Since the announcement of PayPal‘s named “Internet Payment Gateway” Xoom Incorporation, which was called the “cross-border online money transfer company” summit in the last quarter of 2015, has been introduced PayPal in Bangladesh, and ‘confusing news’ is being done by combining Xoom. But the reality is that the nature of the Internet payment gateway and online money transfer service is entirely different; the most horrible thing is that both the system service nature and customer demand are different, which means customers also other.
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Features of PayPal versus XOOM incorporation
The essential feature of the payment gateway like PayPal gives the service through an Electronic wallet, which is used for a cash deposit from a bank account, credit card, debit card, peer-to-peer money transfer, online merchant payment, and withdrawal of money to a bank account, credit, debit, a pre-paid card with the permission of payment gateway’s licensee’s location from the central bank of a country. Which license can take and distributed by the commercial banks as customer demand?
On the other hand, the fundamental feature of online money transfer like Xoom is only used to transfer Cross-Border electronic funds through swift codes, which code is provided by the specific commercial banks to their customer to deposit their money to bank accounts, credit card, debit card or OTC means over the counter or withdrawal their money from XOOM to bank account or over The Counter-OTC. This type of transaction is called the “Online Money Transfer License Location System. For easier understanding, this Xoom is like western union, USA EXPRESS, etc. Most of the time, Bangladeshi people habituated using Western Union, MoneyGram, etc., to transfer their money from a foreign country to Bangladesh through their particular bank.
Most banks in Bangladesh use BEFTN (Bangladesh Electronic Fund Transfer Network) through the Inter-bank fund transfer facility, which has existed for a few years. But In, this selection of money transfer systems does not work with real-time money transfer to ACH (Automatic Clearing House) and RTGS (Real-time Gross Settlement), so Electronic Fund Transfer has not ensured the instant fund deposit. As a result, it takes two or a day for the settlement to deposit the fund per customer demand.
A question may be in your mind; what is that issue in technical assessment, and what are the reasons behind the confusion?
To give your answer, we can say that an online version of money transfer and an offline version of the brick-mortar model remains the same. The resulting money transfer process through online exchange houses will take separately from the country-to-country transactions.
How Confusion arises, and Why did PayPal Buy the Xoom as an associate?
It is mentioned here that perhaps the only Xoom subscriber (sander/payer) can transfer the balance by logging in with PayPal. Resulting, Xoom became PayPal Xoom. PayPal is just a payment gateway, and Xoom is working based on an online money transfer system. Since PayPal is not a bank, they also need to cash in from bank accounts, credit cards, debit cards, pre-paid, and money-packs. At the same time, Xoom is doing the same thing, but it’s just transferring money from bank to bank, not able to hold cash and work to take payment from the online business client or make payment to purchase anything online, which is done by western union, MoneyGram and so on. So, there is no fundamental difference between Xoom with other online money transfer services. This is one reason for buying Xooms offline (Brick & Mortar) and online remittance market by PayPal because PayPal customers are generally online buyers and sellers. As a result, the Merchant Service Monopoly has made a basic service e-wallet.
As the P2P or cash-out is expensive and also lower-rated ratio regarding transactions. PayPal cash-In is Free, but in cash-out or peer-to-peer transactions, customers have to pay a lot of fees from 2.5 to 4 percent; in that case, customers have avoided cash-out or high-value P2P transaction payment gateways cash-out funds to their banks. In the Xoom case, the swift network is used by exchange houses with online money transfers or money operating licenses. In that contest, the Xoom charges one dollar to any account for 4-7 dollars to transfer money.
Inward remittance customers of Bangladesh are mainly of three types:
- Online workers are mainly Freelancers or Remote workers.
- Offline Worker class means the people who give labor to a foreign country
- Merchant Service who are online or offline product merchandisers.
