PayPal India Personal Accounts Hold and the April 30th RBI Deadline
17 March 2010
Happy Saint Patrick's Day.
Now back to our irregular program.
We had expected the PayPal India debacle to fade into the background as PayPal (an eBay company) India slowly got it's Reserve Bank of India 2007 Payment and Settlement Systems Act (effective 12 August 2008) paperwork in order.
And PayPal India spokesman Anuj Najar happily chirped:
Hi blog readers, it’s Anuj from the comms team here.
Following on from Farhad’s blog post on Monday, I’m pleased to let the thousands of businesses who rely on PayPal to sell their goods and services around the world know that we’ve resumed local bank withdrawals in India.
When you select the ‘Withdraw Funds’ option on your PayPal account, we will ask you to fill out a new field entitled ‘Purpose Code’. This information is required under the laws of India in order to identify the nature of cross-border merchant transactions. Simply select the one most appropriate for your business. More details on purpose codes can be found here
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.
I’d like to apologize once again on behalf of PayPal for all the inconvenience this has caused our customers.
AnujThis entry was posted on Thursday, March 4th, 2010 at 7:45 am
Which is fine for the "thousands of Indian businesses who use PayPal".
But whatever happened to those personal accounts whose funds PayPal put on hold January 2010?
Q. I run a charity, and I am based in India. I don’t see the purpose code for donations and charities
A. PayPal can currently be used only as a gateway for payments of goods and services into India. We cannot process payments for charitable donations at this time.
Q. I used to use PayPal for Personal Inward Remittance to India. Now, my balances are stuck in PayPal
A. We are no longer able to complete these withdrawals to your bank account in India. You do have the option to complete your withdrawals by check. If you have any questions, we urge you to contact PayPal customer support by logging into your PayPal account and clicking on ‘contact us’ at the bottom of the page.
"PayPal needs specific approvals to allow personal inward remittances to India, which we currently do not have. Until we get these approvals, personal payments into India will remain suspended."
Which brings up the question, PayPal says thousands of India business accounts but how many PayPal India personal accounts are there?
According to Anuj Nayar, PayPal Director of Global Communications, there are 1.6 million Indians signed up to PayPal. With the caveat "not all of them are regular users". We'll leave it to the reader to do some research as to how many regular PayPal personal account India users exist.
"Within hours of reaching out to them, PayPal's PR team here patched me on a telephone call to Anuj Nayar, their Global Communications Head. He patiently explained the fracas to me, bit by bit, for the better part of an hour."
Which explained how he obtained that tantalizing 1.6 million fact. And Mr. Joseph confirmed PayPal India's lack of paperwork being the reason for the transaction holds:
"I cross-checked my data with Alpana Killawala, at the Reserve Bank of India, I was in for a slight surprise. All money flowing across our borders is subject to two major laws. The Foreign Exchange Management Act (FEMA) and the Payments and Settlements Act of 2007.
According to those laws, organizations like PayPal should have submitted themselves to scrutiny by the RBI. They hadn't, so they were pulled up. To prevent inconvenience to customers, the Reserve Bank has allowed PayPal to honour all transactions done upto January this year. But they're still on the watch list."
In other words 'pulled over for operating without a license'. Solely the fault of the operator.
But Mr. Joseph also wrote something rather disquieting:
"If they don't satisfy all the bank's detailed questions by the thirtieth of April, their operations could be disrupted again!"
Now PayPal India payments were officially suspended on 27 January 2010, cause being operating with out a Payments and Settlements Act license. The "thirtieth of April" is 90 days (give or take) after the suspension. Ninety days being a sterotypical warning period.
It appears PayPal was never in the clear to operate, but to "prevent inconvenience to customers" was given 90 days to comply with the law or face disruptions to PayPal's operations.
The clock is ticking PayPal India. Get your act together.
Apologies for the "transaction" typo in previous articles.
- PayPal India Farhad Irani Restores Business Bank Withdrawls But Hold On Personal Funds Remain
- PayPal India Service Hold Explained: 'We Don't Need No Stinking License'
- The PayPal India Suspended Transaction Services and Farhad Irani
- The PayPal India Transaction Holdup Continues
- The PayPal India Transaction Holdup
"Delay or failure to receive such a license or regulatory approval could require PayPal to change its business practices or features in ways that would adversely affect PayPal’s international expansion plans, and could require PayPal to suspend providing products and services to customers in one or more countries."
John Donahoe, eBay CEO, 27 October 2009