PayPal Adds More Access Restrictions In India

Users in India of the online funds-transfer and payment service offered by U.S.-based PayPal Inc. face additional hurdles when making transactions, according to a notice the eBay Inc. unit released May 9.

All registered PayPal business and individual users must add a “purpose code” when noting anticipated payments from outside the country, PayPal said in the notification. Moreover, all users must furnish their Permanent Account Number, used for tax-collection purposes, to accept payments

Moreover, all users would have to add a valid bank account number to their PayPal account if they had not already done so, according to the notice.

PayPal did not respond to requests for comment, but the notification said the new guidelines are in accordance with the requirements of the Reserve Bank of India, the country’s central bank.

This is not the first time PayPal has blocked services or asked for more documentation from users in India.

In January, PayPal decreed that payments into Indian citizens’ PayPal accounts for exported goods and services could not exceed US$500 per transaction beginning March 1 (see story).  So not only are Indian businesses not able to receive payments that exceed that amount, but consumers from other countries also are may not shop with an Indian merchant using PayPal when the sale exceeds US$500.

Also beginning March 1, PayPal’s users in India no longer could use the balance in their PayPal account to buy goods or services. Instead, they now must transfer their PayPal balance into their bank account in India within seven days of receiving payment from buyers.

In February 2009, PayPal stopped processing personal online payments in India because of specific concerns raised by “business partners and stakeholders” (see story).