Important information on the situation with PayPal India
Michael L. 543 posts - United States
It has by now become international news that PayPal has suspended "personal payments" to individuals in India. As a result, Indian providers are unable to withdraw their oDesk earnings via PayPal, and some have even had difficulty getting money out of their PayPal account. I wanted to take a moment to discuss the implications of this turn of events, and what we are doing to help Indian providers get their hard-earned money safely and reliably.
First of all: what is actually happening with PayPal India?
We are still sifting through the details, but taxation seems to be at the heart of the issue. Indian regulators sent an inquiry to PayPal about the nature of "personal" payments, specifically whether they constitute overseas remittance payments. Initially PayPal suspended both personal payments and local bank transfers, meaning that funds in Indian PayPal accounts were not accessible to their owners. As of Tuesday PayPal has indicated that local bank account transfers would be reopened in a few days, but personal payments remain disallowed. PCWorld magazine has an >excellent summary of the situation to date, and additional information is also available on the PayPal blog.
What is a "personal" payment?
Basically, a personal payment is a payment that is classified as such. A "commercial" payment is a payment that (a) is for the delivery of goods or services, and (b) is classified as a commercial payment in the PayPal system. This presents several complications:
- Until a couple of months ago, there was no mass-payment API for commercial payments, so we had to classify all payments as "personal". As a result, we can currently process PayPal commercial payments manually but not self-service via the web.
- Even if we process a commercial payment for you, we cannot be sure that once you transfer your funds to PayPal, you will be able to get the funds into your local bank account. PayPal says this is being fixed soon.
- Perhaps most importantly, commercial payments incur an additional fee form PayPal of approximately 3%, on top of the currency conversion of 2.5% they already charge, which makes this option expensive.
When will the problem be resolved?
Unfortunately, it is not clear. PayPal had indicated that personal payments would remain unavailable for "several weeks". We believe PayPal is doing everything possible to re-enable these payments, but it appears they will not be returning in the near future. From The PayPal Blog: "Moving forward, the RBI has told us that PayPal needs specific approvals to allow personal inward remittances to India, which we currently do not have. Until we get these approvals, personal payments into India will remain suspended." If and when personal payments return, oDesk may still be required to continue making commercial payments to providers in India. On a more positive note, withdrawal from PayPal to your bank account should now be functioning (see their new bank withdrawal instructions).
What is oDesk doing about this?
We are offering three ways to help our Indian providers affected by the PayPal outage:
- Manual "commercial payment" via PayPal. Even though self-service PayPal withdraw is currently disabled, if PayPal is the best option for you, once a month we will manually send you your earnings via commercial payment. Submit a ticket and we will process your payment within a couple of days. Just be aware that PayPal may charge you a surcharge of up to 3%.
- Free wire transfers. Until we have more clarity on the PayPal situation, for any Indian provider who wants to receive their funds via wire transfer, we will reimburse you the withdrawal fee for one wire transfer per calendar month. Note: this option is typically best for large dollar amounts, as incoming bank fees can be significant.
- Free expedited shipping and no activation fee on the oDesk Debit MasterCard. Payoneer has graciously offered to expedite shipping of new Payoneer cards to Indian providers via FedEx at no charge, and waive the activation fee. Payoneer is a very good alternative to PayPal in India, and can be used anywhere MasteCard is accepted, including stores, ATMs, and online.
If you have additional questions or concerns, do not hesitate to contact oDesk support and we will do everything in our power to help you.
I don't live in India. Does this matter to me?
For now, no. However, international payments is a complicated business and sometimes governments can make decisions quickly that impact all of us. oDesk always recommends that providers have more than one active payment method, so that if anything happens with one partner, you can still withdraw via another method.
Provider payment is fundamental to what we do at oDesk. We could not exist without our providers, and we take any problems with provider payment extremely seriously. We are watching the PayPal situation closely and will do everything in our power to continue to facilitate safe, secure, and reliable payments to all of our providers. As we learn more, we will keep our community updated. Watch this thread for updates!
Update: Feb. 26 2010 Edited to clarify that both the wire and the manual PayPal options being offered once monthly.
Update: Mar. 5 2010 Edited to clarify that personal payments are not yet resumed, and may not be for some time to come. Even if resumed, oDesk may not be permitted to utilize them.
Update: Mar. 11 2010 Important new info posted in comment below
Update: Mar 25 2010 PayPal Withdrawals to India have been re-enabled. Read here.
Score: 9.3, Votes: 28