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The RBI is making it tougher for Indian Business Owners to use PayPal with every passing day. After the issues faced by Indian PayPal users last year with several payment delays and introduction of purpose codes, now the story has a new twist. Yesterday Paypal sent out new regulations for Indian Paypal users to be applicable from 1st March’2011. And to tell you the truth the latest changes are quite a kick-in-the-***.
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:
- 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
- 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.
Well the fine print implies that you cannot keep any money in your paypal accounts for longer than 7 days and also the money cannot be used to make online purchases of any sorts. The 30 day notice can be used to make any purchases you were holding back for now. For freelancers like me who use primarily paypal for all overseas transactions, this will be a real setback. I make domain, hosting and other service purchases online via Paypal along with accepting payments. This change will make me end up paying extra exchange rates when I pay for services. The 1st exchange rate when I transfer the money to my Indian bank account and second when i pay for the services. I have already renewed couple of domain for the next 2yrs. But one can make only short term changes, it will hit hard in long-term.
I have not had similar communications from MoneyBookers yet but they will have to comply to similar changes as well.
What do you guys think?
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