Paypal vs RBI troubles freelancers again, Moneybookers gain advantage

After the nationwide dissatisfaction of freelancers with online payment giant Paypal and the Reserve Bank of India for the new rules put in place early this year, Paypal now has now added another policy, trying to comply with Reserve bank of India, annoying Indian freelancers and small scale IT service providers once again.

Advertisements

In addition to the 500 dollar transaction limit and 7 days’ time limit which Paypal implemented from March this year, Paypal has now introduced new requirements for Indian users in order to comply with regulations of the Reserve Bank of India. As per these new rules, following are a mandate for all Indian users going forward:
•  A purpose code related to the majority of commercial activities for export-related payments
•  A PAN or Permanent Account Number
•  A bank account in India (if not previously added)

With this the legacy of dictatorship by RBI as well as fowl play by Paypal has taken a new turn. On one side, the RBI which has failed miserably in controlling inflation and the Government which has done nothing to bring back the millions of crores of black money stashed away in Swiss Banks, continues with their dictatorship making life hell for freelancers and IT service providers. On the other hand, Paypal which has time and again played fowl against its very loyal customers now takes a step where it will act as a big brother 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 has taken up the role although the RBI guidelines does not really necessitate this.

The Paypal Vs RBI game which is being witnessed by all freelancers with increasing disgust 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 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. However one player which stands out here and is likely to be the preferred alternative to Paypal amongst Indian freelancers is Moneybookers.

Following are some facts which have annoyed Paypal users most and where competitors like Moneybookers enjoy advantage:

Paypal continuously changing its Policy
The ridiculous inconvenience to customers by continuous policy change of Paypal is not something new. It date back to more than a year and had started when Paypal stopped Person to Person payments and electronic withdrawals through local Banks. Some days later, it re-started cash withdrawals through local banks for export settlements with a new condition that the users submit an export code. Some days later, Paypal declared that it requires a Purpose Code from businesses and not an export code! Later in July 2010, PayPal had suspended electronic withdrawals again for some days, only to restore it later for export settlements.

The biggest blow to freelancers came early this year with PayPal’s new policy of putting limit to transactions and timeframe, about which we have already done a series of reports. Even then, Paypal was not clear about certain things. For example, although it is a mandate to withdraw funds within seven days, Paypal has another rule of minimum withdrawal of 10 dollars. If one has 9 dollars lying in the Paypal account for more than seven days (since it cannot be withdrawn), there is no clarity about what would happen to that 9 dollars!

In this case, Moneybookers gain an advantage as it does not have any of the policy issues such as the 500 dollar limit or a strict 7 day inconvenient limit.

Loss through lower Forex rate
PayPal is known to offer 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. However this has been given a blind eye by National authorities due to the lack of proper regulations and governance in this sector.

On the other hand, Moneybookers has been able to succeed in this point with SWIFT i.e. Society for Worldwide Interbank Financial Telecommunication (Cross Border Bank to Bank Wire Transfer). Moneybookers transfers ones’ money to the person’s bank account and so the user gets the Forex rate what his Bank offers. By charging no hidden costs and paying what the customers deserve apart from the service charges, Moneybookers have already made a better name than Paypal when it comes to Forex rates.

Payment amount Restrictions
Due to the 500 dollar limit that Paypal has, large payments needs to be spilt into smaller payments and for each of these transactions, one has to pay Paypal fees as well as Forex charges, resulting in high loss. Moneybookers on the other hand does not have such restrictions and one can use any amount for transactions. Though Moneybookers charges 1.80 Euros for Visa and bank transfer, for big amounts one actually ends up paying lesser than amount one would spend on several sets of small Paypal transfers.

Local Currency not supported
In PayPal one can never have Indian Rupees balance but in Moneybookers ones account balance is in local currency. Time and again, Paypal has created inconvenience with its fowl play to Indian merchants yet continue to enjoy a huge customer base only because most foreign merchants who deals with the Indian merchants or the customers of the Indian freelancers finds Paypal convenient and safe. The RBI too has never been of any help and played a dictatorship role to impart new era of capitalism.

Note: For our earlier reports on Paypal and RBI, our readers can refer to the following article & reports:
PayPal’s new rules based on RBI Guidelines – Blow on Indian Freelancers
RBI Guidelines to PayPal make life hell for IT Service Providers
RBI guidelines for PayPal make no sense
PayPal Starts Fowl Play
RBI action against PayPal as new edition of capitalism
RBI vs PayPal – RBI sets to kill freelancers

About Priyankan Goswami

Priyankan Goswami Priyankan Goswami is the Editor of Times of Assam's Political Analysis section. He is also founder member and member of the Executive board of Times of Assam. By Academic Priyankan Goswami is MBA & Mechanical Engineer.

Connect

Connect on Facebook View all Posts Visit Website

One Response to "Paypal vs RBI troubles freelancers again, Moneybookers gain advantage"

  1. Amit Barua  May 31, 2012 at 03:10 PM

    I personaly dont like paypal ,on my paypal account i have 403 pound ,And i can not withdrawl that money to my indian bank account .paypal realy sucks our hard work money.

    Reply

Leave your Comment