On the other hand, in Bangladesh, there are four types of Inbound Remittance channels used by these three types of customers:
- Exchange houses Like Western Union, MoneyGram, Al-Raji, Lord, Sonali Exchange, etc.
- Online Money Transfer methods like Transfer Voice, Xoom, UAE Express, etc.
- Online Payment Gateway PayPal, Payoneer, and so on; the freelancers use this service
- Hundi is popularly known for money laundering.
First of all, the Xoom has been going on in Bangladesh for many years through Rupali Bank, Shahjalal Islami Bank, and Lord Money Exchange. The confusion arises from Sonali Bank’s public bank, saying that PayPal is coming and can give PayPal service. But still did not clearly explain how to provide PayPal service via Xoom, so confusion is rising day by day. But actually, it’s not possible to give PayPal service via Xoom because there is such logical and technical difference between Payment gateway systems like PayPal and online money transfer processes like Xoom.
Maybe a question arises in your brilliant mind about how we are sure that this is not capable enough to give PayPal service. Keep studying to know how we are sure about it. In general, if we verify the technical and regulatory perspective of internet payment and online money transfer, we can easily understand that it is a different company and different services and types. The difference between another online money transfer or the previous Xoom with the current Xoom is that if someone has a PayPal account, then he or she is allowed to authentication-based login into Xoom, and he or she will be able to transfer funds from the PayPal balance. However, PayPal itself deposits to a card or bank account by cash-in. Because the name of Bangladesh is still not listed on PayPal’s website, that means PayPal still does not index Bangladesh to provide services from Bangladesh to their customer. So, the fundamental difference is not very much as long as PayPal does not allow opening accounts in Bangladesh.
On the other hand, PayPal has a listing of 203 countries working, but a PayPal phone service is functional in 25 or 29 countries. In the 203 countries listed, only 107 countries can withdraw their money from the local bank. The remaining 96 countries, including Nepal and Bhutan, can open accounts, but customers are not getting limited or any vendor accounts. There is nothing more than the country index in these cases. So, US Accounts like Payoneer and verified the master card are necessary for fund transfer to the local bank. So if you want to withdraw money, follow the same procedure done by our freelancers with Payoneer or other MasterCard.
As per discussion, we can say that with kidding fell, PayPal with Xoom and running the internet by blogging remained the same until PayPal indexing in Bangladesh. Resulting in we cannot getting the dedicated service of PayPal. As a result, freelancers or online merchants are deprived of PayPal services.
Now the Million dollar question like: What is the alternative to PayPal? Almost all IT companies in Bangladesh are doing outsourcing work and withdrawing their earnings by using normal banking channels to bring millions of dollars every month without any interruption. The freelancers can easily withdraw money from the local bank through the screen, Payoneer, Neteller, or many other providers of international companies who are mastering the master card. So, don’t worry, guys, who are newcomers to freelancing, you have many options to transfer your earned money to our local banks. Yes, it is true that PayPal is a lot more convenient and has huge facilities, but it is also an expensive service. We need our own or local payment gateway to transfer for e-commerce or P-2P, inter-bank fund.
Indeed, As PayPal is not coming to Bangladesh, this is not the failure of the government’s ICT Division or policymakers, Bangladesh Bank, BASIS or IT sector, and other authorities to make a financial decision for our country. PayPal is a completely independent private company that deals with decision-making by considering its plans, policies, roadmaps, feasibility, and risks. Now our preparation is necessary for the run. Technical Infrastructure in Banking should prepare more. Our credit card users are much lower than in other countries; online banking has not started well. However, there is no problem with the policy support. To work with such an online payment gateway in Bangladesh, its stakeholder will be the first to play a leading role. The ‘Bangladesh Bank’ is the main stakeholder in bringing the bill. So Bangladesh Bank has to take responsibility, and the policy has to be fixed. And honestly, we can say PayPal is not too far if all the banks, ICT divisions, BASIS, and the concerned people work together to make all the technical challenges arising regarding this issue.