Pakistan: Bitcoin Fills the Gap, Where Paypal’s Missing Out

According to one seller of Paypal accounts, "We are here to meet the demands of Pakistani customers who want to experience PayPal in Pakistan."

The costs vary from anywhere between $15 to $25 depending on if you want a bank account or credit card attached to your new Paypal account. What’s even more startling is the fact that these online vendors are selling with 100% legal guarantee tag, attached on their webshops. The end costumer is usually kept in the dark about the legal status of this trade, but then again, in Pakistan there aren’t many prevailing laws pertaining to e-commerce in the first place.

So, if there are people who are willing to pay an average price of $20 for a forged PayPal account, why doesn’t PayPal offer it’s services to these people? To this date, there still hasn’t been a public statement made by PayPal regarding its absence from Pakistan. Due to this reason, a lot of speculation and rumors have stirred the matter further. Several bloggers associated the lack of operations with a fault in current banking environment, or with the risk of money laundering in Pakistan. Now, these reasons might have some truth in them, but we’ll never know for certain until we hear an official statement by PayPal. However, Faisal Khan, a private payment consultant has been investigating this issue for the past 11 years. His analysis and findings is a result of thorough inquiry and it can be read here.

"What PayPal will be looking at are some of the important facts and figures about our market. The number of merchants online, the Internet statistics, the average cost of a purchase online, etc"
— – Faisal Khan.

Meanwhile, the digital payments landscape in the developed world is flourishing right now. As the transition from E-commerce to M-commerce is in progress, money transfer and payment processing companies are innovating to make the process streamlined and seamless for the end consumer. The value of mobile commerce transactions conducted via mobile handsets and tablets amounted up $1.5 trillion in the year 2013, according to a new report from Juniper Research.

There’s an emerging market whose target audience is those 18 million Pakistani internet users deprived of a robust payment infrastructure. It’s a major obstacle for anyone living in Pakistan who has the resources to participate in the Global Internet Economy. Again, this is not just about online shopping – but for all those freelancers, entrepreneurs and artists from Pakistan who live and work on the Internet. The absence of an effective model has compelled these people to find a workaround on their own. More often than not, this workaround revolves around a relative living in US who will receive payments on their behalf and then send them through a money transfer like, Western Union.

Bitcoin, on the other hand can penetrate into this market seamlessly by offering an alternative solution to the current payment dilemma. There’s a dire need of a working payment solution that will facilitate Internet ecommerce in this country. Through a combination of decentralized cryptography, peer-to-peer networking system and digital signatures, Bitcoin enabled a trustless system that was previously inconceivable. It doesn’t require a middlemen like PayPal to bestow it’s blessings upon an impoverished region. Neither are there associated costs to set up an office in this country. The digital currency is truly global and the transaction fee is minimal; hence allowing micropayments.

"We sometimes forget that there are many countries where you can’t take a credit card payment. Those countries become isolated from the rest of the Internet economy.."
— – Stephen Pair. Co-Founder, CEO of BitPay

The protocol of Bitcoin isn’t just limited to being the substitute of PayPal. It’s productiveness goes far beyond being an payment processor of the Internet. In fact, Bitcoin’s proponents have been chanting about how the underlying technology of Bitcoin i.e –  the block chain – carries the potential to revolutionize all areas of finance.

Through the process of trial and error, entrepreneurs and innovators in the first world are now working to unleash the potential of Bitcoin in the developing world. Their pragmatic approach here is to use Bitcoin’s technology to disrupt the $526bn consumer remittance market. Notwithstanding the current regulatory and compliance costs of setting up a network to facilitate such transactions, this is just the tip of the iceberg. Developing countries like Pakistan are usually latecomers to technological movements due to the lack of physical infrastructure. Opportunely, due to rampant usage of mobile technology and the recent integration of 3G within mobile networks, the biggest hurdle has been already conquered. Bitcoin evangelist  said:

"And it’s my contention that—and a lot of people think this—that, just as in Africa, they didn’t go to phones. They went directly to cell phones, that, in the same sort of adoption curve, in these developing nations, you’re not going to see them start getting bank accounts. You’re going to see them just going straight to Bitcoins, because if you own a Bitcoin address, you have a bank account on your phone that you can interact on the global stage with."
— – Jonathan Mohan

Despite the fact that Bitcoin is still in its infancy, the technology will be deployed and adopted much quicker than expected. This is mainly due to the network effect of millions of interconnected people through lnternet and cellular technologies. Satoshi Nakamoto – the founder of Bitcoin has already solve the bigger piece of the puzzle. What remains to be solve is an ideal way to remove the barriers that currently hinder Bitcoin’s growth. In the future, as Bitcoin evolves and eventually overcome its deterring flaws, it may serve as a tool of economic development for emerging economies – including Pakistan.