PayPal – User Agreement for India

In July, 2010 electronic withdrawal of funds from any PayPal account in India was stopped. The only option was to request for a withdrawal of funds by cheque. However, soon we had a relief as electronic withdrawal was restored by PayPal.

I had written on February 4, 2011 about ‘Changes to PayPal User Agreement for India’ with effect from March 1, 2011. Initially, I was optimistic that once again such changes would be reversed as it was done last year.

Changes to PayPal User Agreement for India with effect from March 1, 2011 affect small business India users of PayPal the most as they receive micro-payments. They are forced to transfer their PayPal balance to their local Bank accounts as soon as they reach $10 USD and pay a fees as high as more than 10%.

But it seems that we will have to accept these changes. Now a days, as you log in to your PayPal account, you get this message:
 

If you are still not aware, in order to comply with the RBI Guidelines, PayPal’s user agreement in India was amended with effect from March 1, 2011 for the following services as follows:

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

The second guideline could be tackled easily by breaking up payments exceeding $500 USD into more than one transaction of $500 USD or less each.

But the first guideline is going to hit small business very badly. Today, I have received a payment of $10 USD for a sponsor ad for my blog. Now, after PayPal fees of $0.69 USD, my net balance in my PayPal account is $9.31 USD.

The minimum amount that to withdraw is $10 USD. So, I was left with no other choice but to contact PayPal. I got a prompt reply that I would like to share with you as many small business like me who receive micro-payments are facing similar problem:

So, I am relieved to know that I could still accept micro-payments less than $10 USD for Featured Ads on my GoldenTwine Advertising Network for classified ads, banner ads, and text link ads or Sponsor Ads for my website and blog. These payments help me to maintain my website and blog.

But due to these changes in User Agreement for India users, we would like to request RBI and PayPal the following:

PayPal fees for Bank transfer is Rs.50 if the amount is less than Rs.7000. PayPal should remove this fees for India users. Rather, I don’t mind if they now charge a fees for Bank transfer if the amount is more than Rs.7000.

Alternatively, RBI should modify the guidelines and allow us to keep money in our PayPal account till the amount is at least Rs.7000 so that we may not have to pay any fees. That’s what I used to do in the past whenever I received micro-payments.

Secondly, they should allow us to make small payments like monthly subscriptions from our PayPal account.

Please, share your views on this blog post, especially if you are a small business, and also write to PayPal about your concerns.