Reserve Bank of India – “PayPal not authorised to transfer money”

By on February 12th, 2010     

The showdown between online money transfer and India continues. About two weeks ago, PayPal suddenly stopped transfer of money to individuals using India Banks. After PayPal's suspending of transfer to Indian banks, PayPal wrote in their blog that they are suspending the services to respond to enquiries from the Indian regulators.

Now, India's monetary regulating authority, Reserve Bank of India, has made an official statement. Alpana Killawala, spokeswoman of the Reserve Bank of India (RBI) said:

PayPal needs authorization to operate a cross-border money transfer service, under the country's Payment and Settlement Systems Act.

The Payment and Settlement Systems Act was passed in 2007 and says that no person other than the RBI can commence or operate a payment system, except with an authorization issued by the RBI. The Act came into effect from August 2008 and existing payment systems were given six months to get authorization from the RBI.

While other money transfer services like Western Union have complied with the Act and have already got authorization from the RBI, PayPal choosed to ignore the Act for about 18 months till the RBI finally took action.




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  • Siddhu

    This is ****…. My paypal donations got rejected because of this.

  • Udit

    does withdrawal to credit card still work in india now ???

  • http://www.topseo.in kapil.khaneja

    What a disappointing news. Paypal should have worked this out rather than suspending services. This will not just effect the freelancers community but paypal itself as Indians form a great clientele for them and there are many other service providers who are benefiting from this situation.

  • Rahul Patel

    I have recently emailed to Paypal and Here is the reply…

    We are doing everything we can to process your withdrawal as soon a possible; however, we do not have a specific timeframe to share at this time. We ask that you wait to submit another bank withdrawal request until we have addressed the processing issue. We will contact you again in a few days with an update and, if the issue is resolved, you can initiate another withdrawal at that time. In the meantime, you may also try to withdraw your money to a credit card or request a check to be mailed to your address.

    I know that this is somehow inconvenient on your end; I assure you though that your money will still post either to your bank account or to your PayPal balance and we are sorry for any inconvenience.

    ===================================================================
    Message forwarded again to paypal and waiting for reply…
    ===================================================================
    If the problem takes 1-2 months to resolved then what I should wait for next 1-2 months?? See.. The problem is between paypal and RBI in that case, why should I suffer? You should notify me about that in advance or As the mistake have been made by paypal, you should have make some arrangements to withdraw my money in bank. That is the problem of paypal. Still if you can’t do anything will you give our money with interest (8.5% per annum) as per Indian rule.
    ===================================================================

  • Ricky

    Yes, the current situation is very unfair to the customers.
    About the 8.5% interest, I am not sure if it will apply to PayPal as it is not considered a bank.

  • Pingback: PayPal will soon be resuming its operation in India



Reserve Bank of India – “PayPal not authorised to transfer money” was originally published on Digitizor.com on February 12, 2010 - 12:44 pm (Indian Standard Time)