Bangladesh, once referred to as a “Basket Case” by Henry Kissinger, has emerged as a shining example for developing nations worldwide. With a population of 170.279 million people, the country now boasts a GDP per Capita of $2,470, trailing behind India by only $130, according to the IMF.
Bangladesh has also gained recognition as one of the major freelancing countries, with Payoneer reporting annual remittances of $100 million. The country’s Information and Communication Technology (ICT) exports are projected to reach $5 billion in the next two years, indicating a flourishing IT sector in the South Asian region.
However, despite these achievements, the IT industry in Bangladesh faces a hidden problem that policymakers often overlook – the absence of universally accepted online payment solutions in the country.
Popular global payment platforms like PayPal, which processed 19.3 billion transactions in 2021 across over 200 countries, are not available in Bangladesh. Additionally, services such as Apple Pay, Google Pay, Square, and Stripe are also inaccessible.
This poses a challenge for IT professionals, freelancers, and tech companies who need to transfer their hard-earned money to Bangladesh. Freelancers working on global marketplaces like Upwork, Freelancer, and Fiverr resort to direct bank transfers, Payoneer, and Wise for their payment needs. However, relying solely on marketplaces comes with issues like intense competition, lower prices, sudden profile bans, higher commission rates, and lower-quality clients, creating uncertainty for freelancers, especially beginners.
As a result, many experienced freelancers abandon marketplaces and opt to work directly with overseas clients. However, this presents a new hurdle. Clients and companies based in the United States find it convenient to use PayPal, where consumer-to-consumer money transfers are free. Thus, Bangladeshi IT professionals and freelancers must persuade their clients to use less popular services like Payoneer and Wise for payments.
The table below illustrates the differences between popular payment services:
Payment Service | Transaction Fees | Currency Conversion Fees | Withdrawal Fees | Features | Available in Bangladesh |
PayPal | 2.9% + $0.30 | Up to 3.5% | Free for US | Wide range of features | No |
Stripe | 2.9% + $0.30 | Up to 2% | Free for US | Wide range of features | No |
Payoneer | 0% – 3% | Up to 3.5% | $1.50-$15.00 | Limited features | Yes |
Wise | 0.4% – 1.5% | Mid-market rate | Varies by country | Limited features | Yes |
Tech companies, marketing agencies, and e-commerce businesses in Bangladesh also encounter difficulties in selling products and services in first-world countries. Through personal surveys, it was found that outsourcing companies rely on various methods to transfer money to Bangladesh, including SWIFT (less preferred by international clients), money exchange (providing better exchange rates but difficult to convince clients), Payoneer (offering direct payment requests but not popular among clients), and Wise (providing better rates but making clients less comfortable).
While these payment solutions may be suitable for service providers or outsourcing companies, the satisfaction of clients is equally crucial. Some clients have been known to cancel work orders due to the unavailability of PayPal or Stripe. In one instance, a content agency in Dhaka reported that its owner had to ask a friend to open a temporary PayPal account to keep their US clients satisfied. This is quite difficult for a freelancer who just started in a remote place in Bangladesh. PayPal and Stripe are more development/technologically friendly than Payoneer and Wise. More business ideas can be implemented, and more export opportunities will be created eventually.
However, it is essential to consider the issue from a broader perspective. The challenges lie not only with PayPal but also with digital payment regulations, lack of digital payment awareness, and interoperability. As the country aims to become Smart Bangladesh, regulators must adapt the current digital payment acts and frameworks to cater to the needs of digital service providers.
Efforts have already been made to ease the financial transaction ecosystem in Bangladesh. Some of the initiatives taken are:
Regulatory Frameworks | How the framework works |
Bangladesh Electronic Funds Transfer Network (BEFTN) | The first paperless electronic interbank funds transfer system in Bangladesh can handle foreign and domestic remittances. |
National Payment Switch Bangladesh (NPSB) | Promoting real-time payment transfers and creating interoperability among systems such as interbank Automated Teller Machines (ATM), Point of Sales (POS), and Internet Banking Fund Transfer (IBFT). |
Payment Service Provider (PSP) Payment System Operator (PSO) | Regulated under the Bangladesh Payment and Settlement Systems Regulation-2014, these entities establish an ecosystem to promote electronic payments using e- payment gateways like SSL Commerz Ltd. and Pay Systems Ltd. |
Interoperable Digital Transaction Platform (IDTP) | Acting as a bridge between different financial institutions, merchants, and consumers, the IDTP framework aims to address interoperability issues. A domestic digital payment option called Binimoy has been launched, inspired by India’s Unified Payments Interface (UPI). |
Real-Time Gross
Settlement(RTGS) |
Developed by Bangladesh Bank, RTGS is an interbank settlement system designed to handle large payments between banks. |
The writer is director at BASIS
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