Not having PayPal costs Sri Lanka substantial loss of foreign income: Study

• LIRNEasia study says extension of PayPal facilities crucial, particularly given SL’s precarious BoP position
• Says sizeable segment of Lankan digital entrepreneurs currently caters to global clients
• Points out due to absence of PayPal they have to bring in money via various intermediaries, paying high fees
• CB maintains that PayPal not keen to enter SL due to small market size
• However, ICTA believes it is mostly to do with country’s foreign exchange laws

By Shabiya Ali Ahlam
Further delays in getting the worldwide online payment system PayPal into Sri Lanka limits the country’s potential in facilitating inward payments, an area that requires urgent intervention, as the economy is in dire need of foreign exchange to improve its balance of payment (BoP) position.

LIRNEasia pointed out that the country’s inability to lure in the American company that supports online money transfers has resulted in a substantial loss of foreign remittances into the country, given that a sizable proportion of the working community is engaged in digital entrepreneurship, catering to global clients. According to a study carried out by LIRNEasia, a significant segment of the IT/BPO sector engages in low-skilled digital services, where they carry out freelance work such as designing logos for as low as US $ 5 to advertisement clicking, to generate advertising revenue for YouTubers overseas.

“One of the biggest issues they have is getting payments and PayPal is the dominant payment platform for all these people. If you are doing a gig for American and European companies, they want to pay through PayPal. They can’t get those remittances into the country and cash it out. While they might have a PayPal account, they cannot cash it,” said LIRNEasia CEO Helani Galpaya.

At a webinar hosted by the Ceylon Chamber of Commerce (CCC) yesterday, Galpaya shared that these digital entrepreneurs have to rely on intermediaries, who would charge almost 14 percent of the income earned, as various fees.

“This is a macroeconomic issue since we are desperate for dollars,” she stressed.

Despite numerous attempts to bring PayPal into Sri Lanka thus far, efforts have been futile. While the Central Bank has engaged in a dialogue with the company, it is yet to finalise anything concrete.

According to previous statements made by the Central Bank, PayPal officials had not expressed their keenness to enter Sri Lanka.

Although the Central Bank maintains that PayPal is hesitant to enter the country due to the small market size, which translates into a smaller number of transactions, the Information and Communication Technology Agency (ICTA) is of the opinion that the online payment platform is not keen to enter Sri Lanka due to the complexities in the country’s Exchange Control Act.