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PayPal Now Requires Purpose Code, PAN & Bank Account Details From Indian Users

After putting a limit on receiving payments at $500, and crippling the service’s online wallet functionality for Indian users, PayPal has now made it mandatory for its users in India to furnish additional information, including a purpose code, permanent account number and bank account details, in order to continue to receive payments. The information, it says, is needed to comply with the requirements set out in the notification of the Reserve Bank of India, that apply to all online payment gateways.

According to the RBI Guidelines, issued vide a circular on November 16th 2010, Authorised Dealer Category- l banks will have to ensure that purpose codes are reported to the RBI. They also need to submit all the relevant information relating to any transaction under this arrangement to the Reserve Bank, and user accounts are subject to a quarterly audit. PayPal is simply complying with the guidelines, in order to continue its operations in the country. However, the guidelines do not explicitly mention the requirement of a PAN from the user.

PayPal Vs RBI

– In February 2010, PayPal disallows Person to Person payments, and electronic withdrawals through local Banks, on RBI’s instructions, although it allowed cash-outs through cheques.

– It later restores cash-outs through local banks for export settlements, provided the users submit an ‘export code’.

– A few days later PayPal said that it only required a ‘Purpose Code’ from businesses and not an ‘export code’, and that they make available relevant documents for scrutiny if required. Although, cash-outs for P2P payments was still restricted to cheques.

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– In July 2010, PayPal suspends electronic withdrawals again for some days, only to restore it later for export settlements. However, it disallows re-use of received payments for making purchases or other payments, thus acting merely as a money transfer service, crippling its online wallet feature.

– After RBI’s new guidelines, PayPal, in order to comply, mandates users to transfer payments to bank accounts within seven days of receiving them, and puts a per transaction limit of $500 on payments that can be received.

***

Email Received From PayPal:

Dear Anupam Saxena,

As part of our ongoing effort to comply with the requirements set out in the notification of the Reserve Bank of India (“RBI Guidelines”) that apply to all online payment gateways, all PayPal users in India will be required to add the following to their PayPal account in order to continue to receive export-related payments and withdraw money:

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• 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)

To add a purpose code, PAN and bank account:

1. Log into your PayPal account at www.paypal.com/in
2. You’ll find prompts on the top of your “My Account” page asking you to “Add” your PAN, purpose code and bank account
3. Click on the “Add” links and follow the instructions.

Additionally, PayPal users in India are required to provide a current and accurate postal address on their PayPal account. To ensure that your address is up-to-date:

• Log in to your PayPal account at www.paypal.com/in
• Click on “Profile” and select “Add/Edit Street Address”.

In case you have any queries, please log into your PayPal account and click on ‘Contact Us’ at the bottom of the page.

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For users who have already added a purpose code, PAN, and a bank account in India, as well as validated their postal address, please treat this email as a reminder only.

Sincerely,

The PayPal Asia Team

***

PayPal Vs RBI:
PayPal Issue: The RBI Notification Applicable To Online Payment Gateways
PayPal Restricts Payments To India, Bars Purchases; Why They’re Right
Updated: PayPal Resumes Electronic Payments To India; Can’t Be Re-Used For Making Payments
PayPal Needs To Comply With RBI Regulations By April 30th, 2010
PayPal Payments In India Will Require ‘Purpose Code’; Still No P2P
PayPal To Resume India Payments By 3rd March; Export Code Needed
Updated: eBay’s PayPal Disallows P2P Payments, Transfers To Local Banks

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