The questions that everyone wants an answer to. I have been writing to PayPal for 10+ years to solicit a reply from them – as to why they are not here in Pakistan (you can read that correspondence onwww.faisalkhan.com)

PayPal operates in various countries but a few countries like Pakistan, Bangladesh, (amongst the larger ones) are missing. When countries like Somalia, Yemen and Rwanda are included in the list of countries where PayPal is available, one begins to wonder why Pakistan is not included.

It is not primarily about market size, I am sure Pakistan’s market size is a whole lot larger than many countries (combined) where PayPayl currently operates in.

The issue is country risk. <- I cannot sum it more accurately.

A financial institution like Paypal does risk assessment in their own way to assess which country it should and should not do business with. PK, whilst a large market size (compared to say Sri Lanka or Yemen or Rwanda) still poses a high-risk due to the factors like:

• KYC (Know Your Customer)
• AML (Anti-Money Laundering)
• OFAC (Office of Foreign Assets Control)
• SAR (Suspicious Activity Report)
• Beneficiary Information

The above (IMHO) are the major issues that PayPal faces, not being able to accurately gauge the above, is a risk that PayPal does not want to take.

They, PayPal can be penalized by the financial regulator in the country they operate FROM (not To), and the risk of account freezing, etc. All these factors they have to weigh against how much money they can earn (and they have a pretty good estimator for this). The risk vs the income – makes them conclude that PK is a risk country as far as business is concerned.

In addition to this, a small group with PayPal is trying to convince their management to look into Pakistan, whilst a large portion of members within the PayPal corporate world are literally biased and oblivious towards Pakistan as well (this is not an empty statement, but the ground reality within PayPal). PayPal itself is not entirely ‘clean or fair’ in its efforts. The ruckus that Pakistan is a money laundering country, etc. fails and pales in comparison to the amount of money laundering done in the US, and Latin America. As with every Pakistan/Indian issue, there are bigoted people within PayPal who are still harboring the animosity towards each other, is also another unsaid reason why Pakistan and Bangladesh have not gotten PayPal.

There is absolutely NO written notification and/or official circular from the US Government or Federal Reserve that ‘prevents’ Pakistan from having PayPal or tells organizations PayPal to discourage the Pakistani market. This myopic stance within PayPal is biased and unfair.

As previously speculated on many forums, it has NOTHING to do with SECP, SBP, FBR, etc. – - – that is not the issue (nor ever was).

A lot many forums and discussion boards have proposed that if PayPal cannot come to Pakistan, we should have our own payment system for the world to accept and adopt.

If you track payment systems, there are currently over 250+ payment system, after discounting the top 10-15 payment system, the rest of them COMBINED together probably do not do more than say #14 or #15 on the list. Having a payment system is one thing, having it adopted and be utilized and accepted by others is another matter entirely — and in some cases the key.

Lets talk about inward micro-payment options (barring PayPal) – you have none. No other micro payment system exists currently other than Paypal (sub $1 payments notwithstanding) that is worth mentioning or worth trading or transacting on. Even if you will make one, do you actually think your buyers in the international arena will adopt it? (I dont think so). Even some famous ones are having issues adopting.

The same can be applied for outward settlement. The fees structure for settling payment outside of Pakistan is quite complex. Daily reporting on transactions, along with the KYC and AML needs to be reported to the PRI division of SBP.

Without having any a priori information on the subject matter, people can comment and propose all they want, but seriously ask your self a question, how many hours? days? week? months? or years? have you applied towards the understanding of various payment systems that exist today? Have you ever spoken to them? Understood the back-office and legal issues, met with them in a seminar, etc.

So proposing that Paypal do this or that — is frivolous, (they are way more informed than you and I – combined).

Also – proposing an alternate payment system – how will that fair, if say tomorrow Google checkout becomes a micro-payment system, or the same were to happen with Twitter, or what many consider the inevitable, that Facebook launches either itself or in partnership with someone else, launches an payment/virtual-currency, that allows cross-border settlement and micro-payments? How will you payment system work.

Also remember, Paypal does not allow external payment system to integrate with them.

I do not mean to stomp the idea, but believe me, I have spent many years reading this all and do not make a statement just on heresay, but one that is based on hard statistics, fact and a whole lot of communication.

