How Paypal India RBI conflict added woes to Indian Bloggers, Freelancers and Online Businesses ?
None of us would have ever thought of this. Even I was unaware of the same till I logged into my facebook account today. I could see my news feed flooded with status messages from my fb friends who were aghast with the recent developments taking place for Paypal India. At first, I thought it to be some minor issue but later when I found some time to go through my mailbox, I was taken aback seeing one of the emails. Yes, it was Paypal again and this time they have done the unexpected. Just have a look this content from the same email which I received -
Dear Aswani Srivastava,
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
RBI, which stands for Reserve Bank in India has finally forced Paypal to come up with these drastic amendment for their services in India. A lot of hue and cry is being made over RBI’s act but if you look into deep the story gets more clear. RBI’s main function is to regulate the issue of Bank Notes and keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage. RBI has been doing the same all over years. And certainly it has got some powers and rights to keep a check on how money flows from one source to another and this is where Paypal was in spot of bother. Paypal, which is popularly an online payments and money transfer service was required to adhere to the RBI policies if it was to operate here in India. Honestly, Paypal was never bothered about RBI regulations.
While researching on the same, I came to find out that RBI was considering Paypal as a bank because it was holding money for more than 7 days. And this was one the prime reasons why Paypal was forced to come under RBI scrutiny and adhere to RBI policies if it were to operate here in India. Paypal on the other hand, never considered itself to be the bank. Unlike other banks, it never paid any interest to the users of the same. There was thus mutual contradiction over each others statement and finally the result, is in front of us. One may wonder what made RBI so strict with Paypal. And this is for a very simple reason – To control tax frauds and maintain a healthy flow on money.
Whatever maybe, the users of Paypal in India have been left devastated. This most recent development from Paypal is being highly criticized by the Indians especially bloggers and the freelancers. Paypal was one of the most sought after payment services here in India and now with this most recent development, online businesses have suffered a huge setback more like the beginning of the end of small merchants in India. Most of the online businesses small, medium or big now have to rethink on their payment strategies and come up with the right alternatives which doesn’t look possible at the moment. Still a month is left for the changes to take place and who knows, just like what happened last time, Paypal may be back again with some good news for its users in India…let us hope for the best!!