PayPal recently launched its new P2P payment service PayPal.Me in a bid to capture market share in the growing freelancer economy in India and across the developing economies.
The interesting bit here is that PayPal’s new payment service is very similar in its functioning to the way Bitcoin and blockchain-based digital currency payments work: a merchant simply gives a link/address to the customer and they send the funds, without revealing any sensitive financial information. However, in the case of digital currency payments, the fees are much less - not to mention the fact that charge-backs are impossible.
It’s not hard to fathom why PayPal is pushing to get into the Indian freelancing industry. Unlike the freelance industry in the United States - which totals about 53 million - the Indian freelance market is comprised of only about 15 million individuals, which represents close to 25% of the entire Indian workforce. But according to Payoneer, these 15 million Indian freelancers account for approximately 40% of the freelance work done in the entire world. In fact, more than 50% of US startups contract Indian freelancers to cut down on costs.
VP of Strategic Partnerships at Truelancer.com, Prakarsh, writes:
“With over 1.5M professionals graduating out of the schools every year; India is undoubtedly the largest producer of skilled professionals in the world and ready to fuel the burst in demand side of this exponentially increasing freelance industry.”The PayPal.Me service is geared to towards freelancers, offering them an easy method of receiving & sending payment links over Skype chat sessions and email messages, but even this new service has an Achilles heel: currency exchange fees!
PayPal charges a hefty 2-4% premium on currency conversions, and even with the recent 1 percentage point cut, these Forex fees may still be a dealbreaker for many Indian freelancers.
If you want to find out what those PayPal foreign exchange fees can do to you, just ask Harsh Agrawal, an Indian user who lost about $130 over the course of a few days due to reversed PayPal transfers to his bank account.
This is where bitcoin really outshines PayPal. Not only is bitcoin just as easy to send as a PayPal.Me payment link, it’s also irreversible and doesn’t have those pesky foreign exchange fees.
And the digital currency is becoming more popular in India. Benson Samuel, CTO and Co-Founder of one of India’s largest Bitcoin exchanges, Coinsecure, told CNCB Moneycontrol that “there are about 50,000 users in the country, with about 30,000 actively using Bicoins for transactions.” While those figures pale in comparison to the amount of freelancers in India, bitcoin may gain even more traction as the Indian rupee has lost a considerable portion of purchasing power over the last few years: