PayPal operations in India suspended by RBI

Operations of Pay-Pal, the world-wide e-commerce business website for payments & money transfers over the Internet, have been suspended in India by Reserve Bank Of India (RBI).

As per Indian Govt. Law, any compnay that provides money transfer services in the country, needs to be registered with RBI. But PayPal has not registered with RBI. So, PayPal has been asked to halt its operations in India. It can resume once it gets registered.

The company’s spokesperson says personal payments to and from India will be suspended for at least a few months until the company fully resolves all licensing issues with RBI.

This is a typical reply received when someone tries to transfer money to & from India, on PayPal.

“Your payment of xxx has been sent back to the sender of the payment. We reversed this payment because we have stopped allowing personal payments to be sent to or from India.

“If this was a payment for a purchase of goods or services, and not a personal payment, then you may contact the buyer and have him or her resend the payment as follows: (a) click the Send Money tab, (b) select “Goods,” and (c) provide a shipping address.

“If this payment was a personal payment such as a gift, then we have requested that the sender find another payment method until we restore personal payments to and from India. We are trying to resolve this issue as quickly as possible and we’re sorry for any inconvenience.”

PayPal was being used by many Indians to transfer funds from outside India. After receiving the money into PayPal account, it can be transferred to a local bank. However, customers were even not able to withdraw their funds from PayPal account into their local bank for the past few days. PayPal says this will set right in the next few days.

Paypal payments have been there in India for almost half a decade now. This sudden interest of RBI in this, points that they seem to be taking P2P money transfer payments space seriously and are making regulations for the same.

This halt of operations surely a blow to the freelances, online vendors, auction sites & other people working online for outsoucred jobs. This also gives opportunitues for some Indian players to establish themselves in the money transfer business.