PayPal, the global electronic payments system that was purchased, then spun out of internet auction platform eBay, recently announced that it is pulling out of Colombia, at least for domestic payments. The company, that allows individuals and businesses to send money to each other without revealing bank information, issued this statement (translated here by Finance Colombia):
From September 2, 2015, PayPal will suspend the possibility of utilizing online payments for national transactions in Colombia. Periodically, PayPal revises its terms and conditions, and always acts in compliance with local requirements. Colombia is a very important market, and the users of PayPal that reside in Colombia will in every way, be able to send and receive international payments utilizing PayPal. The PayPal customers in Colombia still may use PayPal for international transactions in more than 200 markets worldwide. Customers of PayPal that have questions about this change in terms and conditions should contact PayPal customer service.
The move set off waves of speculation regarding the motives of the payment giant that has over 100 million user accounts in 190 countries. As PayPal clarified, it is not completely leaving Colombia, but Colombians will not be able to use PayPal for domestic Colombian peso transfers between users or businesses.
For the sake of clarity, Finance Colombia reached out to PayPal for clarification regarding this move, and to get an understanding of why PayPal felt a need to retrench from Latin America’s third largest economy. PayPal Latin America’s Financial Services and Market Development Director Arnoldo Reyes took the time to answer Finance Colombia’s written queries.
Finance Colombia: Why did PayPal decide to cease domestic online payments in Colombia?
Reyes: Colombia is an important market for PayPal. However, today we can’t offer services that meet the specific needs of the domestic Colombian market. For instance, users are not able to make transactions in their local currency and our platform is 100% operated from outside Colombia. Therefore, we took the decision of limiting our services to make international payments for goods and services, while evaluating to improve our product offers.
Finance Colombia: Will Colombians who open new PayPal accounts be able to link those accounts to their Colombian banks?
Reyes: Colombia is an important market for us. As such, we continue to work to provide new solutions to our customers there.
Finance Colombia: How does this affect Colombian retailers that have accepted, or wish to accept PayPal?
Reyes: PayPal’s users or merchants residing in Colombia will be able to send and receive international payments through PayPal services.
Finance Colombia: Have fraud, AML (Anti Money Laundering), or compliance concerns prompted this move?
Reyes: No, these were not the reasons for taking this decision. In fact, our current offer in Colombia better adjusts to improve International purchases and sales and to help promote Colombian exports. For example, in the case of domestic transactions in Colombia, we do not currently offer users the possibility to operate in the local currency and our platform is 100% operated from outside Colombia. The national offer varies depending on the country. And we have decided to limit our services to international payments in Colombia while we assess how to improve our product offer in the country.
Finance Colombia: Colombia’s PSE online payment platform is seen by some as a domestic industry defensive move against PayPal’s incursion into the Colombian market. Has PayPal faced industry or regulatory resistance in Colombia?
Reyes: No, in fact we have always been supported and welcomed by all Colombian institutions. Colombia is a very important market for us and we always search for the best solutions for each market. This is our priority. Today we are not able to continue offering this service for national transactions, but we always evaluate how to broaden our services.
Photos of PayPal’s San José headquarters building and Arnoldo Reyes provided courtesy of PayPal.