PayPal introduces new limitations to merchant payments in India

PayPal restricts merchant payments

After blocking personal payments, PayPal is now restricting the amount of online payments made to merchants in India to comply with new rules to be imposed by the Reserve Bank of India beginning March 1. PayPal spokesman Dickson Seow announced the move in a blog post on Friday.

In January, PayPal blocked incoming and outgoing personal transactions in the country when finance officials said online payments via PayPal should be regulated like similar services such as wire transfers. In July, PayPal customers were again allowed to withdraw funds.

The new change by eBay Inc.-owned PayPal limits Indian merchants from receiving payments coming from overseas to $500 per transaction.

"For purchases or payments above this transaction value, you will have to use an alternative payment method," Seow said. PayPal said most merchant transactions in India cost less than $500.

Another restriction is that PayPal users in the country will not be able to use their funds to purchase any product beyond March 1. In order to do so, customers should transfer funds to a bank account first.

PayPal users in India will retain the right to use the online payment service to purchase from foreign businesses online. But users who sell products to foreign merchants must transfer their funds to a bank in the country within seven days of the delivery of the product purchased.

It is estimated that PayPal has 94 million active accounts in India in 2010 and that number may be reduced because of the restrictions implemented by the Reserve Bank of India.

Posted by James Fried on Monday January 31 2011, 1:54 AM EST. Ref: AP. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0