Wednesday, February 10, 2010

PayPal explains its issue in India

Payment processor "PayPal" (Subsidiary of eBay)has created lot of issues in doing India based payment transactions.

Many people got angry due to irresponsible behaviour such as reversing transactions without any prior information. And, lot of discussions were going on in many forums

At last PayPal has explained the reason behind all these issues.

In a blog post PayPal spokesperson has mentioned that PayPal has suspended the services (personal payment transactions and local bank trasfer) to respond to enquiries from the Indian regulators, specifically questions on whether personal payments constitute remittances into India.

His blog post conveys below three key things.

- We can make Payments(e.g service/goods) other than personal payment. They won't be reversed.
- Suspension of Personal payments from/to India could last months.
- Customers should be able to withdraw their funds to a local bank within the next few days.

Find below his Answers for the questions in the blog post.

It’s Anuj from the comms team here again.

Following on from my blog post on Saturday, I’ve received a number of questions about the situation in India and I thought it’d be best to simply answer the questions in a blog post.

Here are answers to the top questions I’ve received:

1. Why did you suspend local bank transfers and personal payments to and from India?

We temporarily suspended these services to respond to enquiries from the Indian regulators, specifically questions on whether personal payments constitute remittances into India.

We’re working with the regulators and our bank processing partners in India to get this resolved as quickly as we can. We realize that this is causing considerable inconvenience to our customers and I want to reassure you that this is a top priority for the leadership at PayPal

2. When will personal payments be turned back on?

The regulators recently let PayPal know about revised licensing rules that we are now actively engaged in securing. Personal payments to and from India will be suspended for at least a few months until we fully resolve the questions from the Indian regulators.

3. When will local bank withdrawals be available?

Customers should be able to withdraw their funds to a local bank within the next few days. In the meantime, we’re going to restore the money into the PayPal accounts of any customers in India who have initiated a recent withdrawal, so they know that the money is safe in their accounts. Customers will also be reimbursed for any withdrawal fee charges.

4.The PayPal reversal has left me with a negative balance. What shall I do?

If you bought something or transferred money out of your PayPal account to your bank account before we reversed the payment then you may be left with a negative balance.

If this was a payment for a purchase of goods or services, you should contact the sender and have him or her resend the payment as follows:

(a) click the Send Money tab, and

(b) select “purchase.”

If this was a personal payment, then the sender will need to find another payment method until we restore the service. We’re sorry about this.

If you can’t recover the funds from the sender, you can bring your PayPal balance current by logging in to the PayPal account and clicking the “Resolve Negative Balance” link on the Account Overview page.

5. My payment was reversed but it was not a personal payment. What happened?

Only personal payments should have been reversed. Customers who believe that their payments were reversed in error should request that the payment be sent again by following the steps above (click the Send Money tab and select “purchase.”)

If you are still having problems, please contact PayPal customer support

I hope that this helps clear up some of the confusion around the situation in India and I’d like to take the opportunity to personally apologize on behalf of PayPal for the inconvenience that this is causing our customers.


NewYorkTimes points RBI as the reason for all these issues.
It says,

“Providers of cross-border money transfer service need prior authorization from the Reserve Bank under the Payment and Settlement Systems Act,” a spokeswoman for the Reserve Bank of India, Alpana Killawalla, said in an e-mailed response to questions. “PayPal does not have our authorization.”

And one more thing is, PayPal has started paying compensation for the Indian customers who were lost some amount of money as fee and Exchange rate difference during the reversal done by PayPal. So the people's angry turned towards RBI now.

Indian can use Xoom for withdrawing money from PayPal

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Divya said...

Hi all,

I have the same issue with paypal as I am from India. I had more then $712 balance in paypal and because of the limitation, I was not able to withdrew my fund, and with in a few days more funds will hit my paypal account ( as I am a designer and I’m listed in elance, scriptlance and GAF). Now I want to share the way how I am drawing my Paypal fund in India.

I opened a Legal Personal US bank account . ( take 10 days to ship my ATM card, PIN and check book ) ( Don’t believe any offer untill its US-FDIC recognize, I have lost money in google search)

And then I Transfer my PAYPAL fund to My US Bank account ( took 2 minute).
Now I can withdrew my money from any ATM in my city. (my ATM card is MasterCard Debit card.)

I opened the account just for nothing ( only $10, for information they will ask you to deposed $200 at the time of opening the account but you can withdrew the amount anytime) and it’s a 0 balance account with an ATM card cum MasterCard Debit card, 200 page US check book. More over my account is insured up to $100,000. Now, Some of my customer wish to paid me directly in my US bank account. As a result there is no extra charges ( Paypal %) between customer and me….

I am happy that I have a legal Personal US Bank account and NOW I can withdrew Indian rupees without knowing anyone in India :P for More details about the personal US Bank account.

Best of luck.

--- Divya

Rajamanickam Antonimuthu said...

I am not sure whether the comment/suggestion from Divya is reliable not not. The url ( is getting redirected to some other site.

So, Please check with some reliable sources before start using this one.

If you find this is junk/invalid, please let me know so that I can remove it.


Anonymous said...

Hello Divya ,

As you are living in India then how you opened account in US and if you getting money from US then any problem with Income Tax or not? I need some more information about how to open acount in US bcz most of my clients also told me to open Account in US so you are requested to Please provide me some more details abt the same. you can mail me all details on my email id also
My email id is:

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