I decided to write this after I saw a post (opens in a new tab) from 2013 on one of the popular Facebook IT groups “IT Entrepreneurs for Nepal (opens in a new tab)” by Manish Modi, who is now managing director of Khalti (opens in a new tab). It had been eight years since that post, and the problem was still there.
PayPal was founded in 1998 and has become one of the most popular ways to send and receive money online. As of 2020, it had more than 377 million users and five subsidiaries: Braintree, Venmo, Xoom, iZettle and Honey.
Who needs PayPal?#
Anyone working as a freelancer, selling services online or doing affiliate marketing needs a way to receive money from abroad, and PayPal is the most widely used. Platforms like Fiverr, Upwork and Truelancer all pay out to it. Payoneer is available in Nepal and many Nepalis use it, but it has limits: at the time, you could only receive money from businesses, the minimum withdrawal was $50, and you had to receive over $200 before you could send money to others.
If PayPal worked in Nepal, it would be much easier for freelancers, affiliate marketers and anyone selling to customers abroad.
Many platforms also pay by SWIFT bank transfer, so you don’t strictly need PayPal, but receiving money that way is expensive.
The problem I ran into#
A few weeks ago, I withdrew $23.32 from an affiliate marketing platform by bank transfer. After a $12 fee, $11.32 reached my account. Through PayPal, the fee would have been about $0.46.
Why receiving isn’t available#
After seeing many posts online about PayPal’s missing features in Nepal, I did some research to find out why receiving money isn’t available.
On 26 June 2021, I emailed every department of Nepal Rastra Bank (NRB). I told them I couldn’t receive money in my PayPal account, and that PayPal’s reason was “Due to the different laws and financial regulation of each country, some features like receiving payments, adding funds to PayPal account or withdrawing funds to local bank account are yet to be offered, in certain countries.” I also told them I couldn’t sign up for Stripe, the biggest payment processor, whose reason was “Stripe wants to help remove barriers to online commerce in every country where businesses are looking to move, build, and scale online. While we do not have any ETA on Nepal, we will get back to you as soon as we are ready to onboard businesses in Nepal.”
You can read my email to NRB below:
Two days later, the director of NRB’s Payment Systems Department (PSD) replied and explained why PayPal can’t receive money in Nepal: “Pay Pal is not licensed to work in Nepal as a wallet. To Receive a fund in Nepal via PayPal or any other international wallet companies either it has to take permission of NRB or it has to have an agreement with any of the PSP/PSO or money transfer companies or banks licensed by NRB, which I doubt is not happening right now and that is business level decision of the concerned companies and out of NRBs purview. PSD has already issued circular to facilitate transfer of small ticket payments from foreign to Nepal. hope in the coming days PayPal or any other foreign wallets will have collaboration with Nepalese Payment Service companies to serve Nepalese customers.”
So PayPal would need NRB’s permission to let users in Nepal receive money, or a bank, PSP or PSO licensed by NRB would need to partner with PayPal to offer it. I don’t think PayPal will approach NRB for a licence, mainly because Nepal is a small market. The more likely route is for a Nepali PSP, PSO or bank to approach PayPal.
After that, the director of the Foreign Exchange Management Department also replied: “These are frequently asked questions (FAQ), many inquirers have raised this issue. Can’t we (PSD, FEMD and IT department) sit together for amicable solution?“
It sounded like they were working on something, but I haven’t heard anything more in the months since. Let’s hope it comes soon.
What it would take to enable it in Nepal#
So the reason is clear: PayPal has no licence to operate in Nepal, and no Nepali bank or payment company has partnered with it to receive funds.
If you work at a PSP, PSO or bank and you’re reading this, why not approach PayPal and bring the feature people have been waiting for for a decade?