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The truth about paypal,why paypal is about to block india payments after march 1

Discussion in 'BlackHat Lounge' started by bigbooby, Jan 29, 2011.

  1. bigbooby

    bigbooby Registered Member

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    So as you already know by now, PayPal is busy screwing small Indian SMBs and independent freelancers who rely on the service to send and receive payments. This is definitely not the first time this has happened, and will definitely not be the last one.

    In a recent email and blog post, PayPal said that they will be restraining Indian users from using the money in their PayPal account to purchase anything along with putting a stipulation that they have to withdraw the money within 7 days. In addition to that, they have also said that Indian users cannot accept payments more than $500.

    Many users have been blaming the Reserve Bank of India (RBI) for this, but most of them haven?t done any fact-checking as such and are just blaming it because they feel that PayPal has no faults whatsoever. So I sat down with one of my roommates who has been an ex-RBI employee for 7 years to understand why this is happening.

    Let me take you through this. First of we take a look at why PayPal cannot keep your money with them for more than 7 days and then delve into the $500 restriction they will be putting into place. Here is the actual conversation edited in some form by me without changing the details.

    Me: So PayPal says that they cannot keep the money in their account for more than 7 days? Why is this happening.

    RBI-expert: Because if PayPal keeps the money with them, they have to be regulated as a bank (and any institution that does it have to do the same) and PayPal does not want that to happen. Any entity which provides on-demand payments have to be regulated as a bank as per RBI rules, this is mandated because if they hold money for more than 7 days they have to provide users with interest. With this new change PayPal is basically circumnavigating this regulation so that they don?t have to answer questions to any government about how they conduct business and why they charge an exorbitant amount to customers to accept payments whilst continuing to not giving users interest like every other bank in India does.

    Me: So you are saying that PayPal is practically f*cking all Indians.

    RBI-expert: No I wouldn?t say that, but I would say that their business heads know how to circumnavigate against a country?s policies and that they are adamant about accepting regulations because that would mean that they have to cut down on their charges and also ensure that they do follow all guidelines laid down for a bank.

    Me: Ok, so I see that they are screwing their customers with a hefty fee and now this. I do understand that they want to make money, but what is about $500 transaction limit.

    RBI-expert: Well, once again this is a government and RBI mandated thing. All entities who bring cash-flow into India have to basically report transactions above $500 to the RBI and government. PayPal is basically just circumnavigating around this mandate by restricting the payments to $500. Once they do this, they have no obligation to report it to the RBI or the Indian government.

    Me:
    So you are basically saying that these new changes by PayPal is just about screwing the RBI, Indian Government and people who use their service.

    RBI-expert:
    Well, these are the rules. I will simply say this. If PayPal accepts the RBI regulations they have to be treated a bank and I can see that they are hell bent on not doing it. They are basically finding ways to get over it because once they become a bank they come under a different set of rules. Right now PayPal is a monetary service but they are not like say SBI, ICICI, HSBC or Citibank and do not have to adhere to the rules. Once you become a bank, you have stringent rules which I don?t think PayPal wants to follow.

    So as you can see, from the above conversation which came through from a horse?s mouth, I feel that PayPal is basically cheating the RBI, Indian government and Indian users because they don?t want to be regulated. All I can say is that we need to boycott these services, check out some PayPal alternatives.

    Though these things may make my statement that RBI is in no fault at this sound untrue, but you have to understand that these rules have been in place in 2004 and some of them since 1999. So saying that RBI is screwing PayPal is basically wrong. PayPal has been floundering these rules since they came into India and the RBI is just reining them in. They might have given them an option to change to being a bank or stop flouting the rules laid down by the Government of India. I believe you will understand what PayPal chose to do.
     
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  2. emilex

    emilex Regular Member

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    I would not say that PayPal plan is to cheat Indian RBI, government and users. As you can see from the text PP is not and don't want to be a bank so they need to follow $500 rule. Anyway, I`m not using PP... Those who use it need to find other way...
     
  3. cloakndagger

    cloakndagger Power Member

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    It's not really hard to overcome the $500 thing just send multiple payments,regarding holding your money,if you have any sense you don't leave money in your paypal account(well maybe a little).Pre paid credt cards sort the spending option.In fact most black hat people would work this way anyway to avoid funds being "held".
    It'll be intersting to watch fiverr as I'm sure judging by the price there are many Indian sellers there who offer a great service for a fantastic price.
     
  4. Bartholomew

    Bartholomew Regular Member

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    Just don't use paypal. Use moneybookers, payoneer, paxum, webmoney, whatever.
    The only thing paypal is good for is for buying in shops when you don't want to fill in your credit card data.
    Use paypal only for paying, and avoid it for receiving. Just bind a credit card to it.
     
  5. bigbooby

    bigbooby Registered Member

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    Indian users cannot pay for services/goods using paypal from march 1,which means paypal is completely dead in India
     
  6. soyafan

    soyafan Junior Member

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    what other alternatives do we indians use.?!
     
