Contrary to the assertions of Pakistan’s caretaker IT Minister Umar Saif, PayPal will not commence operations in the country, either directly or indirectly. The minister had claimed on Friday that PayPal would indirectly operate in Pakistan through a partnership with the existing payments service, Payoneer. However, sources have confirmed that this collaboration does not imply PayPal starting operations in any capacity within Pakistan. Instead, Payoneer is partnering with PayPal to enable it as a payment method for Payoneer users globally.
For instance, if a US-based company outsourcing work to freelancers in Pakistan uses Payoneer for payments, this partnership allows Payoneer users to utilize PayPal as a payment method alongside debit or credit cards. Pakistani users are still restricted from directly creating a PayPal account due to current limitations, according to an inside source.
The partnership with Payoneer is not exclusive to Pakistan but extends to all geographies where Payoneer operates. The minister’s Pakistan-centric emphasis on the partnership could potentially hinder the country’s efforts to bring PayPal into its market. The challenge of bringing PayPal to Pakistan has been a focal point in policy debates, especially due to the increasing demand from freelancers. Pakistan ranks as the fourth-largest country in terms of the number of freelancers globally.
In September of the previous year, Umar Saif, the caretaker minister, had announced active efforts to bring PayPal and Stripe to Pakistan to meet freelancers’ one-way payment service demand. However, there has been no significant progress since then. A study by the Pakistan Institute of Development Economics (PIDE) suggests that the perceived restrictions associated with electronic money institutions (EMIs) licensing regime, concerns around money laundering, and FATF restrictions are key obstacles preventing PayPal from operating in Pakistan. Exchange control regime and data privacy are also cited as major hindrances in the study.