We may be #3 or #2 on some freelancing project network site, but what are we processing in terms of real-$-value per day? Do we do $30 Million a month – if not – we’re nothing as far as the financial transaction settlement world is concerned – an average ACH in the US transaction more than the $1 Trillion per day (yes, that’s is correct 1 Trillion, and no its not a typo). US ACHs transact more than $30-$45 Trillion per day, depending on the day of the week.

So, swallow your pride and understand and live with what we have. In the fiscal world as far as income – we are NOTHING. Accept that. In the world of RISK, believe me when I say we are almost #1. If people (rather financial institutions are NOT willing to do business here), then there is nothing you can do about it – Government or No-Government Pressure!

Let me give you an analogous example, please bear with me on the humor. The mangoes export of this country is FAR greater in number ($-wise) than say the inward and outward money combined from freelancing. Yet, the US chooses that we cannot export mangoes to the US, and there is NOTHING we can do about it. This has been true for over 25 years. Now – if we cannot export mangoes to the US, then what comical sense do we bring to the table asking Paypal to come here, because we are #2 or #3 on some work portal. [Yes, as an update, I know of the recent mangoes export to the US  -  for the first time.]

After years of writing to PayPal to solicit a reply, which they eventually did (via unofficial channels), I decided to buy a domain called PayPalAlternatives.biz to highlight the alternative payment systems that users can opt for in countries where either PayPal is not available or restricted.

Here is the test of the letter I received:

from ip@ebayenforcement.com reply-to ip@ebayenforcement.com to babushka99@gmail.com date Sat, Jun 25, 2011 at 12:30 AM subject Your Domain Registration – paypalalternative.biz [Case #49847] mailed-by ebayenforcement.com

Header Credentials

Now, whilst I really wanted to comment on it, both my US and Pakistani Legal Council has requested I do not do so.

Here was my reply to this email:

Dear Edith,

I intend not to be bullied by eBay / PayPal. Both these organization have a lot of explaining to do, and chose to do so, only when they feel its there time to do so. 1,000s of people suffer by the injustice done to their PayPal account everyday  - it is not even funny. If you visit websites like paypalsucks.com, screwpaypal.com and many others, you will get an idea of what I am talking about.

I have full intentions of publishing a personalized blog that highlights the various payment systems, that pose as an alternative to PayPal. If the domain is ever snatched away from me, believe me, a very befitting reply in the form of a large scale campaign against PayPal would be made by me.

I was (and perhaps still am) an ardent lover/fan of the PayPal money system and keep wondering why they continue to shun Pakistan, but when they stoop down to dirty legal arm-twisting like this – rest assured, I too shall twist their arm in return.

Its that time of the year again when I shall be writing my annual letter to the CEO/President of PayPal and Ebay (Ebay owns Paypal), complaining to them as to why they are not in Pakistan.

Last year I was very hopeful that would reply back (despite writing to them twice). This year, I have much more than a simple letter in mind for them. I almost feel like betting here (that they will reply back, else I shall eat my letter). Note, I said, I ‘almost’ felt like betting.

Anyhow, I am compiling and researching and have almost completed it. I should be penning my thoughts and arguments in the coming days and hope to have the letter go out before the end of January 2010.

Stay tuned.

Dear Readers,

I need your help.

For years I have been writing to Ebay and PayPal to inquire as to why their services are not available in Pakistan. I have never received a reply from them. This year, I decided to pursue this more assertively. In January of this year I wrote a letter to the CEOs of Ebay and PayPal respectively (the contents of the letter can be read here). I waited for a month – no reply from them.

Just yesterday I wrote another letter to them. Let us see if second time is the charm.

However, what I need from you – is to spread the word – on your blog. The more you help in spreading this issue around – the more activists and lobbyist effort we can garner.

All I am asking you is for you to highlight the same in your own words (about the two letters I wrote) to your readers. Feel free to highlight the non-availability of both Ebay and Paypal in Pakistan as you feel fit. But highlight you must!

Feel free to cross-link to the two letters: (it is not mandatory that you do so, lest I be accused of increasing the back-links for my blog – back-linking won’t help me in any manner, since I do not run any advertisements on my website, hence traffic and popularity is not something I am seeking).

An Open Letter to John Donahoe, CEO of Ebay (Parent company of PayPal)
http://faisalkhan.com/?p=554

PayPal in Pakistan (Part II)
http://faisalkhan.com/?p=623

It is very easy to rant in this digital age… A lot of people have personally written emails to me, saying it won’t work. Citing many theories as to why PayPal / Ebay does not want to do business here in Pakistan. The Nay-sayers are plenty. But those are are willing to help and contribute towards this effort/initiative – outnumber the Nay-sayers by orders of magnitude.

