Internationally, Paypal has pretty much been accepted as the de-facto method of transferring money. It is hassle free, recognized globally, and most importantly it masks your credit card details from the 3rd party. You no longer have to worry about your details going to a shady or unknown website. Further, Paypal is very useful to collect small amounts of money as donations for causes, simply by inserting a badge on one’s website.
However, Paypal has had a strained relationship with the Reserve Bank of India. It all started in 2010, when Paypal transactions began to get reversed for many Indian users. This led to further complications and the need to submit a purpose code. Then in July 2010, they began allowing withdrawals by cheque only. However due to a lot of consternation by Indian users, services resumed as normal in a few days.
Then in 2011, the RBI introduced new guidelines for Paypal to follow in India. Instead of complying, Paypal promptly shot off an email to users saying that due to the new guidelines, certain features would not be available in India any more. This lead to a lot of unhappy Indian users, and even the rise of a Paypal competitor, Alipay.
In a new development, Paypal is now sending users the following email, says Trak.in:
As communicated earlier this year, we are working to implement RBI’s Guidelines regarding the processing of export-related payments. As a result the following changes will be made to your PayPal account:
• Effective 26th September 2011, you will not be able to receive overseas payments exceeding US$ 500 per transaction into your PayPal account.
•Any balance will be auto withdrawn out of your PayPal account daily.
We understand the impact this may cause to your business and seek your support and understanding as we continue to work together with the RBI. We will keep you updated as our conversations progress.
In case you have any queries, please log into your PayPal account and click on Contact Us at the bottom of any PayPal page.
This basically means that you can no longer park your fund in your Paypal account, a feature that users found particularly handy. Also, earlier users could choose when to withdraw their funds based on the day’s USD to INR conversion rate. Now,Paypal automatically credits it to your account on the same day.
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