How can PayPal boost online economy of Pakistan?

By Nauman Lodhi

PAYPAL IS the global standard for payment transfers and for carrying online transactions. Its a swift mode of payment that allows people to send and receive payments instantly.

Besides, majority of E-Commerce web sites rely on PayPal for charging transaction amounts from the customers.

The common problem for Pakistans 25 million plus internet users is that PayPal service is not available to them. It is either due to policies of PayPal or due to the hindrances it faces from local banks and financial governance institutions.

Many experts hint that PayPal has not yet started its operations in Pakistan due to technical as well as law and order concerns. Factors such as money laundering, funding of terrorists, weak banking infrastructure in Pakistan and lack of cooperation on part of the State Bank and local authorities may be hindering PayPal to land in Pakistan.

Who can play a role for removing those hindrances?

The government departments such Pakistan Software Export Board (PSEB), the industry support organizations such as Pakistan Software House Association (PASHA) and the infrastructure development departments like Pakistan Telecommunication Authority (PTA) can play an anticipative role for removing these hindrances that confine PayPal from coming into Pakistan.

Also it is the responsibility of government to improve the law and order situation in the country and make strict laws to curtail cyber crimes. Passing of an anti-laundering bill is another need that the government should resolve to pave the way for PayPal in Pakistan.

PayPal and Online Eco System Based on Cash-on-Delivery

Today most E-commerce vendors in Pakistan are relying on Cash-on-Delivery system in which payments are received at the door step of the consumer at the time of delivery of goods.

For businesses it means putting extra resources for payment collection which means an additional cost of doing the business. It also involves risk as many scams occur while delivering goods to far flung areas in the country.

Virtual stores can help businesses reduce costs

Moreover, selling goods offline involves more cost as the vendors have to open physical stores at different locations. Online stores can help them set up virtual stores through which they can sell anywhere in Pakistan.

If awareness is created to use online stores it can boost business activities throughout the country. Coming of PayPal would allow the local stores to grow their businesses which would consequently result in jobs creation. It will also encourage entrepreneurs to establish new internet-based businesses.

PayPal and Exports

Pakistan is lagging behind other developing countries such as India having 120 million internet users. Pakistani IT companies are not able to receive and send payments easily and find it difficult to sell their software and services online.

Here are given some statistics that will reveal the potential of PayPal in the modern global economy:

Total volume of transactions carried through PayPal in the year 2011 was $118 billion.

Annual online spending by US was 202 billion by the end of year 2011. It will increase by 226 billion in 2012 and 327 billion in 2016.

The IT professionals and freelancers in Pakistan face numerous problems when it comes to receiving payments from clients. Similarly, it is difficult for the software companies to sell their products internationally.

If PayPal starts to operate in Pakistan it will reduce transaction cost and hassles. Currently, the local businessman relies on less reliable modes of payments which are not only slow but are costly too. These are wire transfer, Western Union, Money Bookers, Payoneer.

The author of this post is an IT and Digital Media Marketing Professional. He blogs at: http://www.backspacetab.com

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