PayPal [a], the subject of the below news article, is an electronic payment company and this industry of electronic payments has become very important in the strategy for elevating the Caribbean economy. This is digital currency and not “hard money”, so there are no paper stock or coinage issues to be managed with this approach, but there are numerous risk and fraud issues. PayPal is starting to do business in some of the world’s most challenging markets, like Nigeria; this is a good resume for the Caribbean deployment of electronic payment systems.
By: Eric Auchard and Jason Neely
LONDON (Reuters) – PayPal is entering 10 new countries this week, including Nigeria, providing online payment alternatives for consumers via mobile phones or PCs in markets often blighted by financial fraud.
Rupert Keeley, the executive in charge of the EMEA region of PayPal, the payments unit of eBay Inc., said in an interview on Monday the expansion would bring the number of countries it serves to 203.
Starting on Tuesday, consumers in Nigeria, which has 60 million users and has Africa’s largest population, along with nine other markets in sub-Saharan Africa, Eastern Europe and Latin America will be able to make payments through PayPal.
“PayPal has been going through a period of reinvention, refreshing many of its services to make them easier to use on mobile (phones), allowing us to expand into fast-developing markets,” Keeley said.
Once the services go live, customers in the 10 countries with access to the Web and a bank card authorized for Internet transactions will be able to register for a PayPal account and make payments to millions of sites worldwide.
Initially, PayPal is only offering “send money” services for consumers to pay for goods and services at PayPal-enabled merchant sites while safeguarding their financial details. This is free to consumers and covered by fees it charges merchants.
“We think we can give our sellers selling into this market a great deal of reassurance,” said Keeley, a former regional banking executive with Standard Chartered Plc and senior executive with payment card company Visa Inc .
PayPal does not yet cover peer-to-peer transactions, which allow consumers to send money to other consumers. It has not yet enabled local merchants in the new markets to receive payments, nor is it offering other forms of banking services, he said.
A 2013 survey of 200 UK ecommerce sites by Visa’s CyberSource unit estimated that 1.26 percent of online orders are fraudulent and that 85 percent of merchants expected fraud to increase or remain static last year.
CyberSource also estimated that suspicion of fraudulent transactions result in 8.2 percent of online orders in Latin America being rejected by merchants, compared with 5.5 percent in Europe and 2.7 percent in the United States and Canada.
Such fraud can include ID theft, social engineering, phishing and automated harvesting of customer financial data via botnets, or networks of computers controlled by hackers.
A total of 80 million Internet users stand to gain access to PayPal global services this week, including those in five European markets – Belarus, Macedonia, Moldova, Monaco and Montenegro, four in the African nations of Nigeria, Cameroon, Ivory Coast, and Zimbabwe, as well as Paraguay. Internet usage figures are based on research by Euromonitor International.
PayPal counts 148 million active accounts worldwide.
Last week, MasterCard Inc , the world’s second-largest debit and credit card company, and a PayPal rival in payment processing, said it was working with the Nigerian government on a pilot to overlay payment technology on a new national identity card.
PayPal has operated in 190 markets since 2007 and added three countries – Egypt, Georgia and Serbia last year. Roughly a quarter of the $52 billion in payment volumes PayPal reported in the first quarter of 2014 were for cross-border transactions. PayPal reported $1.8 billion in revenue during the period.
Reuters News Service (Retrieved 06/16/2014) –
Central Banks print currency notes and determine the quantity, measured as M0. But there is no need for that activity with digital money, yet still, there is a big role for a Central Bank with command-and-control of the economy. This relates to M1 monetary supply. M1 refers to the measurement of the total of currency/money in circulation (M0) plus overnight bank deposits (like demand deposits, travelers’ checks & other checkable deposits). So when digital currencies are factored in, though there is no M0, there is still an increase in M1 nonetheless. As M1 values increase, there is a dynamic to create money “from thin-air”, called the money multiplier. The more money in the system, the more liquidity for investment and development opportunities.
Digital currencies are “reaping” the benefits of monetary supply without “sowing” the hard work of actual money/stock/coinage management!
This subject is detailed in the book Go Lean…Caribbean, which serves as a roadmap for the introduction of the Caribbean Union Trade Federation (CU) and the Caribbean Central Bank (CCB). This Go Lean roadmap has 3 prime directives:
- Optimization of the economic engines in order to grow the regional economy to $800 Billion & create 2.2 million new jobs.
- Establishment of a security apparatus to protect the resultant economic engines.
- Improve Caribbean governance to support these engines.
