RBI and Paypal are finally seem to be seeing eye-to-eye on the online payment regulations. Indian users can now receive transactions uption 3000$ via paypal
Paypal Annoucement dated Oct 13 2011
We’ve been notified by the Reserve Bank of India (RBI) that our merchants in India can receive export-related payments for goods and services into their PayPal account up to USD 3000 per transaction (raised from USD 500 per transaction), effective immediately.
RBI circular dated Oct 14 2011@ RBI website
Para 2: The present instructions have been reviewed in the context of requests received from exporters for suitable enhancement of the value of the transaction from USD 500. Accordingly, it has now been decided to increase the value per transaction from USD 500 to USD 3000 for export related remittances received through OPGSPS. The revised directions will come into force with immediate effect.
All other terms and conditions issued vide A.P. (DIR Series) Circular No.17 dated November 16, 2010 shall remain unchanged
Para 2:vi – The balances held in the NOSTRO collection account shall be repatriated and credited to the respective exporter’s account with a bank in India immediately on receipt of the confirmation from the importer and, in no case, later than seven days from the date of credit to the NOSTRO collection account.
Although the news suggest that RBI and Paypal have been in “serious discussion” in this matter, my intuition strongly suggests that this could be the result of innumerable blog posts, comments, tweets, by our online community. RBI has never once in the past hinted at the impact the online community has over social issues, now we know that “we are being watched” and “ our opinion does make an impact”.
This is indeed a great news for most fellow freelancers, and SMBs. This raised limit will allow them to conduct business as usual, without having to cut a sorry face with clients saying “ Due to paypal restrictions….. please…blah blah blah….”
The RBI notification clearly states the transaction limit and the 7 day stipulation period. So, I think i understand when paypal has enforced auto-withdrawal , inclusion of PAN number, export code for all Paypal Indian users. However, what still boggles me is,
WHY ARE WE NOT ALLOWED TO MAKE USE OF OUR EXISTING PAYPAL BALANCE TO PAY FOR GOODS AND SERVICES
- Our Paypal account is linked to PAN
- Purpose code @ paypal ensures nature of transaction
- Paypal account retains history of transaction : remittance and payments.
- All of the above confirms a layman’s idea that every transaction can be traced back to the user.
- RBI notification does not mention anything about NOT USING PAYPAL BALANCE
WHY ARE WE NOT ALLOWED TO MAKE USE OF OUR EXISTING PAYPAL BALANCE TO PAY FOR GOODS AND SERVICES
I am happy that they have raised the export related payments from $500 to $3000. But, it irritates me that I cannot use my paypal balance to pay for online services. I hope that they do something for us to use paypal balance for online services.
Thanks for this immediate informative post Deepa!
Very useful piece of Information.
Thanks
Ramesh
I am puzzled.Why there is restriction by RBI for paying my Paypal Credits?If I am earning in USD thru paypal and if I wish to buy a gift for my relative in Abroad it is not allowed to use my Paypal Credits.I think even in this case RBI should put a limit say up to 500USD and allow all Indians to go for free global purchases.can any one explain me what is the logic of RBI restrictions?
Hi Joshi,
All genuine users share your anger and the frustration. But we also know the “babus”. Ranting will only hold us back and prevent us from thinking about how we can move on (with our work / payment issues) despite all these restrictions (over which we individual users have no control)
After all, in the end of the day, we WILL have to fugureout some way to continue to work and accept payment.
Hi All,
I’m a freelancer and receives money through Paypal in USD which is auto-withdrawn to my bank account. Now as per my client’s requirement, I have to pay the merchant for goods and services through Paypal but I can not pay. Paypal asks to add Credit/Debit cards. I’ve SBI, BOI Visa Electron Debit card but they’re not being accepted by Paypal as the message receives – your bank refused your card.
Can anybody tell me why this restriction is imposed on indian paypal users?
Or will I have a HDFC or ICICI bank debit/credit card for paypal verification?
Hi Mamata
Have you tried contacting paypal via their contact us page?
Albeit late.. they do respond.
Alternatively, have you tried using Virtual Credit Cards? (SBI and HDFC have Vcc, not sure about other banks)
Whether export through Paypal India shall have the same meaning that export through custom clearance and shall Paypal India furnish FIRC (Foreign inward remittance certificate) or BRC ( Bank realisation certificate) to get exemption in VAT and export benefits.
Ashok, I serously doubt that.
Paypal cannot give a FIRC, coz they are not functioning as a bank-entity,… in India
Bank Cannot give a BRC, coz remittance is in local currency INR
I have been getting payments for my data services in USD through bank. The Bank used to convert the US money into Indian money and used to issue me FIRC “on request.” Now, let us say I receive money paypal for my services. Paypal seems to doing the convert USD into INR, and the bank has no work for conversion. So will the bank be able to issue me FIRC? In case I do not get an FIRC from the bank, will that be an issue (as it is required that every inward remittance should be certified by a financial institution – that is in the form of FIRC).
What about payments over $3k?
@Arun
I had contacted paypal regarding FIRC and PAYPAL confirm that they WILLNOT issue an FIRC. Here is a copy of their response
Folllowing this, I have been trying to get in touch my bank – SBI’s Forex cell, but no one is responding. 🙁
do try your bank and share their response. It would be of immense help
Here is paypal’s response:
“You need to Contact the bank where your PayPal withdrawals are credited to request a FIRC certificate. Your bank should then write a letter addressed to Citibank with the following information:
• Unique Transaction Reference number (UTR)
• Customer name
• Account number
• Amount of money
• Date and purpose of the payment
We would recommend that the letter also mentions that the payment was received from PayPal.
You must inform your bank what postal address you want the FIRC certificate(s) to be delivered to.
There is a fee of INR 337.08 (300 + 12.36% Service Tax) per FIRC cert (i.e. per transfer from PayPal to your bank).
I hope this information helps to address your concern.”
MY QUESTION IS WHY WOULD A BANK TAKE THE PAINS TO WRITE A LETTER TO CITIBANK FOR OUR SAKE.
2. As you said, if you contact banks, not everyone there knows about the FIRC procedure. There are few sections called NRI department or FOREX department which would be located in big branches. We have to contact them for clarification reg FIRC (In case you avoid paypal and get paid directly to your bank account via bank to bank transfer – or wire transfer). Again, as you said, there is not good response in public sector banks. In private sector, they tell you what to do to some extent.
Again, a question arises whether these transactions are to be carried out under current A/c or savings bank a/c. Different bankers have different opinions on this.
3. One more issue: One public sector banker told me that in order to issue FIRC, we should have Import Export Code. I was all this time of the assumption that since it is only a small scale and does not involve customs, and work sent abroad through mail, IE code is not necessary. Any specialist on this subject please clarify on this.
4. Also another question arises. Some banks say, they will send the FIRC by post as soon as an inward remittance arrives to the customer. Some others make us go there and fill out a request and then after sometime we have to go there physically to collect it. This is cumbersome and time consuming. They do charge some fee for this. We need to find out who sends the FIRC by post. So please let me know which bank provides us this service at our conveninence.
Can I write directly to Citibank for the FIRCs quoting the relevant references? Which branch and what department should I address my request to?
@Yogesh
for payments over 3K, isnt it more econimical to use direct wire transfer ?