in Pakistan. However, Paypal management declined to do so.

Reasons About Why Paypal Not Launching Its Services In Pakistan

Here are some of the key reasons why Paypal isn't launching right now.

FATF Grey List

Money laundering is not tolerated by international payment gateways such as Paypal, Google Pay, and Stripe. Unfortunately, due to several loopholes, it is still very common in Pakistan. Pakistan remains on the Financial Action Task Force's (FATF) Grey List. This is the primary reason for Paypal's reluctance to launch its services in Pakistan.

Credit Cards Are Widely Used In Pakistan

The second reason could be that credit cards have been the driving force behind the digital payment environment, and PayPal is looking towards POS and credit card penetration in Pakistan, which is unhealthy.

Huge Amount of License Fee to start Services in Pakistan

The third reason for the Paypal service's non-launch is that Paypal's management is unwilling to pay a large licence cost. According to the State Bank of Pakistan, the licence price for starting services in Pakistan is over $2 million, which is a huge sum for corporations like PayPal, which earns two to three percent each transaction (SBP).

Restrictions on Keeping a Fund in a Paypal Account

The fourth reason is that, immediately after PayPal launched its services in India and Bangladesh, it was faced with stringent restrictions on the holding of any amount in a PayPal account due to State Bank regulation. This fear prompted PayPal and other similar companies to consider whether or not to expand into South Asia, notably in India.

So still Pakistani freelancing community has to wait for an unknown time when Paypal Services will be started, Pakistan freelancers have to use alternate options.