Online payment system PayPal has entered an agreement with digital payment service Payoneer to establish its presence in Pakistan allowing freelancers to receive money from abroad. The joint venture is expected to be announced this week.
Payoneer, an existing international payment gateway, catering to freelancers and IT professionals, will secure freelancers’ earnings from abroad and transfer them into the recipient’s bank account in Pakistan, according to media reports.
It is yet to be seen how much Payoneer will charge PayPal and freelancers on its services for transferring money.
Is PayPal coming to Pakistan? No!
Contrary to the claims of Pakistan’s caretaker IT Minister Umar Saif, PayPal is not bringing its operations to Pakistan, directly or indirectly. The minister, who earlier claimed to bring PayPal operations to Pakistan, said on Friday that PayPal would operate indirectly in the country through a partnership with Payoneer.
However, sources have confirmed that the PayPal-Payoneer partnership in no way means that the former would start operations in Pakistan in any way. The joint venture between the two digital payments companies would allow PayPal as a payment method for Payoneer users.
For example, if you are a freelancer working with a US-based company, you can receive payments via Payoneer using your debit or credit card. The new partnership allows Payoneer users to also use PayPal to receive payments, just like their debit or credit card.
“Currently, the restriction for Pakistani users is that they can simply not create an account on PayPal from Pakistan. They can, however, do that if they are, say, a citizen of the UK or the US,” a source familiar with the matter told Pakistan Today.
“This partnership in no way means that users in Pakistan would be able to open a PayPal account directly or via Payoneer.”
The PayPal-Payoneer joint venture is not Pakistan-specific and spans across all geographies where Payoneer operates.
What is holding PayPal from entering Pakistan?
A study by the Pakistan Institute of Development Economics (PIDE) suggests that
- A study by the Pakistan Institute of Development Economics (PIDE) suggests that PayPal’s absence in Pakistan is linked to perceived limitations within the electronic money institutions (EMIs) licensing system.
- Concerns about money laundering and constraints imposed by the Financial Action Task Force (FATF) on Pakistan are also highlighted in the study as reasons for PayPal’s non-operation.
- Additionally, the study identifies exchange control regulations and data privacy issues as significant hurdles preventing PayPal from functioning in Pakistan.