Contrary to Pakistan’s caretaker IT Minister Umar Saif’s claim, PayPal is not going to start operations in Pakistan, directly or indirectly. On Friday, the minister stated that PayPal would operate indirectly in Pakistan through a partnership with an existing payments service called Payoneer.
Sources have, however, confirmed that the partnership in no way means that PayPal would start operations in Pakistan in any way. According to details, Payoneer is entering into a partnership with PayPal to allow PayPal as a payment method for Payoneer users.
For instance if you are a US-based company that outsources work to freelancers in Pakistan, you could make payments to freelancers via Payoneer using your debit or credit card. The new partnership allows Payoneer users to also use PayPal to make 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,” said a source familiar with the matter.
“This partnership in no way means that users in Pakistan would be able to open a PayPal account directly or via Payoneer.”
The partnership is not Pakistan specific and spans across all geographies where Payoneer operates. According to a source, the minister making this partnership Pakistan specific could turn out to be counterproductive for Pakistan’s plans to bring PayPal into country.
The issue of bringing PayPal to Pakistan has been at the center stage of policy debates of all IT ministers in recent years because of a growing demand from freelancers to bring this service to Pakistan. Pakistan is considered a rapidly growing market of freelancers in the world and was recently ranked as the fourth largest country in terms of numbers of freelancers.
In September last year, caretaker minister Umar Saif had said that his ministry was actively working to bring PayPal and Stripe, another global payments service provider, to Pakistan to meet the demand of a one-way payments service for freelancers. The minister had then said that conclusive news could be expected in this regard in the next two months.
There has, however, been no headway in this regard since. According to a study published by the Pakistan Institute of Development Economics (PIDE), PayPal not starting to operate in Pakistan could be mainly attributed to perceived restrictions associated with electronic money institutions (EMIs) licensing regime, concerns around money laundering and restrictions placed by the Financial Action Task Force (FATF) on Pakistan.
The study also attributes exchange control regime and data privacy as one of the major obstacles that prevent PayPal from operating in Pakistan.