Paypal disallows Indians from receiving payments for services!

I use Paypal to receive payments for my freelancing work from my clients all over the world. Today however, I got a shock on receiving the following mail from Paypal:

Hello Bhagwad Park,

Your payment of $ XX.XX has been sent back to the sender of the payment.

We reversed this payment because we have stopped allowing personal payments to be sent to or from India.

If this was a payment for a purchase of goods or services, and not a personal payment, then you may contact the buyer and have him or her resend the payment as follows:  (a) click the Send Money tab, (b) select “Goods,” and (c) provide a shipping address.

If this payment was a personal payment such as a gift, then we have requested that the sender find another payment method until we restore personal payments to and from India.

We are trying to resolve this issue as quickly as possible and we’re sorry for any inconvenience.

Thank you,


To be sure, they’ve given a workaround – they want my buyers to pretend they’re buying “goods” instead of services. There are several problems with this. For one, some of my largest clients are corporates whose payment system is automatic. They don’t “click” anything or “select” anything. The payments just goes from their systems. For me to ask them to change the way they do business is impossible.

Secondly, Paypal is asking me to encourage my buyers to lie! I don’t provide any goods and it’s quite possible that my buyers will refuse to falsify their accounts just because the almighty Paypal says they must.

Mind you, this is only for Indian Paypal accounts. Why has this happened? Paypal refuses to divulge more details on this issue and who knows how long this will last? There are very few reliable options to transfer money from abroad into India and Paypal is like a gateway. It’s tragic that there’s no real alternative to Paypal – most of my buyers know Paypal and will use it and if I tell them I can’t receive payments in Paypal, I don’t know how they’ll pay me.

Fortunately a lot depends on this and some corporations (like oDesk – the organization where I get part of my work from) and unless they find a way to resolve this, all their Indian providers will be unable to withdraw and hence work. And since they get large portions of their revenue from places like India, they simply have to find a viable workaround. Also, all web hosting payments to and from India will be canceled creating mass chaos – so I’m really a smaller fish :D

Crossing my fingers and hoping this goes away soon…

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  1. I think we all are sailing in the same boat. Transactions getting reversed and withdrawals not reaching bank accounts.

    I remember last year we also had the same problem around the 26th Jan I think, when withdrawals were delay by 15 days.

    Every year there is some problem and we guys end up paying transaction charges / reversal charges / withdrawal charges.


  2. Vishwajeet says

    I think Paypal wants you to upgrade to their Premier account (also free), then you can receive automatic payments (without having the senders use the "Send Money" tab) for goods & services. We've done it & we've received many times payments for goods & services…in non-personal manner.


  3. nirvinder says

    if i want send money to india by mucs i get for 140pound


  4. It is not the fault of paypal RBI has tightened the guide lines and due to FEMA etc kind of things web sites like paypal are not able to do business in India if any thing has to be done people/freelancers should inform Finance Ministry and RBI people that a lot of people make their bread and butter from internet based work and going to currency chest branch of a bank each time for a 0.50 USD transaction does not makes sense


    • In reply to abhishek

      Is this resolved?…. because in 2012 this has happened to me and paypal asked me to payback or submitt my reply for the services sold….. and ultimately I filed a complaint to RBI too.. which i never received any answer….. and lateron i came to know that i cant use my paypal account anymore….
      I tried to contact paypal too but no reply …….
      is there somebody who can help me resolve this because i need that account again…


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