By Syed Wahaj Ahmed
Introducing international FinTech companies, PayPal and Stripe, could boost tech ecosystem in Pakistan where internet entrepreneurs and digitalization experts look forward to $800 million in the first year.
“The introduction of globally-accepted payment gateways of PayPal and Stripe are going to revolutionize Pakistan’s tech ecosystem – and, we are going to experience a major inward repatriationary flow and flux in international payments,” an international IT investor, tech entrepreneur and digitalization expert, Noman Said said.
He said at least 1,200 IT companies based in Pakistan and upwards of 75,000 freelancers in IT and IT-enabled Services (ITeS) would almost instantly shift to PayPal and Stripe; and, would now be able to reach and charge customers at par with China, India and other regional, sub-regional & international competitors; which, previously were restrained by their ability to receive payments through international financial channels.
“The US IT industry is expecting to see the processing of upwards of $800 million in the first year of implementation alone as per my recent interactions with various IT conglomerates; trade bodies and universities across US. This would just be a beginning,” he said.
He urged the SBP to remain prepared for a major overhaul in the systems and make commercial banks implement them instantaneously.
Explaining the roadmap, he said first the SBP should enforce across commercial banks attachment of PayPal accounts to Exporters Specialized Foreign Currency Accounts (ESCFAs); freelancers’ accounts and regular bank accounts as these gateways allow users to attach their accounts & route their funds to multiple accounts. He said secondly, the Federal Bureau of Revenue (FBR) should train its officers to understand that internationally-aligned payment services maintain complete money trail; yet, they are not accustomed to unnecessary queries and their statements are self-explanatory. He said thirdly Pakistan Software Export Board (PSEB) should streamline their process to register for the export of IT services. Micro, Small and Medium Enterprises (MSMEs) need to be encouraged and enabled. He said fourthly PayPal and Stripe payments should be given preferential treatment and incentives like remittances.
He said that Caretaker Federal Minister for IT and Telecom Dr Umar Saif should be assisted by the entire federal and provincial machinery; the Special Investment Facilitation Council (SIFC) and IT companies alike to foster the culture of entrepreneurship; digital governance and technocracy in the country in the broader national interest. We need to kind of have a charter of technologically-driven economic transformation, he added.
One of internet pioneer and entrepreneur Monis Rahman said more FinTech companies are introduced in Pakistan, it will be better. But he also stressed need for building local own payment system to connect it with the global economy instead of totally dependence on the international players.
Eminent economic commentator Faiz Ul Haq explained that the State Bank of Pakistan (SBP) needs to show compliance and adaptability to internationally-aligned policies to enable world’s leading FinTech and financial gateways to integrate with Pakistani financial system. It is Pakistan which needs to upgrade their financial system, policies and procedures – and, not the other round, he added.
He maintained that from a purely trade economics point of view, Pakistan’s exports basket need to be broadened and new categories need to be turned into major contributors vis-à-vis total exports minus textiles.
“There is another dimension to it; which can turnaround the economy: primarily, Pakistan’s tax-net can decisively be broadened, rationalized and documented, if we can have another major export-oriented sector of the economy after textiles and information technology – and the services enabled by IT – is the only sector which can grow exponentially. We have 64 per cent youth and we need to put them to productive use. We are already the fourth largest economy in terms of freelancers in a number of verticals within the IT industry; nonetheless, why we cannot give them the status of micro enterprises under Micro, Small and Medium Enterprises (MSMEs) as per the World Bank’s definition,” he said.
Of course! It has been ages freelancers have been facing issues of payments and the local banks and wire transfers are charging too much for example, if your payment is $1,000, 30% in terms of taxes etc will be deducted.
If you use Payoneer which is the only international payment method available except local banks then you have to pay a subscription fee every year of $30 while deduction on every payment will remain the same.
Reading news on this website always enhances ken of readers! Spot on!