PayPal – User Agreement for India
About seven months back, PayPal had shocked Indian users by announcing that wef July 29, 2010 PayPal would not allow electronic withdrawal of funds from any PayPal account in India. The only option would be to request for a withdrawal of funds by cheque. According to PayPal, this decision had to be taken in accordance with ‘regulatory instructions’.
Bad News for PayPal Funds Withdrawal
Change in withdrawal of funds from PayPal accounts for India users
However, soon we had a relief as PayPal had announced that Indian users could continue to use PayPal accounts as they did before, as electronic withdrawal had been restored.
Good News for PayPal Funds Withdrawal
Electronic withdrawal service continues in India
Once again India users of PayPal like me received an email from PayPal on January 29, 2011 announcing upcoming changes to PayPal User Agreement for India with effect from March 1, 2011. This time the problem is much more serious.
The shocking email reads as follows:
Upcoming changes to PayPal User Agreement for India with effect from March 1, 2011
Dear Subrato Paul,
As part of our commitment to provide a high level of customer service, we would like to give you a 30-day advance notice on changes to our user agreement for India.
With effect from 1 March 2011, you are required to comply with the requirements set out in the notification of the Reserve Bank of India governing the processing and settlement of export-related receipts facilitated by online payment gateways (“RBI Guidelines”).
In order to comply with the RBI Guidelines, our user agreement in India will be amended for the following services as follows:
- 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; and
- Export-related payments for goods and services into your PayPal account may not exceed US$500 per transaction.
We seek your understanding as we continue to employ our best efforts to comply with the RBI Guidelines in a timely manner.
We regret any inconvenience caused to you and hope the advance notice will enable you to plan your future use of our services accordingly. For further information, clickhere.
If you have any questions, please contact PayPal customer support by logging into your PayPal account and clicking on ‘contact us’ at the bottom of the page. We sincerely thank you for your patience and continued support.
Sincerely,
The PayPal Team
They wrote on their blog on January 28, 2011:
Hi everyone, it’s Dickson Seow from the Corporate Communications team with another update on the PayPal accounts for our India users.
Read the full story on PayPal Blog
Reach out to PayPal customer support teams by following the steps below:
1. Log in to your PayPal account;
2. Click “Contact Us” at the bottom of the page.
Implications of Upcoming Changes to PayPal User Agreement
I am a website designer especially for small businesses. I provide services like online advertising and matrimonial ads. I am also an affiliate marketer. I accept sponsorship ads for my website and blog.
For all these services, my fees and commissions are modest. I use PayPal buttons on my website to accept payments from my customers. I also prefer to receive my affiliate commissions via PayPal as check payments by post are slow and subjected to other risks like checks getting lost, delayed, payee name not matching, etc.
PayPal User Agreement changes are going to affect online small entrepreneurs like me in many ways.
Payments for goods and services into your PayPal account may not exceed US $500 per transaction
If each transaction for the purchase of goods and services from your business in India is over US $500 then you will have to provide your customer an alternative payment method.
If you are a super affiliate earning commissions above US $500 then you won’t be able to receive your commission via PayPal.
Payments into your PayPal account must be transferred to your bank account in India within 7 days
This is going to affect small entrepreneurs like me the most. I receive small amounts for online advertising and sponsor ads. Featured ads on my website costs as low as US $1.50 for 30 days. A sponsor ad on my blog costs as low as US $10 for 30 days.
Before we could transfer money to our local Bank account, we lose money in 3 ways:
1. PayPal fees for international payments (outside India): 2.9% + $0.30 USD to 3.9% + $0.30 USD
2. PayPal fees for Bank transfer: Rs.50/- if the amount is less than Rs.7000/-
3. PayPal conversion rate is higher than the market rate.
To minimize the loss, we generally keep small payments received in our PayPal account till it becomes a sizable amount of say more than Rs.7000/- before we request for money transfer into local Bank account.
Now, as per the upcoming changes, all money received into a PayPal account must be transferred to a customer’s India bank account within 7 days from the receipt of confirmation from the buyer in respect of the goods or services.
Payments into your PayPal account may not be used to buy goods or services
This is also going to affect small entrepreneurs like me. When we receive some payments, we often use that amount if some payments are due like domain renewal, hosting fees, any online subscription, etc. This is to avoid unnecessary transfer of fund to local Bank account from PayPal, and immediately there after using credit card online to make payments. We will now lose money due to money conversion and transfer fees that could have been saved. Even a small savings is a good savings!
Paypal India Money Withdrawal
Withdraw funds from PayPal account to Indian bank account with ease
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Withdraw funds from PayPal account to Indian bank account with ease
How it affects the small business India PayPal users the most
3 Comments
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The trouble has originated from the Reserve Bank of India. I'm unable to understand the benefit that the bank is seeking to realize from these restrictions. It does seem to be unfair and punitive to Indian business and against the best interest of the people of India. You would think the bank would seek to make trade easier and more convenient. As India is a democracy, I would definitely bring the matter to the attention of the officials who may have some influence in the matter. It is often bureaucratic bungling and not intelligent regulation that is responsible in these matters. It is possible that PayPal has misinterpreted the banks intention. In that case it might be prudent to investigate AlertPay or others as a possible alternative.
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