Why PayPal Is Blocking Payments to India

Your humble blogwatcher selected these bloggy morsels for your enjoyment.

Robin Wauters dribbled out the story late last week:

PayPal ... appears to be blocking personal transactions to or from accounts of India-based users. It is reversing personal transactions.

...

Anuj Nayar, Director, Global Communications at PayPal tells us: "I can confirm that personal payments to and from India have been suspended. ... We’re trying to resolve the situation ... we’re sorry for any inconvenience this may cause." MORE


Angie Mohr has more:

Commercial payments will not be affected in the interim and Indian merchants can still charge their customers around the world and receive payment into their PayPal accounts as always. ... However, the company does not detail the nature of the concerns.

...

The suspension is likely to affect thousands of small Indian freelancers, including IT programmers, web designers and writers, who use personal rather than business accounts to receive payments from customers. Many of these Indian freelancers are lashing out at the PayPal announcement and its lack of detail and information. Upgrading to a business PayPal account requires additional fees and charges and not all freelancers may be eligible to do so. MORE


PayPal's Anuj Nayar says remarkably little in 116 words :

Personal payments to and from India and transfers to local banks in India have been suspended while we work with our business partners and other stakeholders to address questions they have about the service. ... Customers can still make commercial payments to India but merchants cannot withdraw funds in Rupees to local Indian banks.

We’re trying to resolve the situation as quickly as possible and we’re really sorry for the inconvenience that this may cause our customers in India and around the world. MORE


bhagwad is not a happy camper :

As a result, a large number of Indian Paypal accounts have a negative balances running into the thousands of dollars. The worst part is that users weren't informed beforehand — the funds were just whisked away.

...

Paypal hasn't given any explanation to this behavior other than they're looking into it. Although Paypal claims ... that payments made for 'Services' are not being reversed, this is not true. All payments not made for 'Goods' with a shipping address have been reversed — in fact, ... Paypal ... tells the Indian sellers to encourage their clients to lie and claim that they're paying for goods with a shipping address instead. MORE


Kai Hiwatari thinks he has the answer:

This is due to some change in the regulations by the Reserve Bank of India (RBI) regarding offshore money transfers. ... RBI is demanding some documents form PayPal to make them eligible to transfer money to and from Indian Banks. Apparently PayPal hasn't been able to furnish those documents. MORE


And iammani alleges shady tactics:

Of course. Paypal has to be registered with the RBI to make forex (foreign exchange) transfers. Every time someone converts rupees in dollars or vice-versa, the source and destination of transfer and reason have to made available to the RBI.

...

The problem is Paypal doesnt want to be regulated as bank but wants to be able to perform what banks do. And this does not go well with the RBI. MORE


Keith Dsouza goes ballistic :

I sent a payment to someone who withdrew it to his bank. After a blue moon and when you realized your own problems, you decided to withdraw the money I sent to him. Now that would be fine, but you did not intimate him or me about it. Now after all is said and done, his account went into a negative balance. Oh and well it is our fault, we sincerely apologize for that, but still you threaten him that you will charge his mother’s credit card account to recover the dues??? Are you ****** ******* serious?

...

I ask every other user to withdraw their money and boycott PayPal, boycott PayPal forever. Never accept a payment in PayPal, if you think that this is the last time those ******** did this, you are wrong, if someone really cared about you and your money, they would first tell you about it. MORE

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