The cost of getting paid
Freelancers who use third party online workplaces, as well as those who are in direct contact with foreign clients to sell their services, are in need of PayPal, since other payment services are not always supported by these websites nor preferred by clients.
Bangladesh now contributes about 16.8% to the global labour pool online with around 650,000 freelance workers, a share that is estimated to increase significantly in the near future, owing to major government support. Currently freelancers bring an estimated $100 million a year into the country.
With the recent launch of the PayPal-owned service Xoom, many had expected that bringing earnings into Bangladesh would become much easier, but freelancers say it has not been able to achieve the expected result. In fact, many still opt to use PayPal accounts belonging to friends or relatives living abroad to get paid for their services and later have it transferred to local bank accounts.
It appears that for the time being, freelancers are sticking to what they have been using so far. These include Other international payment methods including direct wire transfers to the freelancer’s local bank account, which is supported by the freelancing platform Upwork.
When asked, many freelancers said that they would rather use PayPal instead of Payoneer, since many sites and foreign clients prefer to pay through PayPal. They siad they regularly miss out on many opportunities because they do not have access to the service.
So what works?
One popular service used by freelancers is Payza (previously AlertPay), which is fully functional in Bangladesh, with many local banks allowing customers to withdraw their money from their Payza accounts with their bank accounts. Furthermore, users can transfer funds from their bKash account to their Payza account.
The withdrawal charge for Payza is Tk20 or 2.9% plus $0.30 for personal foreign currency transactions. For business accounts, the charge for foreign currency transactions is the same, but 3.5% for taka transactions.
Payza also has an option for account holders in Bangladesh to convert foreign currencies to taka directly within their accounts. Previously, foreign currency had to be withdrawn to a Bangladeshi bank account in order to convert those funds to taka.
This allows freelancers to use the foreign currency they receive to make online purchases within Bangladesh, or to pay for services that accept Payza payments. Funds held in taka can be spent on purchasing products from Bangladeshi e-commerce websites, pay for services such as mobile balance top-ups, or be sent to other Payza members in the country.
However, the big problem with Payza is that not all of the freelancing sites support its services. This has given rise to the popularity of Payoneer, which is quickly gaining a large portion of the market share in Bangladesh. The websites most frequently used by Bangladeshi freelancers, such as Upwork, and Fiverr all support Payoneer.
Payoneer’s advantage is that registration is free and they send a debit card to the account holder’s address. This service allows the customers to open an American bank account. The money received from clients can then either be withdrawn to the customer’s local bank account or stored in the Payoneer account. Since the debit card is an internationally usable MasterCard, the account holder can use it for online shopping. Payoneer charges $29.95 annually for card activation and $3.15 per ATM withdrawal.
Troublesome banks
“One of the problems that freelancers often face while withdrawing money through their bank account is that many bank officials are not aware of the concept of freelancing,” said one freelancer, who wished to remain anonymous.
He primarily provides search engine optimization services on Fiverr, and uses Payoneer as the main payment service, since Fiverr only supports PayPal and Payoneer.
“So, many people often have to resort to other methods such as contacting a local middleman who takes the money into his account and promises to pay the freelancer by cash. But these people are unreliable and often steal our money and disappear!”
Another problem with Payoneer is that unlike Payza, which supports transactions in taka, Payoneer supports six currencies only.
Waheduzzaman Yeasin, a content writer who works on the popular site Fiverr and has been using Payoneer for more than a year said: “Payoneer does allow an option to withdraw cash from any MasterCard supported ATM booth, but since ATM booths in Bangladesh have a reputation for malfunctioning and getting cards stuck inside the machine, most of us are to scared to do this.”
What is wrong with Xoom?
As an online money transfer service, Xoom cannot offer the services of PayPal, which is a digital payment service. The user agreement on Xoom’s website specifically points out that Xoom can only be used for non-commercial purposes. Customers conducting commercial transactions are subject to termination of their account.
When contacted via e-mail about the difference between the services offered by PayPal and Xoom, PayPal’s head of communications in India, Pooja Sabharwal, only said that PayPal is not currently available in Bangladesh.
Freelancers in neighbouring India are able to enjoy all services offered by PayPal, including PayPal.Me’s unique service that allows users to send a custom link to request funds via text, email, or other messaging platforms. There are no transaction fees, except a goods and services tax and a currency conversion processing fee when shopping overseas. Payments via bank accounts cost a fee of $4.99 to send up to $1,000, transfers over that amount do not require any additional fees for the sender.
