Palestine Pulse

Will new e-payment regulations boost Gaza's gig economy?

Article Summary
The Palestine Monetary Authority introduced new regulations and licensing to secure and expand electronic payment services, a step that could allow more Gazans to receive remittances for work conducted online for foreign companies.

GAZA CITY, Gaza Strip — The Palestine Monetary Authority (PMA) on July 31 announced new regulations for the licensing of payment service companies. The new requirements, whose implementation was called for by the 2018 National Plan for the Promotion of the Use of Electronic Payment Systems, should help solve a problem many Palestinians in Gaza face in receiving payments for work performed online.

Hundreds of young Gazans have encountered obstacles having fees or remittances transferred to banks inside Gaza or wired via e-payment cards. Some have experienced delays in payment, while others have lost jobs as a result.

In the statement announcing the new regulations, PMA Governor Azzam al-Shawwa noted the goal of developing and expanding payment methods — that is, money movement and payment services — through safe and secure e-payment system infrastructure and tools. On June 5, the Palestinian government had approved the national plan, which was developed in light of banks having problems obtaining foreign currency, as well as shekels, from Israel due to its 11-year-long siege against Gaza.

Yahya Salha, a graphic designer, and six other Palestinians used to work remotely for a Saudi company, which he declined to name. They were terminated because their employer could not transfer their earnings money to banks in Gaza.

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“I know many people who were laid off because of this, or because they could not even open current accounts at the banks so they could receive money transfers,” Salha told Al-Monitor.

In March 2018, a group of young people who work online sent Shawwa a request for support in an electronic petition coordinated by the Arab Women's Enterprise Fund. It stated in part, “We ask your Excellency to instruct the relevant authorities and stakeholders as well as our Palestinian banks to consider [us] and facilitate our access to current accounts, so that we become an integral part of the official Palestinian banking system.” The petition played a role in influencing the PMA decision to act to make it possible for freelancers to be paid electronically.

In 2017, the unemployment rate among Gazans aged 15-29 was a remarkable 62.4%. In light of Gaza's dire economic conditions and such high unemployment, many young people have sought, and found, work online in various fields, landing jobs through global business platforms and social media.

The PMA held a public panel discussion in Gaza City on Aug. 2 that included financial experts who discussed the tools and techniques of e-payment systems. Companies already in operation will need to make sure they are in compliance with the new regulations and apply for new licenses. 

Mohammed al-Ashi, a professor of finance and banking at the Islamic University, who took part in the workshop, said that one of the main objectives of the decision was to facilitate the transfer of remittances by young online workers — the population most affected by problems surrounding transferring money to Gaza — without the need to have banks get directly involved.

“The PMA announced that it needs service providers, who will probably be from the West Bank,” Ashi told Al-Monitor. “This electronic money transfer service will go through private companies regulated by the PMA outside the banking system. It is expected to employ blockchain technology for money transfers from and to the Gaza Strip.”

In blockchain money transfers, the transaction is conducted directly between the sender and recipient electronically. Blockchain's powerful encryption eliminates the need for a third party, such as a bank, to initiate wires and transfers.

In the case of remote workers in Gaza, Ashi explained, “They can activate this service and start receiving remittances without the need to open current accounts with banks, which require many prerequisites they cannot meet.”

Ashi also noted some potential obstacles to the system. “Most important,” he said, “we still do not know how much this new approach will be accepted by people, who might have doubts about e-services locally. The PMA must also work on providing a robust infrastructure for service companies and administration cadres [in both the public and private sectors] to implement the decision.”

Wael Sharfa, who in the past found jobs through Up Work, a platform for freelancers, told Al-Monitor, “The biggest problem we face is the ban on money transfers and remittances to the Gaza Strip for political reasons, especially from the Gulf states, which is seen as the biggest market for Palestinians working online. Gulf companies are banned from transferring money to Gaza, which is under the control of Hamas.”

Although the Gulf states have not designated Hamas or any of its leaders terrorists, they have been reluctant to transfer money to Hamas-controlled Gaza after the United States added Ismail Haniyeh, the head of Hamas’ political bureau, and a number of other Hamas leaders to its terrorism list in February 2018.

Sharfa explained that remittances can be wired through Western Union, but the fees are high, sometimes 10% of the transfer value. He also noted that some people do not like using Western Union because it can be time-consuming. PayPal is not available in Gaza.

On April 27, the Bank of Palestine in Gaza City held workshops on “Arab Financial Inclusion Day,” which was attended by dozens of young freelancers. On the occasion, the bank launched An Account for Every Citizen, a program to allow young people to open current accounts so they can receive money transfers. It is facilitating new accounts by reducing application requirements, such as the need to provide a work certificate or contract.

Doaa Shaheen, a journalist who works for foreign websites and participated in the Bank of Palestine event, told Al-Monitor, “Not many foreign companies and websites can deal with banks in Gaza because of the political situation, and not everyone can open a bank account, not to mention that banks charge 5% commissions on every transaction.”

Speaking for many, Shaheen added, “We hope that the PMA's new measures will allow us to receive money transfers electronically without the need of third parties, whether institutions or people.”

The PMA's electronic payment effort might prompt a surge in online jobs in Gaza, which could lead to more college graduates finding employment. The biggest challenge, however, will be to create the proper infrastructure, hire qualified staff to oversee implementation of the new regulations, promote the new system and track financial transparency.

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Moath al-Amoudi is a Palestinian writer who has been working as a journalist for eight years, specializing in public issues. He holds a master's degree from the Islamic University and has worked for several Palestinian and foreign media outlets. He helped conduct research for the book “The Palestinian Prisoners,” which has been published in several languages.

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