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Today, PayPal India has raised the transaction limit per transaction to $3000. This comes as a big relief for people who were doing single large transactions. Finally RBI has woken up and understood that we cannot do business with such restrictions in place. However this is still valid only on cross border transactions and not for within India. We are still waiting on the day when PayPal payment with India is ok’d by RBI, this will help thousands of merchants and promote e-commerce growth in India.

Seems like RBI has made it so complex for PayPal to do business in India that it has gone crazy. All Indian merchants are facing the brunt of not being able to do business within India with PayPal and since the PAN card verification drive is going on, it has become impossible to do business with PayPal from anywhere. We have heard this from many merchants and have experienced this ourselves that PayPal keeps rejecting valid PAN card details and then put the account on a temporary hold where you are unable to receive any money.

If this was not enough, PayPal is auto withdrawing payment to bank accounts everyday. Which means that even if you get a payment of $2, this amount is sent to your bank next day resulting in loosing money with conversion and small payment transfer charges.

In this age where more and more companies are going online with ecommerce, it seems like RBI is encouraging monopoly by stopping multinational companies like PayPal to do a game changing business in India.

Below is the mail i got today from PayPal… They have finally resolved the payment issue with RBI but what worries me is the Export Code, does this mean that only Exporters can transact online via PayPal? There are thousands of Individuals who do not have an Export code… what happens to them? Will they manipulate the system by entering any random export code in the PayPal form?
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We have been diligently working with the RBI and our business partners to resume Indian bank withdrawals for the thousands of Indian businesses who depend on PayPal to sell their goods or services in the global marketplace.

Today, we are happy to announce that the RBI has allowed us to continue local bank withdrawals for settlements for exports of goods and services. We are currently making changes to comply with Indian regulations for settlements for exports of goods and services, and we anticipate that, as of Wednesday, March 3rd, customers will be able to use our bank withdrawal service.

As part of the changes, you will be required to fill out a new field entitled ‘Export Code’ when you request a withdrawal. This information is required under the current laws of India in order to identify the nature of cross-border merchant transactions.

On Monday, March 1st, we will be back in touch with specific instructions on how you can move your money into your bank account.

Moving forward, the RBI has told us that PayPal needs specific approvals to allow personal remittances to India, which we currently do not have. Until we get these approvals, personal payments into India will remain suspended. However, if you are an exporter, you will continue to be able to use the PayPal service for payments of goods and services. In fact, with the changes we are making to our system, PayPal is now set to be a more powerful engine for exporters in India. With purpose codes for export transactions and FIRCs (Foreign Inward Remittance Certificates), you should now be able to get the export related benefits you seek.

In the fast few days there have been numerous posts all over the net about payments being stopped and some being reversed for Indian customers. PayPal has also made an official statement in their blog about the same. In affect PayPal has stopped processing payments made to Indian accounts which are personal in nature. If you have a PayPal account which is verified as an Indian account, you could still get payments from your customers abroad, however they have to be made as Goods sold or Services rendered and cannot be done as personal.

This might just be another step in curbing money laundering, that is what i think. Last month PayPal stopped adding US bank accounts to customers with Indian address. I agree that this will put an end to lot of false accounts created for suspicious purposes but this will also affect a lot of genuine users and merchants. India is emerging as one of the biggest markets in the world and in the coming years it will also emerge as a leader in online transactions but if such hijacks continue on Indian payments the future will not look so good.

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