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Contrary to the assertions of Pakistan’s caretaker IT Minister, Umar Saif, it has been clarified that PayPal has no plans to initiate operations in Pakistan, either directly or indirectly. The minister had announced on Friday that Pay Pal would establish an indirect presence in Pakistan through a collaboration with the existing payment service, Payoneer.
Nevertheless, reliable sources have debunked the notion that this partnership signifies PayPal’s commencement of operations in Pakistan in any form. Instead, Payoneer is entering into an agreement with Pay Pal to enable as a payment method for Payoneer users.
For example, if a US-based company outsourcing work to freelancers in Pakistan wishes to make payments, it can use Payoneer, including options like debit or credit cards. This new collaboration allows Payoneer users to utilize Pay Pal for payments, akin to using their debit or credit cards.
A source familiar with the matter explained, “Currently, the restriction for Pakistani users is that they cannot create a PayPal account directly from Pakistan. They can, however, do so if they are citizens of the UK or the US.”
The partnership is not exclusive to Pakistan but extends across all regions where Payoneer operates. Making the partnership Pakistan-specific, as suggested by the minister, might adversely affect the country’s efforts to bring Pay Pal into the market.
Read Also: Tech Transformation: Pakistan’s Bold Steps for Freelancers and IT Growth
The quest to bring Pay Pal to Pakistan has been a focal point in the policy discussions of IT ministers due to increasing demand from freelancers. Pakistan, recognized as a rapidly growing freelancer market globally, holds the fourth position in terms of freelancer numbers. Last September, Minister Umar Saif had expressed active efforts to bring both PayPal and Stripe, another global payment service provider, to Pakistan. However, no progress has been made since then.
A study by the Pakistan Institute of Development Economics (PIDE) indicates that PayPal’s reluctance to operate in Pakistan is mainly attributed to perceived restrictions associated with electronic money institutions (EMIs) licensing, concerns about money laundering, and restrictions imposed by the Financial Action Task Force (FATF) on Pakistan. Additionally, the study identifies the exchange control regime and data privacy as major obstacles preventing PayPal from operating in Pakistan.