Paypal Suspended All Domestic Payments To & From India

  • Features
  • Posted by: admin
  • Mar 1, 2011
  • Reading Time: 3 minutes

PayPal is one of the most preferred online transaction system for the people who regularly perform online billing.  PayPal has been doing a great business in online transaction system for Indians who are working as a blogger, internet marketer, web designer and freelancers on internet to earn money. But there were issues going on between Paypal and the Government of India which created a hardship to many small and mid level business in India. Government of India declared that until they get IEC Code, Indians cannot withdraw money from their Paypal accounts.

With the consequences of such problems mentioned above, PayPal have announced a 30-day prior notice regarding on changes to PayPal user agreement for India with effect from 1st March 2011. Reserve Bank of India(RBI) have announced new regulations for PayPal services in India which indicates that you cant maintain money balance in your online PayPal account with effect from 1st March and the received money should be transferred to your bank account in India within 7 days. Receiving payments through PayPal account may not exceed US$500.

At present with the effect of complexities, PayPal imposed a ban on personal transaction to and fro from India. Last Saturday Paypal said, “Personal payments to and from India and transfers to local banks in India have suspended temporarily while we work with our business partners and other stakeholders to respond the queries from the Indian regulators , but customers can continue to make commercial payments to India whereas merchants are not allowed to withdraw funds in Rupees to local banks in India”.

The company has blamed Indian regulators for the imposing ban while on the other hand many PayPal users explained that PayPal is to blame for the restrictions, in which Paypal has to comply with the guidelines being laid down by the RBI to track the payments activities made on Paypal otherwise RBI will stop PayPal operations in India as they are not able to monitor and control PayPal directly like they monitor with the banks in India.

Indian regulators have raised question asking whether money sent through PayPal as personal payments constitute remittances that is the money sent to the families in India by Indians working abroad. In order to bring the solutions to this query, PayPal need to associate and work with Indian regulators and the company’s bank processing partners which might require a longer time say about months. This indicates that the ban might prolong and might not end within a short period.

PayPal apologized for the inconvenience and said “We’re working with Indian regulators and our bank processing partners to bring the solutions and resolve the case as soon as possible. Personal payments to and from India will be suspended for at least a few months until we fully resolve the inquiries from the Indian regulators ,”.

Sadly, the only way to buy from e-commerce websites is to transfer your money from PayPal account to the bank account in India which causes an air of sigh for Indians who engaged their sole earnings on the internet.


Veronika Tondon is a business enthusiast with extensive experience in Invoicing & Payment Process. She has 6+ years of experience in Invoicera, the leading cloud-based invoicing solution as Invoicing Consultant. Sound knowledge in business process execution, offers end to end solutions for complete automation of business processes and AR/AP processes. Contact Veronica for your invoicing requirement.

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