Payoneer, the widely used global payment platform popular among freelancers and small businesses, has implemented a substantial increase in fees for its users in Pakistan.
The newly introduced 3% withdrawal fee, which took effect immediately, has generated concern among tens of thousands of freelancers and digital professionals who rely on Payoneer for their cross-border transactions.
This change represents a 50% increase in withdrawal fees for transactions involving non-local currencies and comes as a setback to the burgeoning freelance industry in Pakistan, which has become a prominent global hub for online workers.
What are the changes?
The new fee structure directly affects Payoneer users who transfer funds to bank accounts denominated in foreign currencies, such as US Dollars, Euros, and British Pounds. Given Pakistan’s rapidly expanding freelancer community, the timing of this fee adjustment raises several questions regarding its long-term implications for the digital economy.
Key changes include: Withdrawal to Foreign Bank Accounts: The fee for transferring funds to foreign bank accounts has risen from 2% to 3%. Transfers to Third-Party Bank Accounts: Previously offered without charge, this service now incurs a 3% fee. Internal Payoneer-to-Payoneer Transfers (USD, EUR, GBP): For amounts exceeding 500 units, a fee of 0.60% will be applied, while smaller transfers will be subject to a fixed fee of 3.00. Domestic Payoneer-to-Payoneer Transfers (USD, EUR, GBP): Now includes a 3.00 fee, even for transactions occurring between local Payoneer users within Pakistan. Receiving Payments: Payments under $100 will incur a $1 fee, while payments equal to or exceeding $100 will be subject to a 1% fee. Other Currencies (GBP, EUR, CAD, AED, AUD): Similarly, receiving payments in these currencies below $100 will incur a $1 fee, and amounts over $100 will be charged at 1%.
A particularly noteworthy change is the introduction of a 3% fee for transferring funds to third-party bank accounts, a service that was previously provided free of charge. This adjustment could have a significant impact on individuals and businesses that depend on Payoneer for their international payments.
Impact on Pakistani Freelancers
Pakistan has emerged as one of the most significant markets globally for freelancing. According to Payoneer’s 2023 Global Gig Economy Index, Pakistan ranks among the top countries for freelance work, with over 3.8 million freelancers making substantial contributions to the national economy.
The freelance industry in Pakistan is estimated to have a value exceeding $1 billion, with thousands of professionals offering services across various sectors, including IT, web development, graphic design, content writing, and digital marketing.
Freelancers in Pakistan now face increased costs for accessing their earnings, which could discourage many from continuing to use Payoneer or compel them to seek alternative payment solutions. Many of these freelancers, particularly those working with international clients, rely on platforms like Payoneer for receiving payments in a timely and cost-effective manner.
The new fee structure could erode their profits, affecting not only individual freelancers but also small businesses that depend on global transactions.
Reasons Behind Payoneer’s Decision
Payoneer’s decision to increase fees occurs amidst a broader trend of escalating financial transaction costs. As cross-border payment systems grapple with inflation, currency fluctuations, and increasing operational expenses, Payoneer has had to implement these adjustments to sustain its services.
While the company has not provided specific details regarding why Pakistan was chosen for this fee hike, the growing volume of online transactions and Payoneer’s dominant position within the Pakistani market likely make it a target for such changes.
The 3% fee hike is particularly significant considering the proportion of freelance workers in Pakistan who rely on Payoneer. According to Freelancing in Pakistan 2023, approximately 30% of freelancers use Payoneer as their primary payment platform. The impact of these new fees could deter freelancers from continuing to use Payoneer, potentially leading them to explore other payment platforms like PayPal, Wise, or Skrill, although these alternatives have their own limitations and regional restrictions within Pakistan.
For small businesses in Pakistan that rely on Payoneer to receive payments from international clients, this fee increase could lead to higher operational costs. As businesses expand globally, the ability to manage international payments efficiently becomes critical. This hike might prompt businesses to explore new payment gateways or even absorb the additional costs themselves.
