Internet-based money transfer service Paypal has resumed remittances to small-time exporters who will now have to report them as export revenue to Indian authorities. “Customers who rely on PayPal are now able to sell their goods and services around the world and withdraw money to their local bank accounts,” explained Anuj Nayar, director of global communications, PayPal.
“However, before they can effect the withdrawals, they are now required to specify the nature of the transaction by selecting the appropriate ‘Purpose Codes’ i.e. whether the transaction is for the export of goods or services. This information is required under Indian laws in order to identify the nature of cross-border merchant transactions.”
PayPal, a service provider facilitating payments and money transfers online, has resumed processing payments for export of goods and services. Personal payments, that is money transfer between individuals, to and from India, though, continue to remain suspended until PayPal receives the necessary licences and approvals from RBI.
In January this year, the central bank had initiated action against PayPal for carrying out money transfer operations without authorisation from RBI.
The banking regulator’s contention was that such personal payments amounted to cross-border money transfers, and PayPal was not authorised by RBI to offer the service. Following this development, PayPal had to suspend operations in India, putting many of its Indian users, numbering nearly 1,75,000, in a spot.
The inquiry by the banking regulator, however, is yet to be concluded. “We have given them time till April 30 to respond to certain queries that we have raised. Future course of action will be determined after they send their responses,” said RBI spokesperson Alpana Killawala.
Mr Nayar confirmed that PayPal intends to apply for the requisite licences and approvals to transact personal payments to and from India, but pending a policy review by the government, uncertainty persists on this front.
“The Indian government is conducting a policy review on the regulation of inward remittances, and the central bank is not processing new applications pending completion of the policy review. So although we intend to apply for a licence to process inward remittances, it is uncertain when we will be able to submit an application,” he added.