Monday, February 8, 2010

Paypal Stops payments to India: Some Observations

If you are a freelance worker in India or somehow your work is related to internet then it is perhaps a very bad time for you because you can not carry out transactions through Paypal. Paypal is the most popular form of online transaction and they just posted an entry in Indian blog with the following message:
I’m writing to let you know that 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.
During this time, customers can still make commercial payments to India but merchants cannot withdraw funds in Rupees to local Indian banks.

Anju is the person who put the message on behalf of Paypal. He promised to update the blog as soon as there is information. However, until now there is no update and it is really very tragic. This entry was posted on February 6. However, from some of the websites that covered the news, I can find that the problem originated on 28th January 2010.
After reading the message of Paypal, I could not understand what the problem is. There has not been any controversy or problem regarding Paypal in India.
Many people are dependent on it because it is a very reliable way of online transaction. India is the outsourcing giant. The big companies employ thousands of workers. However, it is the freelance workers who are mainly dependent on Paypal in India.
India has thousands of people working in Internet for various individuals and companies of USA and other countries. If you take a look at the Digital Point forum then you will understand that how many Indians are working in Internet. Many of them are very unhappy and and they don’t know whom to blame. Some thought that Indian government and RBI had something to do behind this problem of Paypal. However, there has been no official reaction from either Indian government or Paypal.
So, it is not clear what the problem is. This shows the complex world that we live in now. Internet is a great place and it is helping everyone. However, when something like this happens then many people suffer. I just hope that Paypal officials understand the gravity of problem.
On the other hand, I also wish that Indian government officials try to address the problem and contract Paypal about it. Both the parties should talk to each other and solve out the problem. As I have already stated that many people in India are dependent on earning money from internet. It is helping many families and for Indian economy, it is also brining some foreign currency. So, Indian government should encourage this matter and help the freelance workers who are bringing foreign currency.
I am not sure when there will be an update about the whole issue. It is already several days and there is no official confirmation either from Indian government or Paypal. Indian freelancers are perhaps at this moment frantically searching for alternative methods of payment but the really is that Paypal is the best. 


  1. The problem is with PayPal's side. They are not properly registered in India. And PayPal doesn't consider itself as a remittance company as it says their all accounts are online. No offline work takes place. They just have a BPO run by PayPal in Chennai, TN, India.

    Until they (PayPal) register themselves as under 2007 Payement and Settlement act 2007 RBI will not allow it to do their activities in India - as per Alpana Killawala (C.G.M. of RBI)

  2. You are right satish. I wonder why they are taking such a long time to do the paypal registration process in india for their activities and also, this seems that paypal is not aware of their business in india. They realized now due to RBI strict rules and now they have started doing things. This is not all fair by making all the indian's facing problem financially.

  3. Recent issues with PayPal withdrawals to Indian Banks & more over payments just randomly being reversed back to the senders will have a deep impact on PayPal's reputation. It raises so many questions like (THIS MIGHT CONTAIN SPOILERS):

    A) Should we trust PayPal in future?

    B) Are they really concerned about our Money?
    ANS: ABSOLUTELY NO, After a long period of two weeks we receive an apology letter stating that “We are sorry we goofed up opps!”? and stuff like “Your money just got sacked since this is nothing serious to us we are just doing a drill of playing a game with your hard earned money”?

    C) Is RBI responsible for this?
    ANS: UNQUESTIONABLY MAYBE, So, Question is why this is happening in India and nowhere else? Question is why we are being kept behind curtains and dark? Question is why Moneybookers and other Payment systems are working but PayPal is not? you just want to exclude the RBI out of this since they are least concerned with us. Everyone failed here! RBI off course you cant expect them to give you a comforting truth so a comforting lie should suffice you! And PayPal Ow man no shit a multinational company failing to inform and notify of an issue of this magnitude. That was an AWESOME combination of pure frustrating, destroying trust & spreading chaos.

    D) So what does PayPal tell us now?
    ANS: “We are sorry, but your valuable to us so please give us another opportunity to goof up and play some more engaging games with your money” and “We just love to make more profits by giving you a pathetic exchange rate”

    D) What now?
    ANS: DTA (Don’t Trust Anyone) Get your sleeves up against them and find your own ways to get paid over any other medium that serves better, communicates better and keep them in plenty. If one fails other should work out.

    Ive let all my clients know about this issue and advised them (in advance unlike PayPal) to switch over to some other Payment system which is reliable, responsible and does the main thing “ACTION” at PAR. The truth will probably be dead and berried RIP about what happened because the shame and disgust they bring upon themselves is apocalyptic now.

  4. I am using CCavenue now which runs completely in jurisdiction of Indian goverment.

    This incidence of paypal is scary....I lost money for no reasons in exchange rate.

    Paypal not reliable at all. Do not depend on them.

  5. A new fact about Pay Pal :

    I applied for a charity account with Pay pal because its free and supported by vbulletin software for payment subscription, I have all the documents like NGO Registration certificate, Memorandum of Society, Society PAN card, and the Bank details , bank details were verified by the Pay Pal by depositing amount of Rs. 2 and 40 paisa, after submitting all the document as per said in their website and in their emails, they denied me for the account, just because they have no tie-up with India regarding charity account, what the hell is this, why the pay pal people should not mention at the time sign up process. I have wasted around 1000/- rs in doing fax to pay pal and after 4-5 days they denied.

    Don’t apply for a charity account with pay pal if you are living in India. Just wastage of time and money.

  6. Very much align with Sonia, PayPal is doing monopoly here, transaction fee while transfer amount to your bank......Huge.

    No other option available here.... ccavenue is too expensive.