Friday, January 28, 2011

Paypal Deceives Indians - Is it True?

Again PayPal included two sets of rules for Indian customers. They are-

1) Any balance in and all future payments into your PayPal account may not be used to buy goods or services and must be transferred to your bank account in India within 7 days from the receipt of confirmation from the buyer in respect of the goods or services;


2) Export-related payments for goods and services into your PayPal account may not exceed US$500 per transaction.

Now, this is going to affect the Indian users very heavily. See the following case study-

Consider you're a Freelance Writer, you can receive payments from overseas clients, i.e. under the category of "freelance journalism" but this amount cannot be more than $500.00

Also, you cannot withdraw more than $500.00 and more over you need to withdraw the money withing 7 days of receiving it....phew!!

As a 'contractor', you cannot make payments to other writers from your PayPal account

You cannot use PayPal account for buying goods and services that allow payment through PP.

Do you know why this occurs?

If PayPal keeps the money with them, they have to be regulated as a bank. But PayPal does not want that to happen. Any entity which provides on-demand payments have to be regulated as a bank as per RBI rules. With this new change PayPal is basically circumnavigating this regulation so that they don’t have to answer questions to any government about how they conduct business and why they charge an exorbitant amount to customers to accept payments.

In addition to this, all entities who bring cash-flow into India have to basically report transactions above $500 to the RBI and government. PayPal is basically just circumnavigating around this mandate by restricting the payments to $500. Once they do this, they have no obligation to report it to the RBI or the Indian government.

I think now you understand why PayPal amended this rule. Any way, Indian users are having tough task ahead in the ensuing days...