Less than a month after announcing that it was suspending domestic activity in the Colombian market, Finance Colombia has learned that Paypal and Davivienda, a major Colombian bank, plan to announce an alliance this week that makes Davivienda the exclusive banking channel for merchants to accept Paypal as a method for cross border purchases, and the ability to transfer money from Paypal into a Davivienda bank account.
It is unknown whether the ability to make domestic purchases and person-to-person transfers via PayPal will be re-enabled. Currently, only Colombians with credit cards (not debit cards) can utilize PayPal, and then only to make purchases. It cannot be used to send and receive money between individuals.
To utilize this service, the small merchants it is directed towards must be Davivienda account holders and have those accounts linked to PayPal. When they wish to transfer a Paypal balance to the Davivienda bank account, they must initiate the balance transfer online, and then send via email, documents supporting the sale to Davivienda for review. Once this is done, the transfer may take up to six days. Davivienda charges $10 US plus tax per each transfer from Paypal to the Davivienda account, and Paypal charges 5.4%+ US 30 cents per each transaction on top of a currency conversion commission of “up to 4.5%.” Potentially $20 of a $100 USD transaction could be lost to financial institution fees.
This article will be updated as more information becomes available.