Can Bangladesh be truly digital without access to any universal digital payment system?
The lack of access to any major universal payment system hinders Bangladesh's economic growth. Access to universal digital payments systems like Paypal can enhance our ability to participate in the global economy
Bangladesh is poised for significant economic growth in the coming years as a rapidly developing nation. According to the World Bank, the country's GDP is projected to grow 7.1% in 2022 and 7.2% in 2023. However, to fully realise its potential, the country must address certain systemic issues that impede progress.
One such issue is the lack of access to efficient and globally recognised online payment systems. As per a survey by the Bangladesh Association of Software and Information Services (BASIS), only 17% of the population has access to online payment systems.
While several domestic options are available, none possess the same ubiquity and credibility as PayPal. Government officials have promised the arrival of PayPal several times, but nothing has come to fruition so far.
PayPal is a widely utilised online payment platform that millions of merchants across over 200 countries and territories accept. Data from PayPal shows that as of Q3 2021, the company had over 400 million active accounts worldwide and processed $222 billion in total payment volume. Its integration into the Bangladeshi economy would provide local merchants and consumers access to a secure and dependable online transaction method.
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Additionally, PayPal's reputation for high-security measures, such as encryption, fraud detection, and two-factor authentication, would assuage consumers' concerns regarding the safety of online payments.
Furthermore, the simplicity of setting up and utilising a PayPal account would greatly benefit small and medium-sized enterprises in Bangladesh. A report by the Small and Medium Enterprise Foundation (SME) shows that there are around 3.5 million small and medium-sized enterprises in Bangladesh that employ around 20 million people. These businesses could expand their reach and customer base without the need for complicated and costly payment systems. This would ultimately drive economic growth and development in the country.
The Constitution of Bangladesh, adopted in 1972, guarantees certain economic and social rights to its citizens, including the right to work and to participate in the economy. Specifically, Article 15(1) of the Constitution states, "Every citizen shall have the right to work and to participate in the cultural, social, economic and political life of the nation."
While the Constitution does not specifically mention access to digital payment systems such as PayPal, the right to participate in the economy and engage in commercial transactions can be interpreted to include the right to use digital payment systems, given their importance in facilitating economic activity in the modern age.
In Bangladesh, the regulation of digital payment systems, including PayPal, is governed by the Bangladesh Bank Act, the Payment and Settlement Systems Regulation Act, and other relevant laws. These laws provide the framework for the operation of digital payment systems in the country. They can impact access to these systems and their potential impact on the exercise of economic and social rights.
Moreover, the lack of access to PayPal poses a significant challenge for Bangladesh's growing number of freelancers. According to a report by the International Labour Organization (ILO), the gig economy in Bangladesh is growing at an annual rate of around 20%. Many freelancers rely on online platforms to find work and get paid, and many of these platforms require payments to be made through PayPal.
Without access to PayPal, freelancers are at a disadvantage when it comes to finding work and getting paid. They often have to rely on less secure and less convenient payment methods, which can be time-consuming and risky.
We must not forget that the gig economy and freelancing offer a potential solution to the unemployment issue in Bangladesh by creating additional income opportunities and improving labour market flexibility. This allows individuals to monetise their skills and expertise in a flexible manner, bridging the gap between underemployment and underutilisation of skills.
The gig economy enables individuals to participate in the nation's economic life and can drive productivity and growth. Thus, it presents a promising approach to tackling Bangladesh's unemployment challenge.
In conclusion, the lack of access to PayPal is a hindrance to the economic growth of Bangladesh. Not just Paypal, Bangladesh does not have access to several other universal payment systems, including Apple Pay, Google Pay, Square, and Stripe. Besides, getting an international credit or debit card in Bangladesh can be challenging due to the country's limited banking infrastructure and strict regulations.
Consequences of the difficulty in obtaining such cards include limited access to international commerce and reduced financial freedom for individuals and businesses in Bangladesh. This can limit their ability to participate in the global economy and restrict their economic and social rights, such as the right to engage in commercial transactions and access financial services. It poses a significant challenge for merchants, consumers, and freelancers who need a reliable and secure online payment system.
It is high time for Bangladesh to move towards the right direction; introducing PayPal could be the first step towards reaping the benefits of globalisation.
Mohsena Akter Drishty is the Community Fellow of Bangladesh Legal Aid and Services Trust (BLAST).
Md. Tanvir Haider Siddique is an LLM Student at the Department of Law in University of Chittagong.
Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinions and views of The Business Standard.
