Paypal amends User Agreement for India to comply with RBI guidelines

PayPal has come up with a shocking news for the Indian entrepreneurs yet again by making amendments to its user agreement for India. Around the same time last year too, PayPal had made news by stopping personal payments to India.

In the recent changes announced by PayPal, which will come into effect from 01 March, 2011, there are some very strict amendments made for the Indian users, which has again created a buzz among Indian bloggers and Freelancers.


PayPal will not allow users in India to receive more than US$500 PayPal customers in India will not be allowed to receive payments for any export-related goods or services for an amount exceeding US$500 per transaction.

PayPal will not allow Indian users to keep money in PayPal balanceAll 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.

Customers in India will NOT be able to complete their checkout with their PayPal account balanceCustomers in India cannot send money from their PayPal account balance. They will need to link a credit card to their account in before sending you money with PayPal.

Overseas customers will not able to complete purchase or pay via PayPal for amounts above $500PayPal customers in India will not be allowed to receive payments for any export-related goods or services for an amount exceeding US$500 per transaction.

As given on the PayPal blog, PayPal has made these changes to comply with the RBI guidelines.

Below is the mail that I received from the PayPal team:

Dear Amandeep Singh,

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:

  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.

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, click 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. We sincerely thank you for your patience and continued support.

The PayPal Team

PayPal has long been making news among the Indian entrepreneurs and freelancers who provide their services online and rely almost completely on PayPal for their payments from international clients.

What do you think about this change from PayPal; are such steps from RBI going to make the flow of money into India transparent or is it only going to cause problems from the young entrepreneurs who are the so-called future of India? What is your take on this???

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  2. I also got the same email yesterday. Now i am worried because it would be difficult to pay for hosting service, domain renewal. I dont have a credit card attached to my account. Now i think i will have to get one soon. What the Indian Government is doing?

    • Yes Alok,

      I understand your concern… Not only you and me.. all the bloggers are going to feel the same… you now need to have a credit card which you need to associate to your PP account else you cannot make payment using PayPal balance…

  3. This is create more problems for the ‘newer’ people getting into freelancing market and will make them live on pennies, lolz. Most of the freelancer start and they earn less than say 30 dollar in their first week of freelancing career (of course because of the competition) they will surely be even lucky to get that much in first week, unless they do something ‘unethical’.. so for 30 dollars to be transferred within a week? Considering how little information about ifsc our banks and branch names and no update of inclusion of IFSC code for the newer branches (for sbi? ,lol) this ‘newer’ freelancer has be close to a genius to actually be figuring out within a week because paypal has to send money and so will send and reverse and send back and reverse and send back..and in the process charge atleast 250 rupees and also any conversion rate change lolz.. i have gone through this sh!t..anyways..i might not be clear to many but who have had been stuck with bureaucracy of indian banks and just amazing paypal’s policy would know what i m speaking.

    • I second your thoughts on that Chandrakant… This is really ridiculous on part of the bureaucrats who sit in the Government high positions and keep passing such crap to the Indian citizens to suffer… I know that they are doing all this to bring about transparency to the money coming to India, but I just wonder is this the only option they have? 😀

      There are already PAN numbers we associate with PayPal accounts, is it really not helping them trace the transactions… I am safe from the heat of this, at least for now as I am in the UK and I got a PayPal verified account some days back. Here also, there are some clauses, but not this strict… 😉

  4. upto me it is the worst rule ever… for getting this rule they can better take away paypal from India… in india it is difficult to get Credit card, so here after indians teans gonna face problems during payment..

  5. I want to know frnds , that what will happen if we don’t withdraw the money.. Will it remain there or just flew away.. AND I WANT TO ASK THAT A DISPUTE HAS BEEN OPENED REGARDING A PAYMENT IN MY ACCOUNT, CAN ANY ONE TELL THAT HOW LONG WILL IT TAKE TO RESOLVE THAT ISSUE, I AM VERY SCARED, PLEASE HELP ME FRIENDS. 🙁


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