Why Bangladesh should introduce PayPal

Nowadays freelancing is a popular career choice among many people especially the younger generation. According to the Oxford Internet Institute (OII), freelancers from the US, UK, Pakistan, and Canada struggle whereas Bangladesh is currently the second-largest source of online workers.

Freelancing or digital outsourcing plays an essential role in the economy's growth, which is well known as the digital economy. In this Covid-19 crisis, when people are losing their jobs and the country's economy is struggling, freelancing can play a significant role in lifting the country's economy and opening new doors of opportunity for youths to be financially independent.

Nevertheless, while neighbouring countries, including India, Nepal, and Pakistan are nurturing their freelancers and moving their economy forward, Bangladeshi freelancers are somewhat falling behind. Although the government has taken many initiatives to stimulate the sector, there are still shortcomings regarding the payment system. The primary purpose of freelancing work is to get paid from foreign service seekers. That is the first place where Bangladeshi freelancers are facing many challenges.

The payment system is basically through bank transfer and sometimes through illegal channels.  Since the bank transfer system is complex, as a result, freelancers often use the illegal channel as the payment method.

As a result, the government is not receiving the expected revenue. A solution to this problem could be the introduction of PayPal, currently, the most popular payment system around the world.

PayPal is a digital payment method for all top markets where clients and workers can easily transfer money online, and they, along with the government, are benefited.

In the US, where Bangladesh has the most clients for freelancers, it is falling back in the competition only for the unavailability of PayPal.

In the absence of PayPal, freelancers, as well as the service seekers face complexities for bank-to-bank transfers. As an outcome, it deals with very few direct clients outside the marketplaces such as Fiverr, Upwork etc and Bangladesh is losing a considerable amount of revenue every year.

One of the primary reasons for the non-existence of PayPal in Bangladesh is the bureaucratic complexities.

The Banking Company Act, 1991 states that Bangladesh Bank is an autonomous body and the latest Foreign Exchange Transaction guideline Volume 1 Chapter 8, Para (23), sub-Para (2) illustrates that the Authorised Dealers (AD) shall enter into standing arrangements with internationally Online Payment Gateway Service Providers (OPGSP) and maintain separate Nostro collection account for each OPGSP.

So, it is evident that there are no obstacles from the central bank. However, since the Banking Division's establishment by the Ministry of Finance (MoF), Bangladesh Bank has lost its sovereign capacity in reality.  Because of this bureaucratic perplexity, implementation of any policies in the banking sector falls back.

Nevertheless, the authority has introduced a payment system called Xoom, which is approved by PayPal. But it cannot be regarded as a replacement for PayPal. Besides, it is similar to other conventional payment systems where PayPal is a digital money transfer system, which offers way smoother money transfer experience.

Even though PayPal is well welcomed by the IT and ITes services providers and the service seekers around the world, still Bangladeshi freelancers are deprived of such service due to the bureaucratic complexities. Also, the policies executed by the central bank are in favour of the payment service.

It is noteworthy to mention that PayPal is currently available in 203 countries in the world. Therefore, even neighbouring countries India, Nepal, Bhutan, and Sri-Lanka have been able to give PayPal access to their freelancers. Although the ICT Minister promised to bring PayPal in Bangladesh in front of the media in July 2015, and so far, there is still no implementation of his declaration.

Lastly, it is essential to mention that due to the complexities mentioned above, youths are reluctant to join the race, which is an imminent threat to the flourishing digital economy.

For the sake of the national economy, the policymakers should negotiate with the PayPal authority and respond to the crisis immediately. During the Covid-19 crisis, such measures could help the national economy on a larger scale.

Apurba Mogumder is an undergraduate law student at North South University.