Blog Post

PayPal Suspends Personal Payments in India

PayPal says it has suspended personal payments to and from India, as well as transfers to local banks in India, although it’s not clear from the company’s short blog post what the problem is or what’s being done to fix it. All it says is that the company is working with its ” business partners and other stakeholders to address questions they have about the service.” PayPal says that commercial payments can still be made to India but merchants in that country can’t withdraw funds in rupees to local Indian banks.

An unnamed analyst quoted by IDG News Service says that the changes may be related to new government rules in India that are intended to prevent or discourage money laundering. These rules, introduced last year, require financial intermediaries to verify the identity of clients carrying out international money transfers.

India has been taking steps to try and improve security as part of its anti-terrorism efforts, including banning the import of cell phones that don’t have an identity code and thus can’t be tracked. It’s possible that the Indian government is concerned about PayPal money transfers being used to fund terrorism, and is requiring the company to either verify who is making and receiving the payment or block the transfer.

According to one online forum discussing the topic, PayPal has been reversing payments since Feb. 1, sending users an email that states:


Your payment of $XX.XX has been returned to you. If you sent the payment with a bank account, the funds will be returned to your PayPal balance. If you paid with a credit card, the amount will be credited back to your card. We returned the payment to you because we have stopped allowing personal payments to be sent to or from India… If this payment was a personal payment, such as a gift to a friend or family member, then we request that you find another payment method until we restore personal payments to and from India. We are trying to resolve this issue as quickly as possible and we’re sorry for any inconvenience. Thank you, PayPal.

Another user said that he or she received an email from PayPal saying the company had suspended “specifically those funds transfers that do not have an underlying exchange of goods or services.” The email recommended that the seller contact the buyer and ask them to pay again, and specify that goods were the reason for payment. Other disgruntled and confused PayPal users are discussing the issue in forums here and here.

Post and thumbnail photos courtesy of Flickr user quaziefoto

21 Responses to “PayPal Suspends Personal Payments in India”

  1. PayPal is earning a big amount from Indian customers, and not paying Tax to indian govt., I think RBI is doing just to collect tax and customer data from PayPal, this is good for our country.

    We should support RBI.

  2. Paypal has confused Interpreneurs from india. But its not paypal its regulations made by indian Government and not even politicians can be blamed. but then why are we victim why this purpose code?

    Now I got an email that you have to withdraw money within 30 days and i have lot of money kept in paypal account :(
    written email to paypal but have to wait 24 hours for reply..

    we cant even buy or transfer payment form paypal balance ?

  3. This is Anuj Nayar from PayPal’s Communications team. Farhad Irani, PayPal’s head of Asia-Pacific, posted a new update and set of instructions for customers in India who would like to withdraw funds from their PayPal account to their bank account. You can see his post here:

  4. Recent issues with PayPal withdrawals to Indian Banks & more over payments just randomly being reversed back to the senders will have a deep impact on PayPal’s reputation. It raises so many questions like (THIS MIGHT CONTAIN SPOILERS):

    A) Should we trust PayPal in future?

    B) Are they really concerned about our Money?
    ANS: ABSOLUTELY NO, After a long period of two weeks we receive an apology letter stating that “We are sorry we goofed up opps!”? and stuff like “Your money just got sacked since this is nothing serious to us we are just doing a drill of playing a game with your hard earned money”?

    C) Is RBI responsible for this?
    ANS: UNQUESTIONABLY MAYBE, So, Question is why this is happening in India and nowhere else? Question is why we are being kept behind curtains and dark? Question is why Moneybookers and other Payment systems are working but PayPal is not? you just want to exclude the RBI out of this since they are least concerned with us. Everyone failed here! RBI off course you cant expect them to give you a comforting truth so a comforting lie should suffice you! And PayPal Ow man no shit a multinational company failing to inform and notify of an issue of this magnitude. That was an AWESOME combination of pure frustrating, destroying trust & spreading chaos.

    D) So what does PayPal tell us now?
    ANS: “We are sorry, but your valuable to us so please give us another opportunity to goof up and play some more engaging games with your money” and “We just love to make more profits by giving you a pathetic exchange rate”

    D) What now?
    ANS: DTA (Don’t Trust Anyone) Get your sleeves up against them and find your own ways to get paid over any other medium that serves better, communicates better and keep them in plenty. If one fails other should work out.

    Ive let all my clients know about this issue and advised them (in advance unlike PayPal) to switch over to some other Payment system which is reliable, responsible and does the main thing “ACTION” at PAR. The truth will probably be dead and berried RIP about what happened because the shame and disgust they bring upon themselves is apocalyptic now.

  5. Thank you for contacting PayPal.

    I understand your frustration regarding your payments getting reversed.
    If the payment was for a purchase of goods or services, and not a
    personal payment, please contact your buyer and have him or her resend
    the payment by following the steps below:
    1) Log in to their PayPal account
    2) Click the Send Money tab
    3) Select “Purchase”
    If the payment was a personal payment, such as a gift to a friend or
    family member, then we request that you find another payment method
    until we restore personal payments to and from India.

    Yes, we do allow Personal payments from USA to Saudi Arabia; however,
    your brother can open an account in Saudi Arabia but cannot receive
    payments since Saudi Arabia is one of the Send Only countries.

    The regulators recently let PayPal know about revised licensing rules
    that we are now actively engaged in securing. Personal payments to and
    from India will be suspended for at least a few months until we fully
    resolve the questions from the Indian regulators.

    Thank you for giving us the opportunity to be of service and for
    choosing PayPal for your online payment needs. We value your business
    and we look forward to further strengthening your customer satisfaction.
    For further assistance, you may call us at 1-888-221-1161 or you can
    also visit

    Joanna Marie
    PayPal, an eBay Company

  6. Paypal india really sucks. I have business account and got payment from another business account, they reversed that payment. When i contacted customer support they send me readymade reply. They even don’t have time to hear customer. Can any body please bring the alternative of paypal, so we can switch immediately. End of paypal is started…

  7. They first halted the service without any prior notice. Next, they reversed payments received to the senders back.

    Also, they stopped Bank withdrawals, and today they reversed it and while reversing the money, they charged currency conversion fee, which is unprofessional as that money was never transferred to the end user anyway!

    Lets join the Facebook group, list our views and problems there and let our voice heard

  8. PayPal verifies the name and address of the users by sending a unique pin through credit card bill. Then why don’e they exempt the verified users from this mess?

    Shockingly, there was NO announcement from their end. Money is not getting deposited to bank, but the amount is deducted from PayPal balance.