Paypal Clarifies Its Position On India Payments – Puts Blame On RBI

Last week week we blogged about Paypal India block and how it left IT guys high and dry. There was no clarification from Paypal then as to why they went ahead with the block but now on their offical blog they have an official word on it.

Here are some excerpts:

1. Why did you suspend local bank transfers and personal payments to and from India?

We temporarily suspended these services to respond to enquiries from the Indian regulators, specifically questions on whether personal payments constitute remittances into India.

We’re working with the regulators and our bank processing partners in India to get this resolved as quickly as we can. We realize that this is causing considerable inconvenience to our customers and I want to reassure you that this is a top priority for the leadership at PayPal

2. When will personal payments be turned back on?

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.

3. When will local bank withdrawals be available?

Customers should be able to withdraw their funds to a local bank within the next few days. In the meantime, we’re going to restore the money into the PayPal accounts of any customers in India who have initiated a recent withdrawal, so they know that the money is safe in their accounts. Customers will also be reimbursed for any withdrawal fee charges.

Read more here.

What does the above mean from an Indian Market Perspective?

As you can see from above they have admitted that RBIs (though they have not mentioned RBI but its understood that payments come under their scanner) directive forced them to take the action they did. Now this is surprising as Paypal payments have been there for Indians for almost half a decade and this sudden stance by RBI points at the fact that they seem to be taking P2P money transfer payments space seriously and are making sure regulations are being created for the same.

This also means that Indian players who are looking to launch their services in this space could do so pretty soon. We have some inside information stating that Wallet365.com (which is a Times group initiative) which was stopped by RBI in 2006 could soon be rebranded and relaunched for India. More on that as we have it. We have always been bullish on what Ewallets can do for ecommerce in India. Read more of our thoughts here.