This subject of electronic payment systems has been previously covered in these Go Lean blogs, highlighted here in the following samples:
a. http://www.goleancaribbean.com/blog/?p=906 – Bitcoin needs regulatory framework to change ‘risky’ image
b. http://www.goleancaribbean.com/blog/?p=528 – Facebook plans to provide mobile payment services
c. http://www.goleancaribbean.com/blog/?p=360 – How to Create Money from Thin Air
This Go Lean/CU/CCB roadmap looks to employ electronic/digital currency schemes to impact the growth of the regional economy. This is defined early in the book in Verse XXIV (Page 13) of the Declaration of Interdependence, with these words:
Whereas a free market economy can be induced and spurred for continuous progress, the Federation must install the controls to better manage aspects of the economy: jobs, inflation, savings rate, investments and other economic principles…
Creating the CU/CCB governance is “Step One, Day One” in the Go Lean roadmap. Implementing this framework for electronic payments allows for emergence of the regional currency of the Caribbean Dollar. This currency emergence allows for the foundation, so that the regional society can be elevated, economically and governmentally.
The Go Lean posits that the business model of PayPal can be fully deployed in the region. Even though PayPal transacts in every CU member-state, except Cuba and Haiti [b], they have provided an example of how to develop an online electronic payment scheme. There is also the need to model other electronic schemes like Visa/MasterCard and Smart Cards (for Cruise Tourism).
The Go Lean book details a series of community ethos, strategies, tactics, implementations and advocacies to foster the proper controls for electronic payments in the Caribbean region:
|Community Ethos – Money Multiplier Principle||Page 22|
|Community Ethos – Lean Operations||Page 24|
|Community Ethos – Cooperatives||Page 25|
|Community Ethos – Promote Intellectual Property||Page 29|
|Community Ethos – Ways to Bridge the Digital Divide||Page 31|
|Strategy – Vision of Caribbean Single Market||Page 45|
|Tactical – Separation of Powers – Central Banking||Page 73|
|Implementation – Assemble Central Bank Cooperative||Page 93|
|Implementation – Ways to Deliver||Page 109|
|Implementation – Ways to Impact Social Media||Page 111|
|Planning – Ways to Better Manage Image||Page 129|
|Anecdote – Caribbean Currencies||Page 149|
|Advocacy – Ways to Mitigate Black Markets||Page 165|
|Advocacy – Ways to Foster Cooperatives||Page 176|
|Advocacy – Ways to Impact Cruise Tourism||Page 193|
|Advocacy – Ways to Foster Technology||Page 197|
|Advocacy – Ways to Foster e-Commerce||Page 198|
|Advocacy – Reforms for Banking Regulations||Page 199|
|Appendix – Alternative Remittance Modes||Page 270|
Now is the time for all of the Caribbean, the people and governing institutions, to lean-in for the empowerments described in the book Go Lean … Caribbean. This is the basis for the CU vision, a better place to live, work and play.
Download the book Go Lean … Caribbean – now!
Appendix – Cited References:
PayPal is an international e-commerce business allowing payments and money transfers to be made through the Internet. Online money transfers serve as electronic alternatives to paying with traditional paper methods, such as checks and money orders. It is subject to the US economic sanction list and subject to other rules and interventions required by US laws or government.
PayPal is an acquirer, performing payment processing for online vendors, auction sites, and other commercial users, for which it charges a fee. The fee depends on what currency or payments the seller is using. In addition, eBay purchases made by credit card through PayPal may incur extra fees if the buyer and seller use different currencies.
On October 3, 2002, PayPal became a wholly owned subsidiary of eBay. Its corporate headquarters are in San Jose, California, United States at eBay’s North First Street satellite office campus. The company also has significant operations in Omaha, Scottsdale, Charlotte, Boston, Baltimore and Austin in the United States; Chennai and Bangalore in India; Dublin and Dundalk in Ireland; Kleinmachnow in Germany; and Tel Aviv in Israel. Since July 2007, PayPal has operated across the European Union as a Luxembourg-based bank.
Source: Retrieved June 16, 2014 from: http://en.wikipedia.org/wiki/PayPal
b. PayPal Countries
PayPal’s tagline: We get where you’re coming from. We are available in 193 markets and 26 currencies. Spend and receive safely over borders and language barriers. We’re here for you, wherever you are.
|Antigua and Barbuda||Jamaica|
|Belize||Puerto Rico (USA)|
|Bermuda||Saint Barthélemy (France)|
|British Virgin Islands||Saint Kitts and Nevis|
|Cayman Islands||Saint Lucia|
|Dominica||Saint Martin (France / The Netherlands)|
|Dominican Republic||Saint Vincent and the Grenadines|
|Grenada||Trinidad and Tobago|
|Guadeloupe||Turks and Caicos|
|Guyana||Virgin Islands (USA)|