  7. redstone.1337

    redstone.1337 BANNED BANNED Jr. VIP Premium Member

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    No one can do anything in this matter with the current rules and regulations imposed by RBI. RBI has some set of rules for institutions holding money more then 7 days and Paypal isn't a bank so it doesn't wan't to pay the interest and of course why would it pay us the interest? Everyone was at least going normal with Paypal, I never saw anyone questioning Paypal to pay him interest but the RBI came into action and forced Paypal to work under its policies. Both parties are doing this in accordance to the current rules. So, unless RBI sees Paypal just as a medium for Online Transactions and gives it an exemption from some of its rules, we the people'll have to suffer. :(
     
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  8. rocky2020

    rocky2020 Regular Member

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    yes,i received this email.I am thinking to quit paypal and searching for alternative.
     
  9. hpscool

    hpscool Junior Member

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    Guys what about suggesting some alternatives for paypal.I think we all need some good service for receiving money safely and withdrawing them.SO please suggest some alternatives you have experience with.(Should be usable for Indian )
     
  10. undelia

    undelia Newbie

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    Moneybookers is an alternative to Paypal but the problem is most clients prefer and trust Paypal, and it's something that's hard to ignore. Besides this update from Paypal was inevitable (in some form) since last year. Who can forget the chaos between Feb-April 2010?
     
  11. this_is_dev

    this_is_dev Junior Member

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    How did u come to the idea of PP is doing this from their own choice ?

    Most of the big online free lancers work from India. By their actions Paypal knows that they're going to face a big loss too.

    It's the RBI who wants to keep track on all transactions on Indians. You cant pay from PP you have to transfer the money to your bank first then make payments, does that make a click now ? Indian government doesn't wants any one to avoid TAX!
     
  12. Bross

    Bross Senior Member

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    PayPal Toughens its stance in the Indian market for 3 related reasons only.

    1. India transacts the lowest amount of money in an average transaction.
    2. India has the highest amount of transaction problems (Refunds, chargebacks, etc.).
    3. India has the highest amount of users. (Excluding Ebay).

    This creates a simple thing - A lot of work and not good enough income, not to mention credit issues with the credit companies.
    Crystal clear they have nothing against Indians. It's a business move exclusively even though you want to believe otherwise.
    When a market is not very profitable and causes a lot of work you either get rid of it or make order in it.

    Of course this will also hurt legit consumers; but this is a part of life.
     
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    Last edited: Jan 30, 2011
  13. Bartholomew

    Bartholomew Regular Member

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    Yes they can, via linked credit card.
    Let me tell you what people do in countries where paypal allows outbound transactions only and via linked credit card only. I live in a such conuntry, it's Russian Federation, and I'm pretty sure you know that we still have a significant piece of internet business. We cannot deposit or receive a penny on paypal account, we can only pay via linked CC.

    So, for internal payments in Russia and other Russian speaking countries there's webmoney - an analog of paypal. It allows you to have subaccounts in RUR, US, EURO, Ukrainian grivna, all in the one main account. You can withdraw and deposit money, pay for goods, there are options to withdraw money in credit cards of Russian and offshore banks. To use all features of it you must have a so called "personal certificate", to get it you just must visit a sertification center in person or send notarized copies of your id's to it.
    If there's still no such system in India it looks like there's a perfect business opportunity to create it. Someone will for sure.

    When you do business with foreign partners who don't accept webmoney, or if you don't want to show your money flow to the state, you have the following options: wire transfers, paypal alternatives such as moneybookers, cheques.

    Wire transfer: this is the best way to send and receive sums above $1000. You need an bank account, preferably in foreign bank, so ther'e wont be tax problems from tax police. To get it you can either register an offshore company, or just open a bank account in the bank which accepts applications from non-residents. For example Thai's Kasikorn bank is the good choice. The bank should have internet access and should issue you a visa or mc cc. The offshore company is quite an expencive thing, I recommend it if you cash in over $15000-$20000/month.

    Paypal alternatives: the most reliable and cheap is moneybookers. Drawback - they don't issue their own credit cards, so you'll have to withdraw to linked CC and thus show your money to tax police.
    Other alternatives are payoneer, emstopayouts, paxum, okpay and there are a few more. They do issue and send their own CC's, but they not as reliable as moneybookers, so it's better to cash out anything you receive immediatelly, everyone remembers what happened with Epassporte.
    Many affiliate programs already pay out through one of these systems, those who decide to pay only in PP will just lose their affiliates.

    The cheques is a last resort, as it takes a long time to get the cheque via snailmail and a long time and high fees to cash it out in another country. There are a few small companies in USA who for a small feew would accept a cheque issued to you, cash it out and send you the money via one of paypal alternatives. I'm sure few of Indian companies will be created, as this is good business opportunity.

    tl;dr what you'll have to do:
    -open an account in local bank, get a CC, link it to your PP account so you will be able to buy things in foreign shops, pay for hosting etc.

    --if you earn less than $500/month skip the rest--

    -get an account with credit card in one or few of paypal alternatives to receive money from affiliate networks (for example in adult paxum is dominant atm, in other niches there might be or will be another systems, research it)
    and
    -get an account in foreign bank if you earn several thousands/month.

    ...and wait for internal Indian paypal alternative for micropayments within India.
     
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    Last edited: Jan 30, 2011
  14. Sanitarium

    Sanitarium Regular Member

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    The truth about paypal and what groups they hate...

























    They hate human beings, if you are one you are screwed using them, i would suggest mutation for a happier life.
     
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  15. mohitjmehta

    mohitjmehta BANNED BANNED

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    anyone tell me which is best alternative for paypal ???
     
  16. sagarbest

    sagarbest Senior Member

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    Moneybookers and alertpay are great..:)