PayPal is halting personal payment services for users in Japan from Wednesday due to new regulations that go into force the following day.
"We wish to inform you that effective 31 March 2010, you will not be able to send funds using the 'Send Money' function for non-commercial transactions only, until further notice," the company wrote in an e-mail to Japan-based users. "The changes to our personal payment services are necessary in order for us to comply with new regulatory requirements in Japan."
Commercial payments, for example to companies for goods bought online, are not affected, PayPal said. Personal payments from outside of Japan to users inside the country will also continue.
PayPal did not detail the regulations in question and could not be reached for comment.
The move to halt personal payment services is a blow to PayPal, which two weeks ago said it plans to double its Asian operations this year and hire an additional 1,000 employees. PayPal manages operations in seven Asian nations, including Japan, from headquarters in Singapore and last year saw the regional volume of payments it handled jump 38 percent to US$6 billion.
But the year hasn't started smoothly. In February, PayPal stopped processing personal payments in India and allowing withdraws in Indian rupees. The Reserve Bank of India says PayPal needs authorization to operate a cross-border money transfer service under local laws and doesn't have one.
Rupee withdrawals have resumed but personal payments are still suspended.