In a recent email and blog post, PayPal said that they will be restraining Indian users from using the money in their PayPal account to purchase anything along with putting a stipulation that they have to withdraw the money within 7 days. In addition to that, they have also said that Indian users cannot accept payments more than $500.

Many users have been blaming the Reserve Bank of India (RBI) for this, but most of them haven’t done any fact-checking as such and are just blaming it because they feel that PayPal has no faults whatsoever. So I sat down with one of my roommates who has been an ex-RBI employee who has worked with them for 7 years to understand why this is happening.

Let me take you through this. First of we take a look at why PayPal cannot keep your money with them for more than 7 days and then delve into the $500 restriction they will be putting into place. Here is the actual conversation edited in some form by me without changing the details.

Me: So PayPal says that they cannot keep the money in their account for more than 7 days? Why is this happening.

RBI-expert: Because if PayPal keeps the money with them, they have to be regulated as a bank (and any institution that does it have to do the same) and PayPal does not want that to happen. Any entity which provides on-demand payments have to be regulated as a bank as per RBI rules, this is mandated because if they hold money for more than 7 days they have to provide users with interest. With this new change PayPal is basically circumnavigating this regulation so that they don’t have to answer questions to any government about how they conduct business and why they charge an exorbitant amount to customers to accept payments whilst continuing to not giving users interest like every other bank in India does.

Me: So you are saying that PayPal is practically f*cking all Indians.

RBI-expert: No I wouldn’t say that, but I would say that their business heads know how to circumnavigate against a country’s policies and that they are adamant about accepting regulations because that would mean that they have to cut down on their charges and also ensure that they do follow all guidelines laid down for a bank.

Me: Ok, so I see that they are screwing their customers with a hefty fee and now this. I do understand that they want to make money, but what is about $500 transaction limit.

RBI-expert: Well, once again this is a government and RBI mandated thing. All entities who bring cash-flow into India have to basically report transactions above $500 to the RBI and government. PayPal is basically just circumnavigating around this mandate by restricting the payments to $500. Once they do this, they have no obligation to report it to the RBI or the Indian government.

Me: So you are basically saying that these new changes by PayPal is just about screwing the RBI, Indian Government and people who use their service.

RBI-expert: Well, these are the rules. I will simply say this. If PayPal accepts the RBI regulations they have to be treated a bank and I can see that they are hell bent on not doing it. They are basically finding ways to get over it because once they become a bank they come under a different set of rules. Right now PayPal is a monetary service but they are not like say SBI, ICICI, HSBC or Citibank and do not have to adhere to the rules. Once you become a bank, you have stringent rules which I don’t think PayPal wants to follow.

So as you can see, from the above conversation which came through from a horse’s mouth, I feel that PayPal is basically cheating the RBI, Indian government and Indian users because they don’t want to be regulated. All I can say is that we need to boycott these services, check out some PayPal alternatives.

Though these things may make my statement that RBI is in no fault at this sound untrue, but you have to understand that these rules have been in place in 2004 and some of them since 1999. So saying that RBI is screwing PayPal is basically wrong. PayPal has been floundering these rules since they came into India and the RBI is just reining them in. They might have given them an option to change to being a bank or stop flouting the rules laid down by the Government of India. I believe you will understand what PayPal chose to do.

PayPal has also been blocked or regulated in countries such as Japan, Brazil, USA among others. Some of these countries have put in similar restrictions on in place which were also done last year in India. So it does not really make sense to say that RBI is the only one who is regulating PayPal.

This post has been updated with additional inputs and facts.

The post Why Is PayPal Screwing Indians? An ex-RBI Employee Tells Me The Facts appeared first on Techie Buzz.

PayPal has been demanding PAN card numbers from all Indian users for a long time. Many users worked around this restriction by simply providing fake PAN card numbers as PayPal didn’t do any validation. However, beginning today, PayPal will be limiting accounts with invalid PAN numbers. Limited accounts will not be able to receive payments. However, they can still be used for sending payments and making online purchases using linked credit cards.

The trouble with PayPal’s latest move is that its verification system appears to be pretty dodgy. Two Techie Buzz staff members, including yours truly, have had their accounts limited in spite of furnishing correct PAN card numbers. Given PayPal’s long standing policy of shooting first and asking questions later, it’s not surprising that they chose to act without giving the account holders any opportunity to respond. Let’s just hope that they will get around to fixing this issue soon.

