Changes to PayPal User Agreement in India – RBI Guidelines

With effect from 1 March 2011, you are required to comply with the requirements set out in the notification of the Reserve Bank of India governing the processing and settlement of export-related receipts facilitated by online payment gateways (“RBI Guidelines”).

In order to comply with the RBI Guidelines, the PayPal user agreement in India will be amended for the following services as follows:

  1. Any balance in and all future payments into your PayPal account may not be used to buy goods or services and must be transferred to your bank account in India within 7 days from the receipt of confirmation from the buyer in respect of the goods or services; and
  2. Export-related payments for goods and services into your PayPal account may not exceed US$500 per transaction.

These guidelines imply that,

  • You will not be able receive funds more than US$500
  • You cannot keep money as a PayPal balance
  • Your customers will need to link a credit card to their account in before sending you money with PayPal
  • If you are listing products greater than US$500 per transaction then you may need to seek alternative methods of payment, PayPal will not allow to receive payments for any export-related goods or services for an amount exceeding US$500 per transaction.

Courtesy: PayPal India Notification