PayPal, the American online money transfer, is undoubtedly a global online transactions giant. According to its own account, it has 179 million accounts drawn from 190 markets.
In 2014 it gave Zimbabweans a glimmer of hope by lifting what, by all definitions, was an embargo on Zimbabwe by starting to allow accounts with Zimbabwean cards and bank accounts.
Two years later Zimbabwe is still not fully plugged in into all PayPal features. Things don’t look good either.
In view of the current cash crisis in Zimbabwe I thought I would revisit PayPal’s status on the Zimbabwean market and share an update.
To make things easy I developed a Q & A approach to hopefully capture what I think are the key issues to be aware of concerning PayPal and Zimbabwe in June 2016.
Why is PayPal such a big deal?
PayPal is a big issue because it is dominant player. Millions of websites worldwide, many of them exclusively, use PayPal to receive payments.
This means potential buyers or customers from markets without PayPal cannot make purchases on such websites.
So the gust is both on the potential customer and the business, but mostly against the customer from a country without PayPal (as Zimbabwe was before June 2014), because most countries now have PayPal.
PayPal is also a big deal because it gives extra security when shopping online. Card fraud remains a major issue across the internet. By using PayPal you won’t have to reveal your card details at every online marketplace.
You simply pay using the service and only PayPal knows your card details as opposed to as many sites as you shop from knowing your details.
What is the current status of PayPal in Zimbabwe?
Nothing much has changed since June 2014 when PayPal became available in Zimbabwe and nine other countries including Nigeria.
Zimbabwe domiciled users can still open accounts using local addresses and send money to other PayPal users that can receive money or buy online on marketplaces or stores accepting PayPal as a payment method.
In a nutshell PayPal remains consumer (outgoing) and not business (incoming) oriented service for Zimbabwe.
Take a look at 10 services you can now enjoy in Zimbabwe thanks to PayPal
What does a full feature PayPal service look like?
When PayPal is at its best as is the case in Botswana or South Africa, businesses can open merchant accounts to receive payments locally and abroad via PayPal.
This also applies to solopreneurs who may want to sell single items or run a personal store on a blog or on marketplaces such as eBay, for example.
Peer to peer money transfers are also possible within the same market.
At the moment, since Zimbabwe cannot receive money via PayPal in the first instance, PayPal account holders in Zimbabwe cannot send money to other Zimbabwe PayPal account holders.
This adds to the frustrations that we face in a cash strapped economy that has its eyes opened wide for foreign capital injections. Whatever inflows that could be coming via PayPal are not making their way into Zimbabwe when it needs them the most.
For Zimbabwe the PayPal glass remains half full or half empty depending on the type and level of inconvenience this maybe causing you.
What could possibly be hindering PayPal from offering the full service to Zimbabwe?
PayPal is notoriously tight-lipped it’s not as easy to get an explanation on things (my email to them had not been responded to by the time we had published this post, if they do I will update).
So we can only learn from their operational patterns, previous public statements and personal experience to analyse how they think. It appears activating full PayPal features for a particular market is depended on the market’s central bank regulations and PayPal policy itself.
Of the two, the latter is over-powering. PayPal prides itself of being “the safer, easier way to pay and get paid online”. This means safety and ease of use is right on the leading edge and therefore the company’s most guarded goal post.
This also means markets that cannot guarantee safety and ease of paying and getting paid are not worthy to receive full features but can only be consumers (make outgoing payments) as is the case with Zimbabwe.
Allowing risky countries to send money and not receive guarantees safety and ease of doing business within the PayPal ecosystem.
What are the implications of the current cash crisis on PayPal in Zimbabwe?
My analysis leads me to conclude that the depth and width of the current cash crisis is a big issue for PayPal in Zimbabwe, at least as it pertains receiving funds and operating merchant accounts.
In fact, we may have just kicked ourselves some years down the road away from full PayPal functionality that much of the world has long enjoyed.
It all begins here when PayPal makes this promise to the buyer:-
We understand that sometimes things don’t arrive as planned. So if an eligible item you’ve purchased online doesn’t arrive or arrives significantly different to the seller’s description, we can reimburse you for the full purchase price plus shipping costs, up to $20,000 per item.
This, in other words, is part of PayPal’s flagship and strictly implemented Buyer Protection programme.
At the moment with badly depleted and depleting Nostro accounts, Zimbabwean banks are hardly able to dance in sync with this essential PayPal requirement.
If PayPal allowed Zimbabwean account holders to operate merchant accounts, should something go wrong, as it will, with a transaction be it fraud or lack of delivery of a promised good or service, PayPal would be unable to recover that amount and that would be bad for their business.
Poorly funded Nostro accounts is also the reason behind local banks switching off or limiting card use for cash withdrawals via ATM when abroad, for example.
So the cash crises and overall financial market confusion is our undoing as it relates to PayPal. In coming articles I will explore possible current work-arounds or alternatives.
However, be cautious of the fact that these are just but work-arounds and cannot match the robustness and security offered by PayPal.
If you have anything to add or that I may have overlooked in this update please drop it in the comments.