I am Suresh Nair from Kerala. I have been using Paypal for the last 8 Years. They are one of the best payment processors. I cannot compare paypal with other payment processors like clickbank, 2checkout etc, because most of our sales are processing by Paypal. I have provided 2 payment options and 95% of them are choosing Paypal. So I cannot think about an alternative. The recent issues are because of ‘outdated’ guidelines from RBI. First of all, paypal is not a bank but a payment processor. So they have to make new rules/guidelines for payment processors.

Because of the new guidelines, we are facing the following issues:

1) Not able to use paypal fund to pay for domain, hosting, advertising expenses.

2) Not able to accept big amounts like USD 10,000 at a time, so we create multiple invoices for the same transaction.

3) Not able to process immediate refunds. Because, auto withdraws make the account empty. When somebody post an issue in paypal resolution center, they cancel the previous withdrawal and automatically deduct the foreign currency transaction fee. This is nearly $1.5 for every thousand rupees. This has already happened several times.

2 months back I found a real solution to this problem: I became an NRI and all the problems were solved. I registered a business in Malaysia and I have a Paypal account which is attached to my Malaysian bank account. Then the fund will be transferred to my Indian (NRE) account. No worry on paying Income taxes here in India since I am now an NRI and NO income tax in Malaysia for foreign income.

So Paypal doesn’t suck, but RBI sucks!

Now my question is : does this $500 limitation apply to funds received in GBP? I mean will PayPal convert amount received in other currencies to $$$ and then if its more than $500 block your account?

Please advice.

If there is a need, there is a way.

I really don’t source from there much anymore, but occasionally, it is cost effective to hire a $5 hourly guy to perform certain ‘menial’ coding tasks, then just put my Eastern European guys on the job to tidy it up once the grunt work is done.

Do we know how they intend to handle benchmark payments, etc? For example, how would they prevent someone from just smurfing a series of $400 payments to effect a $2000 transaction?

Reserve Bank of India has imposed some restrictions on Paypal since it is not a banking entity and thus not entitled to give interest on money retained with it nor report transactions falling under the money laundering definitions.

It certainly puts a big spanner in the works but payment by cheque or merchant processors should circumvent the problem to a certain extent but the small players would definitely feel the pinch.

Hope Paypal works out something with the RBI since the larger issue of internet commerce is at stake.

US will be looking into this issue too.

Paypal is not regulated by the FDIC or any regulations.

Do you know you can send >10kUSD via paypal and not file the paper work requirement?

Not sure, but I’ve met a couple companies from India and have worked with them outside of Elance after a successfully completed project.