Shashi pointed me to this blog post about the Paypal-RBI tiff. I do not like the tone of the article, because it is too accusatory towards Paypal and even if the article is right, the tone is not very conducive to discussion and solution. But it brings out too important pieces of information
- If anyone bring $500 or more in India, it needs to be reported to RBI
- If Paypal holds funds for more than 7 days, it needs to be treated like a bank and has to adhere to strict banking laws in India.
Now the second one is a little tricky. It is for good reasons, but banking laws are rather strict in India and I can see that paypal may be unwilling to get into that territory.
But the first one, as far as I have understood, can be resolved only if paypal is willing to report the transactions to RBI. I think this is what the Indian payment gateways do. What is paypal’s issue there? I wonder if someone will speak up.
The third major problem which has not been clearly discussed there is about payments made through Paypal. I wonder if this problem is related to “reporting” issues or to the “holding the funds” issue. Would be great to reach out to someone who has some insight into this?