Pakistan Finance Minister Asad Umar has given a four-month deadline to the IT Ministry to bring PayPal or a similar service to Pakistan. Umar’s deadline to bring PayPal to Pakistan stems from the need for an online payment system in the country to boost the IT sector.
Either PayPal or its alternative or a homegrown service
Umar told PTI Social Media in an interview, “Either Paypal or any other alternate virtual payment system but in the next four months or so we should have an internationally acceptable payment gateway for the surging number of startups in the country.”
Underscoring the urgency of the matter, the minister said he is ready to take the next flight to meet with PayPal’s CEO and convince him to start operations in the country. Further, the minister said if PayPal does not come to Pakistan, then they will look for an alternative from anywhere in the world or develop a homegrown online payment system.
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“I’m ready to catch a flight and go and meet @PayPal CEO and reps anywhere in the world to highlight potential of Pakistani market”. Says @Asad_Umar in his live session. “We have given ourselves a 4 month or so deadline to bring a universal gateway to Pakistan” #AsadUmarLive pic.twitter.com/oxm8yKbUhP
— PTI (@PTIofficial) October 13, 2018
Umar said he had met with Prime Minister Imran Khan and the IT Ministry to ensure that they are moving in the “right direction.” He has also asked the IT Ministry to form a task force and even suggested potential members for it.
Last year, authorities suggested that AliPay (now known as Ant Financial) would start operations in the country. Ant Financial, which is part of the Alibaba Group, is a mobile and online payment service. The Chinese company even invested in Telenor Bank in March 2018. Now it is believed the company will start operations in the country some time before the end of this year.
Recently, the State Bank of Pakistan and PayPal’s money transfer service Xoom worked together to collect donations for the nation’s dam fund. The fund was created to support the construction of the Diamer Bhasha and Mohmand Dams. To facilitate donations from many Pakistanis living abroad, PayPal entered into agreements with five local banks: United Bank Limited, Allied Bank, Bank Alfalah, MCB Bank, and the National Bank of Pakistan.
How bringing PayPal to Pakistan could help
PayPal, a U.S.-based financial service, supports online money transfers and is used globally by businesses, freelancers and consumers. It currently has operations in about 190 markets around the world.
Bringing a service like PayPal to Pakistan could prove a boon for the approximately 200,000 freelancers there who earn over $500 million, notes Samaa. Currently, these freelancers use informal non-banking channels to take payments from abroad.
Pakistan ranks fourth in terms of earnings in the freelance market and accounts for 9% of the freelancers worldwide, according to the Online Labor Index published by the Oxford Internet Institute in 2017. However, freelancers in the country face problems receiving payments from overseas.
Bringing PayPal to Pakistan would also support the government’s goal of $10 billion in IT exports by 2025. Presently, the country’s IT exports are at $1 billion. A PayPal-like service would provide a much-needed boost to the Business Process Outsourcing (BPO) industry. Such a service would also benefit the e-commerce industry, both on the buyer’s and the seller’s side.
Challenges in bringing PayPal to Pakistan
This is not the first attempt to bring PayPal to Pakistan. The previous government also expressed intentions to bring PayPal to Pakistan, encouraged by the fact that the Financial Action Task Force (FATF) moved the country from its grey list to its white list. The FATF is a multilateral body that fights terrorist funding and money laundering. However, it has moved Pakistan back to the grey list.
To attract a name like PayPal, the country will first and foremost have to get off the grey list. The government will also have to provide the infrastructure and the supporting regulatory framework to bring PayPal to Pakistan. In addition, if PayPal agrees to invest in Pakistan, it would need access to data about demographics, financial inclusion, the banked population, and market size.
Pakistan’s treatment of internet companies has also been a concern in the past. The country banned YouTube for more than three years. Pakistan also does not have “bilateral or mutual legal assistance treaties for cyber-crime-related cooperation,” according to Samaa TV.
Overall, the IT Ministry has a big task on its hands, and it has only four months to do it, but if it somehow succeeds in attracting PayPal, it could prove revolutionary for the nation’s technology ecosystem.