Paypal New Rules Sucks! Indian Freelancers To Suffer The Most


Update: Paypal has now lifted this limited and now users can receive funds upto $3000 at once.

From 1 March 2011  for Indian users, PayPal is no more the easiest way to pay. PayPal team last night sent out some shocking new rules to Indian PayPal users by sending them a surprise Email last night. In the Email PayPal team stated new terms and rules for Indian PayPal users.

So here’s the preview of that shocking mail from paypal to Indian customers.

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, our 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.

We seek your understanding as we continue to employ our best efforts to comply with the RBI Guidelines in a timely manner.

Which means:
  1. Indian PayPal account holders cannot receive payment of more than $500 per transaction for export items and services.
  2. You will not be allowed to purchase items or services online using your PayPal account if you are in India. That means, from 1’st march 2011 you can’t use PayPal to pay for hosting charges or to buy items on web.
  3. You must transfer any funds in from PayPal to your bank account within 7 days from the receipt of confirmation from the buyer in respect of the goods or services. Even if you receive a payment in your PayPal, you will have to withdraw that within 7 days of transaction confirmation to your bank account.

These are the new restrictions and limitations coming on PayPal from effect of 1’st March 2011 for Indian users. PayPal says these new guidelines are in order to follow the guidelines from Reserve Bank of India (RBI) due to TOS of Indian currency rotation rule.

According to the Indian Currency Rotation Act:

  • Any company keeping money for more than  7 days have to pay interest and should be treated like a bank.
  • Any transaction which bring money more than $500 at one go, should be reported to RBI.

Whoever is to blame, its really going to get hard for freelancers who have no Credit Card, blogger can’t use Paypal anymore to pay hosting and domain renewal. And cannot keep money for more than 7 days in their paypal account. And it will badly going to effect users who get small payments, because paypal would charge them 50 INR for transferring funds to their bank accounts. For instance you are getting a payment of $5(225INR) in your PayPal account, the after transaction fee of 50, you would get only 175INR in your bank account.  So this is a very disappointing move from PayPal and RBI.

Lets home that they would bring some positive changes in the above rules, considering the fact that there are huge number of freelancers and bloggers in Indian who reply on PayPal for online transactions.

Paypal India office only one branch in India which is in Chennai. If you would like to get in touch with them directly, then here’s the address and contact details.

Paypal India Pvt Ltd
No 334, Futura IT Park, Block A,
Old Mahabalipuram Road,
Chennai - 600119

Phone number to contact Paypal Chennai Office -
+ 91 044 66348000, +91 044 66348001

If you are someone who is also the one suffering from the new rule then you can post your comment below.


  1. one alternate to freelancers
    if you have an existing client who paying though payapal, tell them to continue the payment through elance or oDesk
    There is no any interruption from Indian banks.

  2. Paypal and RBI are playing with the Indian freelancers.
    It a real pity of RBI as it is not at all caring about people who are dealing in lakh's & crore's and the thing that concerned them is the poor little Indian freelancer who earns a decent living for his painful efforts.
    I am definitely against their rules.
    slogan of RBI
    "Leave the Rich and Hitch the Technical Mitch"

  3. I read somewhere that Paypal is the real culprit as it is trying to evade some key rulee and not pay interests on funds in the Paypal account holders of Indians.

    I read that in Europe paypal operates as a bank and pays interest on the funds but in India, they are trying to evade that and thats way RBI is after their ass for.

    Shame on Paypal ..they will loose Indian customers - if they continue doing that.

  4. Wow..that really sucks :( So far PayPal is the easiest to pay and also to be paid. Hope one day they revise this silly change for you guys

  5. PayPal needs minimum 10$ balance to withdraw to bank.. is there any website which offers lower than this amount? Or which is the best alternative for paypal?

  6. this rules affect from march 1st right?
    so i have $7 in my paypal account which i received today for supplying links
    that means i can keep the money in my account till march 1st and then i may find an alternative?
    please help me admin

    • Naser, from march 1st you will have to withdraw the money to your bank account within 7 days. Some alternatives are moneybookers.

  7. Need to find out alternate option now, since PayPal wont be more easy way to transfer money. Can you give your comment on Moneybooker?

  8. yes it sucks , I have to renew my hosting in April I am worried what will I do then I dont have credit card

  9. This really sucks , waht if we have 2 accounts . 1 of a family member and we keep on transfering funds between them .. ? :)

  10. Hi Suresh, Thanks again.....You really have a awesome blog. Its great to see that u are sharing a lot of information with people like us. Keep it up. your blog really helped me to enhance my knowledge. Content is really good and i am happy to visit again.

Comments are closed.