The post PayPal Begins Validating Pan Numbers of Indian Accounts, Ends up Targeting Valid Accounts appeared first on Techie Buzz.

Rewinding: In order to comply with RBI guidelines, PayPal enforced two deadly rules for all Indian PayPal accounts. First, Indian users must empty entire PayPal funds to their bank accounts within 7 days of receiving a payment. Second and the worst of all, Indian users can never use funds in their PayPal account to buy goods, pay bills or even send the money to someone else. It is a one way street,  the ($) can check in any time she likes but she can not be transferred to a PayPal account of someone else’s. Unless you have a credit card linked to your PayPal account, Indian users can never send money, buy goods or pay for services.

In last couple of months, PayPal quietly rolled out auto withdrawal of Payments and waved off withdrawal fees for Indian users. This came as a surprise for many, since Indian users are not used to hear good news about PayPal’s changing policies and rules every now and then.

No sooner I realized that Okay, things have settled down, I can now peacefully go back to work, here he comes again.

A lot of Indian users are facing a typical problem of Invalid name on PAN, while the truth is that their names are actually same on both their PayPal accounts and PAN card. There is no way anyone can change their name on a PAN card which has already been registered with Govt of India, while on the other hand PayPal limits specific Indian accounts saying that Your PAN card is invalid.

The result is that until and unless a valid Pan number is added to a PayPal account, the user can not receive a payment. Makes no sense at all!

The Problem of Name Verification In PayPal and Indian PAN Card

Few days back, I logged into my Gmail account and was shocked to see an email from PayPal stating that my PayPal account has been limited from receiving payments.

My initial reaction was Wait, what? I have already added my PAN number in PayPal, along with my Bank details, home address and a purpose code for withdrawing payments. Everything was fine just the other day, what happened all of a sudden? I will first check my PayPal account and see whether everything is fine or not

When I logged into my PayPal account, I saw this big red notification Your PayPal account access is limited

For the sake of checking the receiving status of funds, I called up a friend who lives in U.S and asked him to send a small payment at my PayPal address.

Dang!

My friend could not send the payment and PayPal showed him this message:

So here is my PAN card (which can be registered only once in a lifetime).

And here is what I see when I try to update my PAN on my PayPal account:

If you are going through a similar situation, let me assure you that it is not your fault. This is probably a glitch in PayPal’s PAN verification system and there is no possible way to get over this other than convince PayPal staff that your PAN is correct and no action is possible from your side.

Here are a couple of things I did, in order to remove the PayPal PAN restriction:

1. Follow @AskPayPal on Twitter and tweet your problem to him. This guy is faster than the tech support staff of PayPal and he will surely respond to your Tweet.

2. Take out your camera and click images of your PAN card, Bank pass book and your Indian citizenship voter card. This is important, as the photo on your Indian voter card and the photo on your PAN will prove that you are the same person.

3. Login to your PayPal account, click the Contact us link and send PayPal an email describing your problem in full detail. Here is a sample email template

Hello

My PayPal account has been restricted from receiving Payments. The cause stated in your email [date] is that my PAN was found to be invalid. The truth however, is that my PAN is valid and my name is same on my Bank Pass book, PayPal account and my PAN card. There is no way I can change my name with any of these organizations.

I have checked my Information with the Income tax department website of India.

• The name on my PAN card is [Your name]
• The name on my PayPal account is [Your Name]
• The name on my Bank Account is   [Your name]

I have attached five documents as email attachments, let me know if the photocopies or scanned copies of any of these documents needs to be shipped at a physical address.

Enclosure:

A. The name as it appears on my PayPal account.
B. The Name as it appears on the income tax website.
C. The name as it appears on my Bank pass book and bank cheque book.
D. The name as it appears in my PAN card (Photo identification).
E. My Voter ID card which proves that I am an Indian citizen (photo identification).

Please let me know what should I do now.

4. Hold on for a day or two and you should hear from PayPal soon. In my case, they sent me an email stating that Your PayPal account has been restored.

Phew!

Thank you Pallab.

The post PayPal Incorrectly Limits Indian Accounts Over Different Name on PAN Issue, Here is How To Fix it appeared first on Techie Buzz.