The government of Pakistan is currently in talks to introduce a worldwide payment partner like PayPal Pakistan, which has shed a great deal of positive light on Pakistan’s IT-related exports. This came to light during Monday’s meeting of the Senate Commerce Committee.
Participants were also briefed on the formation of the first-ever National e-Commerce Council in the country. Senator Zeeshan Khanzada presided over the meeting at Parliament House. According to the report, Pakistan’s e-commerce market is the 37th largest in the world and is expanding rapidly.
Members of the committee emphasised the significance of e-Commerce and online services maintaining a high standard of quality in order to win the confidence of consumers and reach their full potential. Senator Tarin made the shocking claim that, due to high taxes in Pakistan, freelancers there have stashed away $3 to $4 billion abroad.
Senator Afridi was informed by government representatives that discussions had been made with PayPal and other similar payment gateways in an effort to bring them to Pakistan. The Senator was informed by the officials that;
“Payments on marketplaces like Amazon are currently being processed through a different payment gateway connected to PayPal, but we are working to launch this service in Pakistan as soon as feasible.”
The ex-finance minister also proposed a 10-year tax break for independent contractors. He urged the appropriate authorities to let independent contractors open bank accounts denominated in any currency they choose. At the event in question, Senate Deputy Chairman Mirza Muhammad Afridi made the observation that introducing international payment systems like PayPal in Pakistan would be beneficial to the country’s IT exports.
What’s stopping PayPal from being available in Pakistan?
PayPal was unable to launch in Pakistan initially due to numerous technical, legal, and support challenges.
Historic Government Actions.
Although some people have made an effort in this direction during the past decade or so, official efforts have been lacking. The attitude surrounding the digital economy and the low emphasis accorded to it by our government is one of the key difficulties facing Pakistan today. The digital ecosystem in Pakistan has been an afterthought, holding back the country’s tech sector, until very recently.
It’s high time for Pakistan to foster an environment welcoming enough for PayPal to warrant the company’s presence there. Any entrepreneur operating an online store that needs to pay a Chinese supplier can do so without any hitches.
Problems with the Law.
Our regulatory philosophy is also a major contributor to our current success. If PayPal wanted to operate in Pakistan, it would have to pay the SBP’s required $2 million licence fee. Perhaps Elon Musk and Peter Thiel wouldn’t have had to launch small firms like PayPal to automate payments in the US if they were subject to the same restrictions as elsewhere in the globe.
To make matters worse, PayPal takes between 2% and 3% of each transaction, making international money transfers prohibitively expensive. Even if you send and receive $100 million a year, it still wouldn’t be enough to cover the $2 million licence cost. Most businesses would be put off by this, the ever-present threat of financial fraud, and the stringent regulations imposed by bodies like FATF.
An indemnification fund for these businesses is one solution, but it would require significant government involvement to achieve.
PayPal’s Value Decreases in Pakistan.
The economic strategy of PayPal is rather intricate, limiting it to becoming a pure transaction processor. Even in countries with relatively lax restrictions, like India, PayPal is unable to facilitate individual transactions. PayPal is the only option for sending money to a bank account in India.
Customers in Pakistan do not have access to a unified system or a single platform for making interbank transfers. Companies like PayPal in the United States and India can link to any bank to handle payments without having to first obtain a banking licence. In order for PayPal to offer its services in Pakistan, it will require a licence and adhere to stringent financial rules.
