Visa wants to make the process of paying for goods on your phone or iPad as easy as swiping your credit or debit card at an offline retailer. To do so,..
When the big boys enter the game, can we say the days of PayPal are numbered? I don’t think so. Traction will need to be worked on.
Everyone by now has heard, David Marcus, the CEO of PayPal has resigned from PayPal and is now going to Facebook to head Messenger. I’ve been advocating for years that Facebook will get into the payments space. I have countless posts on Quora that will testify to that fact. A lot of people kept shunning me, saying Facebook will never get into payments, citing one reason or the other.
With David Marcus jumping ship, I feel vindicated (almost). To be honest, I feel like Daniel Negreanu when he calls out cards of his opponents (in Poker). I explained my instinct about Facebook getting into payments earlier on on Quora (Why are start-ups or Facebook itself not using Facebook’s larger user base for money-transfer services?), which was part of a larger article I wrote Facebook forays into the world of online payments.
Facebook has been acquiring money transmitter licenses for a while now. They were not doing this just for the fun of it – there was/is a greater plan.
If you look at China, the success of Tencent’s app WeChat in the payment’s space has been nothing short of spectacular. Baidu is the other player that recently entered into the mobile payments space in China as well. AliPay which has 750+ Million users, is the world’s largest eWallet provider. Tencent’s WeChat and their 355+ Million mobile wallet users is huge in the mobile payments space. No one in the world can rival the success of WeChat. The only other viable contender is Facebook.
Human behavior has some very simple traits. Communicating (chatting) is perhaps the simplest and most common trait when two people meet up. On a recent post by Brian Roemmele on Quora: I cited the following reasons for David Marcus wanting to jump ship:
Facebook offers everything that David Marcus would want:
- It has a very large (virgin to payments) user base
- It has a chat client (Facebook Messenger and WhatsApp)
- It has the ability to add on apps to the messenger (just as WeChat has)
- PayPal does not have any of these elements as listed above
- The culture at Facebook was not very conducive to the operating style of David Marcus. (So many insiders whom I know at PayPal have cited this). Even Rakesh Agrawal tweeted about it..
There is no doubt, this is a great win for Facebook. Recruiting David Marcus is perhaps the best move they could have made. Very few people know the payment’s landscape very well from a 100,000 feet. David Marcus is one of the few ones, who not only knows how the entire ecosystem looks like, but has some inside knowledge of PayPal and its plus/minus points and how Facebook could possibly leverage them.
Remittances will definitely be something that Facebook would eventually embrace, however, because of David’s background, I personally think P2P payments is what he will strive after, putting those money transmitter licenses to use.
All in all, PayPal is now a ship without a captain. It would be interesting to see if they bring someone from the outside, or from within eBay. The morale as of yesterday isn’t all that good. Its somber.
David Marcus can very well pull it off. Making a world class payments platform that ties 100s of countries together. Very few people in history have been given this chance, I for one am hoping he pulls through. Best of luck – for you will need it.
Paying for your coffee with your smartphone is so old-school. So, like, 2010. Today, PayPal is working on paying with wearable devices like activity trackers, smartwatches, or possibly even smart s…
Whilst the CTO is myopic when it comes to the payments “world”, nonetheless a great article to read. There is no doubt PayPal has done a lot of good, however, the games have just begun!
See on venturebeat.com
For the past 11 years I have been writing religiously every January an Open Letter to the President of PayPal, arguing a case for them to come to Pakistan. Also, see an update to this letter as to why they are not coming to Pakistan. For 10 years, I did not hear back from PayPal. Not once. No matter how ingenious the approach, I never got so much as a peep out of them. All that changed in 2013. For the first time ever, I did get a reply back from PayPal via unofficial channels. Before I delve into the content of the communication with them, let me say, there will be no more letters from my end now to PayPal. There is only so much one can do and invest time in. I think I have done enough from my end. For reasons that are personal, I shall not be pursing this cause any further. The baton and cause now needs to be passed on to others. Continue reading →
Pakistan E-Commerce Survey: We are trying to document the anatomy of Pakistan’s E-Commerce ecosystem. If you are a resident Pakistani and/or Pakistan affiliated in any manner, Please take 3 minutes out and fill this and share.
The results of the survey would be open for all, including the raw data (minus Names/Emails). Every person who fills this out – counts! Your valuable time and input is highly appreciated.
Thanking you in advance.
I have decided to update the answer I had written below. A lot of people have asked me why PayPal isn’t operating in Pakistan especially after I wrote an Open Letter to David Marcus (President of PayPal), See: Open Letter to David Marcus, President of Paypal by Faisal Khan on Posts Continue reading →
January 16th 2013.
David A. Marcus
2211 North First Street
Subject: PayPal for Pakistan
Dear Mr Marcus:
For a little over 10 years now, I have been writing to the President/CEO of PayPal every January asking Why isn’t PayPal available in Pakistan? For 11 years straight, I have never received an official reply. Not once. Continue reading →
One of the most recognized platforms in the world for blogging is WordPress, however, if you were to opt for an upgrade (as I tried), from Pakistan, it is not possible.
While trying to pay for the upgrade, I received an error message that said: This transaction cannot be processed. Please use a valid country on the billing address.
Since WordPress uses PayPal for its payment processing, unfortunately, Pakistan is not on the list of countries support by PayPal for payment processing. There are quite a few countries that are blocked because of this reason.
Here is a forum update that I found on the above mentioned subject.
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.]