After almost killing freelance business in India with the rules implemented to comply with Reserve Bank of India guidelines (Dictatorship?) early this year, Paypal has now come back with another annoying rule. This time its worse, – it’s all set to annoy and create inconvenience to its Indian users even the more.
After the nationwide dissatisfaction of freelancers with online payment giant Paypal and the Reserve Bank of Indiaover dictatorial rules put in place early this year, Paypal has now started enforcing daily auto-withdrawal of funds for Indian users from September 26, 2011. The reason given, same as earlier is, to comply with RBI guidelines.
Earlier this year, Paypal had added the policy of 500 dollar transaction limit and 7 days’ time limit for its Indian customers. This, by itself had created huge inconvenience for freelancers and small scale IT Service providers. Now, with the amounts getting auto-withdrawn, the customers would be forced to accept the exchange rate of the day. Since they cannot retain the amount, it is not possible for the customer to seek a favorable exchange rate for withdrawal even though the RBI has set a time limit for seven days.
To make matters worse, Paypal has made life hell for most proprietorship business user accounts. In most freelancers or merchants who run his own proprietorship firm, the PAN number used is the one of the owner or the merchant, unlike registered companies who has their own PAN number. Understandably the name of the owner or merchant would not be the same as the name of his firm, while the account used in Paypal can be with the name of proprietorship firm, for convenience with customers or other business interests.
As our readers already know, Paypal had, earlier this year, enforced all Indian users to have a PAN or Permanent Account Number, purpose code related to the majority of commercial activities for export-related payments and a bank account in India (if not previously added). When Paypal verified the PAN numbers, it often found discrepancy between the Paypal account names in cases of proprietorship business as the PAN was issued in name of owner. As such the accounts were made limited usage ones and other inconveniences caused.
Paypal which has time and again played foul against its very loyal customers is trying to act as a big brother, mandating PAN and keeping track of all transactions and taxations. Although Paypal, an international online money transfer organization does not really deserve to play the role of keeping a track of people’s transaction (through PAN numbers) for taxation and other purposes, it had taken up the role although the RBI guidelines does not really necessitate this.
Many users, who had followed our previous reports on RBI and Paypal early this year has complained that the new Paypal rules have led them to incur financial losses due to this auto-withdrawal enforced on them.
The drama of changing rules and lack of clarity in its policies by Paypal is being witnessed by all freelancers with increasing disgust. It is now compelling even the most loyal Paypal fan or customer to think about alternatives to Paypal. With people looking out it is being considered better chance to reap benefits for other Payment gateway services of other banks / Providers in India & abroad such as Moneybookers, ICICI Payment Gateway (PAYSEAL), Citibank Payment Gateway, HDFC Bank Payment Gateway and AXIS Bank Payment Gateway and even third party gateway providers like CCAvenue- Mumbai, Transecute- Mumbai and Time of Money.
Mentionable that Paypal is already accused of offering lower currency conversion rates (rates lower than the global market of the day). Some customers of Pay Pal who have written to us after our publishing of continued reports on Pay Pal and RBI has cited examples where PayPal have a Forex rates lower by around 2%, the hidden charge costing Indian merchants extra rupees per transaction. With the auto-withdrawal policy enforced, Paypal has only stabbed the customers further.
Note: For our earlier reports on Paypal and RBI, our readers can refer to the following article & reports: