When PayPal didn't come to town
If there were anything that our growing number of IT freelancers would die for, it would be PayPal, one of the fastest, easiest and most popular online payment systems in the world. Our financial policy does not allow PayPal to function here, because our policymakers are under the impression that PayPal can be used to launder money out of the country—as if the existing system has succeeded in preventing money laundering.
At every glossy event by the relevant ministry claiming to promote the ICT (Information and Communications Technology) sector, IT freelancers have repeatedly voiced their demands to introduce PayPal in Bangladesh.
A study by Oxford Internet Institute of Oxford University, the UK published in July, revealed that Bangladesh is home to 16.8 percent of all outsourced online workers in the world, second only to India. The ICT division says there are nearly 5,00,000 outsourced online workers in the country. They make USD 100 million per year, which the government wants to increase to USD 1 billion by 2021.
The unavailability of PayPal represents a fundamental impediment to reaching such an ambitious goal. Why, you may ask.
Most IT freelancers deal with foreign clients through trusted platforms or marketplaces like Upwork, freelancer.com, etc. For all top marketplaces, PayPal is the accepted and integrated payment method. It is beneficial for both the clients and the workers. Clients can make the payment swiftly online, and the workers can receive it instantly. In the US, the most important client base for Bangladeshi freelancers, PayPal is so popular that Bangladeshis often lose out on opportunities to their competitors just because they do not have a PayPal account.
Now, without PayPal, they resort to more expensive, sluggish and inconvenient methods such as bank-to-bank wire transfers.
Some high-end online freelancers, who avoid intermediary marketplaces and work directly with the clients on large-scale or group-based projects, believe that the one-man model of freelance work is not the future. In order to realise its ambitious goal, they say, the government should focus on establishing an industry. Such an industry would only emerge if freelancers can use PayPal to directly deal with clients.
The domestic e-commerce sector will also experience a boom. As PayPal as a payment method can be integrated into any website, the local e-commerce sector can sell its services and products both domestically and internationally using the system. Its outbound transaction and wallet features would allow our freelancers to buy necessary services and plug-ins from abroad.
Over the years, there has been much noise about PayPal coming to Bangladesh.
In July last year, Sonali Bank said that it would sign an MoU with PayPal, allowing it to launch its operation in Bangladesh. Some sceptics, however, chose to differ with the notion, and have been proven right.
The service which was introduced is not PayPal, but Xoom, an online money transfer system that was recently acquired by PayPal. Xoom, it appears, was touted as PayPal. However, the services are different, because PayPal is a digital payment system and Xoom is a money transfer system more akin to the likes of Western Union. Because of its inherent nature, PayPal has certain features that Xoom or any other money transfer system cannot offer.
For example, many freelancers pointed out, unlike PayPal, Xoom being a money transfer system does allow the foreign clients to claim a refund in case the commissioned work does not satisfy them or is not delivered on time. Similarly, Xoom also does not allow one to make payments in advance, while the nature of some work is such that a portion of the payment needs to be made in advance.
Moreover, it turns out that Xoom has been available in Bangladesh since November 2015, when it launched its operations in collaboration with Social Islami Bank. Therefore, the news of Xoom being "(re)introduced" was hardly a cause of excitement for our freelancers.
Over the last few months, rumours again sprang up of a possible launch of PayPal. In an event organised by the ICT Division, it was claimed that PayPal would officially be inaugurated on October 19. However, PayPal, when contacted, disputed the claim, saying, "PayPal is not currently available in Bangladesh and we don't have news to share right now regarding future plans."
Despite the clarification, the hefty event eventually went through with the title "PayPal+Xoom Connectivity Launch". But, Xoom posted a statement in its blog, clarifying that Xoom is a standalone service of PayPal, and that they do not offer any additional PayPal services in Bangladesh.
Xoom has simply expanded its service to include Sonali Bank in its list of the other 53 banks in Bangladesh. However, the collaboration with Sonali Bank means there will be faster bank deposits to Sonali Bank customers from now on. Plus, Bangladeshi expats in the US will now be able to send up to USD 10,000—an increase from the previous limit—to family and friends in Bangladesh.
Xoom may benefit many Bangladeshi expats living in the United States and encourage them to transfer money legally because it charges a lower fee, but it is not very helpful for those who need PayPal. Xoom is also not available for sending money from any other country than the United States.
The ICT division implies that since Xoom can be used from PayPal's dashboard, it is essentially a substitute to PayPal. In reality, a user cannot use his PayPal balance to pay for a Xoom transaction. One can only use PayPal's log-in credentials, and thereby, the bank account, credit or debit card associated with it for Xoom transaction. It means that Xoom will exclusively use the bank account or credit or debit card information of the user, which is precisely why many US-based clients are reluctant to use something other than PayPal. Many noted that the use of PayPal is so common and widespread that it is only natural that the US-based clients put their faith in its reputation. They would not take the trouble to create a separate account in Xoom just for Bangladeshi freelancers.
Above all, Xoom is restricted to international transfers of non-commercial nature. If Xoom identifies that any of its accounts is conducting business operations, according to its user agreement it could terminate the account in question. This restriction is enough to restrain IT professionals from using the service.
It is generally understood that our financial policy puts a restriction on outbound transactions, which is incompatible with how PayPal works. No one expects the entrenched impediment to go away overnight. But why present the same old wine in a new bottle?
It is a welcome step that Xoom will offer faster bank deposits to Bangladesh, which will undoubtedly benefit many. One should also note the government's intention to facilitate the process of bringing hard-earned remittance home. However, if the authorities want to make our IT freelancers' life easy, they should continue to work on removing obstacles to allowing PayPal to operate in the country.
Nazmul Ahasan is a member of the editorial team at The Daily Star.
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