I think we need to approach this with patience and without giving up hope. Dr. Ian Wilmut who first successfully cloned “Dolly” the sheep, got it right after 276 attempts. Imagine that – 276 attempts!!!

Being persistent pays off.

I am no Dr. Wilmut, and we certainly have no sheep to be cloned. But if it takes 276 attempts to get PayPal in Pakistan – why not!

A journey of a thousand miles begins with the first step.
An ancient Chinese proverb

I thank you in advance.

Regards,

FAISAL KHAN

Earlier this year, I sent a letter to the CEO of Ebay (Ebay is the parent company of PayPal), and to the CEO of PayPal itself.

The contents of the letter can be viewed here. The delivery snapshots as provided by Fedex can be seen below.

Proof of Delivery receipt for Letter to CEO of Ebay: John Donahoe

Proof of Delivery receipt for Letter to CEO of PayPal: Scott Thompson

I have not received any reply so far (which was quite disappointing).

So, yet again, I am writing another letter to them. Contents of which can be seen below.

________________________

February 12, 2009

John Donahoe
President and CEO
eBay Inc.
2145 Hamilton Avenue
San Jose, CA 95125
USA

Subject: PayPal for Pakistan

Dear Mr. Donahoe,

I am writing to you to inquire as to why Ebay and Paypal services are not available in Pakistan. It is very disheartening to note that whilst countries like Angola, Yemen, Uganda, Madagascar, Jordan, Kuwait and Rwanda (to name a few) can enjoy the benefits of PayPal, Why is Pakistan left out?

Pakistan is home to 17+ Million users of the Internet. Mobile users are hovering around the 80+ Million mark. The population is 160 Million. Our banking system is robust and seasoned, whilst our digital infrastructure is top-notch, having many firsts (for example: we have the world largest Wimax deployment).

For years I have personally been writing to Ebay/PayPal, but have never received a reply, which in this day and age, is quite disappointing.

The main objective of this letter to know (not superficially, but in detail) what is preventing the inclusion of Pakistan in the countries where PayPal / Ebay services can be offered.

A lot many professional organizations in Pakistan are willing to lend support to the cause, should Ebay/PayPal require so.

If there are any policy or government issues preventing your organization from doing business here, kindly do highlight the same so that at the very least we can start addressing the issue.

I just want to be able to have an eBay and a PayPal account from Pakistan. In the event you want to reach me, the easiest way is via email, my personal email address is babushka99@gmail.com and official email address is faisal@nacspl.com

Regards,

FAISAL KHAN
CEO
Net Access Communication Systems (Private) Limited

CC: Mr. Scott Thompson, President, PayPal.

A few days ago, I embarked on my annual routine of writing to Ebay and PayPal – asking them why their services are not being offered in Pakistan? I have been doing this for a couple of years now.

This year, I decided to write a letter and write to the very top, i.e. the two CEOs of Ebay and PayPal, John Donahoe & Scott Thompson.

Rather than just email, I decided to formally send a letter and Fedex’d it to them. The letters were delivered yesterday. Now it is a wait and see – as to what they will say.

January 11, 2009

John Donahoe
President and CEO
eBay Inc.
2145 Hamilton Avenue
San Jose, CA 95125
USA

Subject: PayPal for Pakistan

Dear Mr. Donahoe,

I understand you are someone who is immensely busy and have thousands of other important issues to deal with, but I thought I’d try my luck with you. I’ve been writing to PayPal / eBay since 2002 regarding issuance of PayPal accounts for Pakistan, in 2005 I started including eBay in my correspondences to include eBay accounts for Pakistan.

I have never received a reply back. Twice in the past, I received a reply back (filed via customer services) that my ‘complaint’ has been lodged and PayPal will look into it. Other than that, have not gotten a satisfactory reply.

The issue – simple. Why is eBay / PayPal not being offered for Pakistan?

I just finished reading an article on your hand-on approach in TIME Magazine (Issue 12 January 2009 – Asian Edition, Page 35, written by Kristina Dell), it simply compelled me to get on the computer and write another letter to eBay / PayPal. The article gave me hope (again!)

