Indians Cannot Use Paypal Mass Pay Feature Anymore

We recently blogged about the problems Indian Paypal users are facing in the wake of new RBI rules. We also discussed its repercussions on Freelancing in India. What I also figured out is that we Indians cannot make anymore Mass payments from Paypal.

Mass pay feature was one of best way to send money to friends and family in India without losing too much transaction fee and the ease with which Paypal Mass pay can be used added to it’s advantage !

After speaking to Paypal executives (you can call Paypal for free), there is no hopes of things coming back on track at any point in the near future ! I guess I should convert my Paypal Business account to Personal account, atleast that saves some transaction extra transaction fee 😉

End of my rant ! 😀

Indian Paypal Users Face Problem : Is It The End Of Freelancing In India ?

Paypal is an online payment processing e-commerce business. It is the faster, safer way to send money, make an online payment, receive money or set up a merchant account. All you need is an email address, if you have one, you can send money to that email address !

Off late, Paypal and RBI have had a few issues and the latter had given instructions to Paypal to modify the way it functions in India. According to the new regulations set by RBI, the changes in Paypal are as follows:

An Indian resident Paypal user cannot receive more than $500 in one transaction : I have not idea what you are supposed to tell your clients, especially those who make automated payments from their credit / debit cards, paypal balance. Imagine if you’ve done business worth $5000, your client will have to sent ten installments of $500 :). How smooth and easy can that get.

An Indian resident Paypal user MUST have a credit card / debit card if he/she wants to make international payments : If you are a small time freelancer, who is making a living from online activities, then god save you ! It’s a mammoth task for any body, who’s not in a 9 to 5 job to get a credit card. Of course you can apply for a Debit card, but the uphinge one has to go through to get hold of Debit card makes the whole experience a sour one.

An Indian resident Paypal user cannot send money to another Indian resident Paypal user : If put it simple words, Indian paypal users cannot make any domestic payments ! You try doing that and you get this message:

We notice that you are attempting to pay an Indian resident user. The payment you initiated has been blocked. PayPal only facilitates international payments and cannot be used for domestic payments within India. We suggest you find alternative methods to complete the payment. If you believe that the person you attempted to pay is not based in India, please contact PayPal customer support.

Which means, you can’t send money to your near and dear ones from paypal. You can’t pay your hosting bills if you have rented it from a local host. You can’t pay a fellow Indian freelancer for the work done for you.

The natural outcome of the above to steps is that, users will have to withdraw the amount to their Indian banks linked to their respective Paypal account. To any common man who is not associated with Paypal, the whole issue may seem to be very simple. A Paypal user has to withdraw money to Indian Bank account, and make payments using credit / debit card. But we still haven’t discussed about the actual problem when it comes to Forex transaction, which is, Exchange Rates !

The following figures will give you a better idea about what I’m trying to tell :

1 USD as per todays exchange rate (according to is : 44.2458298 Indian rupees.

As per todays rates, if you withdraw funds by electronic transfer to your bank account, then PayPal exchange rate is : 1 USD = 42.9780 INR


If you want to make any international payment, PayPal’s exchange rate as of 06-Apr-2011: 1 Indian Rupee = 0.0217883 US Dollars, which means every 1 USD will cost you 45.636 INR.

A customer will, forcefully, lose 3 INR for every Dollar he withdraws and uses the same to make international payment via Paypal!

The Faceless Freelancers in India can be called the ‘Educated, Unorganized Sector’. Silently, this sector has been contributing a huge chunk of revenue, which has bettered the lives of thousands of people who have been working from the comfort of their homes. This sector is also responsible to provide jobs to thousands of educated people, and there by is combating un-employment problems. With such restrictive policies it only worsens the state of all those who depend on online activities for their livelihood, and in turn affects the GDP too !

There are a few loopholes which RBI is concerned off. But extreme policies like this is not a solution. Instead of making things worse for a whole lot, Government should probably come up with policies to plug the loopholes.