PayPal will hire 1,000 engineers for its development centres across Bangalore, Chennai and Hyderabad over the course of the coming year, the company said in a statement on Wednesday. As digital payments adoption has grown in the past year, in the wake of the pandemic, PayPal said that it needs to focus on building and scaling its artificial-intelligence, machine learning, data science, risk, security, and customer experience practices going forward.
While the global digital payments giant has witnessed significant growth in its user-base and merchant-base in the past year, posting a net profit of $4.2 billion in fiscal year 2020 (calendar) up by 71% year-on-year, it is shuttering its payments gateway business in India by the end of March. Going forward, PayPal will continue to operate its cross-border trading platform, enabling local businesses to export their products abroad, in addition to its development centres.
PayPal India will hire engineers across software, product development, data science, risk analytics and business analytics streams at entry, mid-level and senior roles, it said.
In 2020, the company processed $1.4 billion worth of sales for more than 360,000 merchants in the country. But due to heavy competition in the payments gateway space, from legacy payments companies and new fintechs, the company was not able to compete effectively and its losses grew. In FY19, the company’s losses grew to ₹8.13 crore as of March 2019 from ₹2.3 crore in the previous year on the back of revenues worth ₹654.7 crore in FY19 compared to ₹261 crore in the previous year, according to regulatory filings with the Ministry of Corporate Affairs.
The company remains a dominant player in the cross-border payments, particularly since its platform connects buyers and sellers from across the world. A spokesperson for PayPal said at the time that from April 1, this year, the company will focus its attention on enabling more international sales for Indian businesses, and shift focus away from our domestic products in India.
Non-compliance with money laundering rules
In December 2020, the Finance Ministry’s Financial Intelligence Unit issued a ₹96 lakh penalty against against PayPal Payments Private Limited over non-compliance with norms laid out in the Prevention of Money Laundering Act, 2002 (PMLA). The bone of contention in this case is that PayPal failed to register itself with the FIU for several years. While PayPal said that it is a payments intermediary and not a payments system operator, the FIU says that the PMLA does not “distinguish between ‘payment systems’ and ‘payment services’, and has similar definitions for ‘payments systems’ and ‘payments operators’ as under RBI regulations.” Therefore, PayPal is not just a payment intermediary but also operates a payments system, the FIU said.
In its order, the FIU said that “there is ample evidence of the wilful violation of the law and, therefore, PayPal cannot be let off with a penalty that should normally be imposed for minor violations”.
On January 12, the Delhi High Court issued a stayed the FIUs penalty and sent a notice seeking its stance on PayPal’s plea by February 26, this year. The court also directed the Reserve Bank of India and the Ministry of Finance to constitute a committee to clarify the policy stance on whether entities like PayPal need to be considered as reporting agencies under the PMLA.
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