Pakistan – purely from your business perspective may not be that big of an economy, but it surely has an economy that is larger and more active than Bhutan, Chad, Honduras, Somalia, Maldives, Rwanda, Uganda, Yemen —combined!

If these countries can have the privilege of obtaining a PayPal account, why not Pakistan?

As Pakistanis cannot legally have a PayPal account, 1000s of users here circumvent the system and obtain PayPal IDs from their friends and relatives abroad to use and conduct commerce. This should be of no surprise to you.

The same can be said about eBay.

Like I cited, we may not be that big on your radar, perhaps we’re not even equated to a blip, but a country of 170 Million, to be blatantly ignored (you may agree or disagree on my choice of words, if the above mentioned countries can have PayPal, I’d like to know what piece of legislation, law, banking infrastructure, etc. prevents eBay/PayPal from including Pakistan under your countries-in-which-you-work umbrella).

Pakistan’s predominant trading Partner happens to be the US. Within respect to both imports and exports (discounting oil).

The first time I experienced eBay and PayPal in the summer of 2001 whilst briefly working in the US – I was mesmerized to say the least. Till date, I wish we had the privilege of conducting business on a website so many take for granted.

This is not meant to be a protest letter by any means. In fact it is one of a very humble request. A request whose time has come, and was long overdue. I have in the past cited my willingness to help, providing information or getting eBay / PayPal connected to Banks, regulators, whomsoever you would like to meet. I am, in no way proposing or advocating a ‘role’ for myself – my intention is just to help.

Is it too much to think that perhaps this one letter will get the ball rolling. Or if the ball is already rolling, yield the desired result. Will this letter be tacked on your things-to-do board and actually get done with? Is this the right time to plead the case for my country?

I’ll end my letter with a quote from Dale Carnegie (sorry, couldn’t find a befitting Irish quote) “Most of the important things in the world have been accomplished by people who have kept on trying when there seemed to be no hope at all.”

I just want to be able to have an eBay and a PayPal account from Pakistan. In the event you want to reach me, the easiest way is via email, my personal email address is babushka99@gmail.com and official email address is faisal@nacspl.com
Regards,

FAISAL KHAN
CEO
Net Access Communication Systems (Private) Limited
Karachi, Pakistan.

CC: Mr. Scott Thompson, President, PayPal.

I’ve been reading a lot about how one company or another in Pakistan is going to be bringing e-commerce – specially internet payments or even mobile payments. How we will be able to have our own eBays-look-a-like and our own Amazons and god knows what else.

Various efforts have been done, but then seriously think about it – are you using it? On the top of my head if there are any Pakistani websites where I have used my credit card – it is undoubtedly www.libertybooks.com and www.airblue.com – I have not used my credit card anywhere else on a Pakistani website.

If one were to take the days of Digicom (now long gone) when it started its ISP operations in Pakistan as a benchmark date as to when the web was born (1995) here in the sub-continent, then 13 years later – we have to gauge ourselves from a consumer / commercial point-of-view – where are we standing? Pretty much in the same place… nowhere!

As much as we think about the ingenious ideas about payments, the mass appeal has still not kicked in. Is it our timings? I highly doubt that (read my article on TCS Listen Up!).

Are the payment solutions themselves immature (my opinion is hardly).

Are the banks to blame which can push the much needed traffic towards e/m commerce? ( a definitive yes!)… but there is something else that is missing. Government? (who care would be my answer).

There is surely something that is stopping us from using digital money. Wouldn’t you agree?

Let me digress for a few minutes… consider the following… An analogy is voice-mail.

Used everywhere in the world, but not in Pakistan, India, UAE, Bangladesh, and most of the Asia-Pacific countries. Voice-mail is used very heavily in Europe and Americas, but why not here? To be honest, I don’t have an answer to this question, but it does beg to ask another – is what is impeding our growth have something to do with culture / people rather than technology? I for one say – maybe yes, this could be anomaly in the whole equation of electronic/mobile commerce in Pakistan.

Craigslist is now also in Pakistan (Mr. Craig even left a comment on the blog). So why aren’t we a nation that is plugged into online classifieds? Why is it that WorldCall forums are selling stuff – but only limited to those who are on those Go4B.net forums. Even if we had the payment methods – we are still shy about using them.

I feel trust is an issue. I know I can trust Air Blue and Liberty Books (well I really don’t trust Liberty Books, but then what the heck, every now and then you gotta take risks). But UBL’s Orion – I wonder and ask myself why I haven’t bothered signing up on Orion? Why isn’t everyone else using Orion? Lootmar which is an up and coming start-up hoping to make it big into the auction space in Pakistan – has a long way to go, but it’s a start – but then again, why aren’t we all using it? (I’m sure Lootmaar would have a long list, but that’s not the point). The point being – we have everything, but stimulus (for lack of a better word) is stopping us.

On Orkut and Facebook, Pakistanis are clicking away-a-plenty. Same goes for Blogs. We novices have even mastered the art of cut-and-pasting Google AdSense campaign code into our blogs but yet, when it comes to buying online, we are very shy.

My definitive arguments and conclusions are at the end of this post, but very quickly I too want to pitch in an idea.

Almost everyone has a mobile phone and a bank account. So here is the gist of my proposition:

• Go to the bank – get your mobile phone registered to your bank account
• So I go to this website and I like this USB stick. Its for Rs. 2,000, I place it in my cart and proceed to checkout
• The website owner is also registered with the bank and had a mobile account associated with its bank account
• So upon check out the website gives me a total: Rs. 2,000 and its merchant number and transaction number
• I from my mobile send an SMS to my bank – entering the transaction number and the amount
• My bank checks my account balance and since I’ve linked my mobile to make transactions on my account it (the bank) will provide me be back with a 10 digit code via SMS (valid for 30 minutes)
• This code will ONLY make payment to the defined Merchant Account that I had sent and for Rs. 2,000 only
• This code will not make sense or be of any use to anyone should my mobile get stolen
• You are probably going to ask if a PIN is used and if so, when a mobile is stolen wouldn’t the PIN be in there – the answer is no PIN is used and if your mobile is stolen I am pretty sure you will be letting your cellphone company know of this, which in turn will stop it from transmitting any SMSs to your bank account for any transactions.
• I place the code on the website and hit ‘Submit’ and the website will verify the transaction – and complete
• In either case of data-snooping, cellphone theft, etc. No information is compromised.

Whilst it may seem mundane and boring, but the simplicity element and security are paramount in this setup. The merchant will never know my mobile number (rather does not need to know), its unique one SIM to a Bank account – but it does require a clearing house at the bank’s end (interfacing).

Before you shred this idea to million pieces… let me assure you, its not the idea that I want to emphasize here. Like I cited, ideas that can work are many. It’s the adaptability that is missing.

We are ‘carry-thy-wallet-to-the-merchant’ nation. We physically want to be present. We are a Cash-on-Delivery based economy. For larger ticket items – we believe in going to the store ourselves. Our ground and overnight shipment can still be improved but companies like DHL, Fedex, TCS are still not up to the mark. I mean for crying out loud, if I need bubblewrap – TCS cannot deliver it to me (to be fair, neither can the others). Packaging material like (airbags of space utilization, Styrofoam peanuts and bubblewrap) are all absent.

Tracking options are slowly being improved upon. There has not been a concerted effort by the banks to push electronic or mobile commerce in Pakistan. This is a fact. There is an old-school management in place who still don’t dwell very well upon such ideas. The new breed might (and we would have to wait 2-5 years for them to take over) who would probably then instill such ideas into a bank’s business plan.

The government has been a silent spectator of sorts. Promised were the days of automated systems and this and that, well frankly I haven’t seen it. For a country that still uses Hotmail and Yahoo! as official addresses – I don’t pin much hope siding with them.

What we can do and the picture is not so bleak, is promotion! It’s the only tool we have left out for the masses. If we all promote such businesses like Lootmaar and other Pakistani merchants who are trying to sell online (Beliscity www.beliscity.com and Makarts www.makarts.com) we can make a difference.

The Start-up Initiatives taken by P@SHA – are also a great place to take relatively new start-ups and give them support – give them hope. Incentive based programs can be drawn by these merchants to bring traffic towards them. They can promote themselves with bloggers and need to have viral and word-of-mouth advertising maximized. They need to quickly go from Version 1.0 to Version 2.0 and so on and so forth. But not at the expense of quality, security and breaking-what-was-working-already!

Side-lookers like banks, mobile companies, ground shipping and handling companies, credit card companies, ATM owners, consumer marketing companies, merchants-in-waiting, all are looking at us, so you can chin-up and rather than just moving on to the next blog read, perhaps you too can contribute towards the local start-ups who are trying to make a difference. After all, we only have ourselves to blame.