PayPal India Crisis Spreading Panic

PayPal

As we all might know, PayPal a leading online payment processor is reversing all the personal payments to and from India which are made on or after 1st February, 2010. Which spread a panic to merchants all over the India who uses PayPal to send or receive money.

Below is a Standard Notification Email that people are receiving.

Hello XXXX,

Your payment of xxx.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,
PayPal

Personal payments is a mode of payment is PayPal where neither the sender nor the receiver has to pay the transaction fee as the payment was made as Gift or Payment Owned. Later, the payments sent as “Services” or “Good Sales” with a shipping address also were getting reversed.

This made the situation worse as the email they sent out for reversals clearly mentioned that payments are allowed only if the payment made as Service or Goods with a Shipping Address.

Its not only that. Withdrawals to Local Banks in INR is also halted since January 26. PayPal is canceling the withdrawals to cover up the negative fund balance which caused due to the reversals.

There are various blog posts and News Article on the issue, but I’d like to highlight some of them. A post by Manish at plugged.in a thread in Digital Point Forums and a post in TechCrunch. You can see how people are panicked, angry, frustrated and hopeless loosing all their money.

There was absolutely no notice given prior to take the actions and no official updates on the issue till yesterday. There was a post on official PayPal Blog from Anuj Nair, Communication Team, PayPal. He Says..

Hi blog readers, it’s Anuj from the communications team here.

I’m writing to let you know that personal payments to and from India and transfers to local banks in India have been suspended while we work with our business partners and other stakeholders to address questions they have about the service.

During this time, customers can still make commercial payments to India but merchants cannot withdraw funds in Rupees to local Indian banks.

We’re trying to resolve the situation as quickly as possible and we’re really sorry for the inconvenience that this may cause our customers in India and around the world.

I’ll update the blog as soon as we have more information to share.

Anuj

Who are these business partners, Anuj? RBI? Government of India? Indian Banks? Or you are trying to hide something from customers? No one knows. If that, its not a safe and legal business practice. You have so much questions to answer.

No one knows how long it might take to resolve the issue and I’d suggest everyone who got compromised to keep cool and wait till the next update from PayPal officials.

Update (09 Feb, 2010)
It seems the withdraw issue is being resolved slowly. PayPal is now reversing the pending bank transfers through EFT to PayPal account. The fees (Currency Conversation Fee and Withdrawl Fee) are also being reverted.

They are sending out emails again to notify people. Below is a standard email format that they are using.

Thank you for your patience while we work to address the issue of processing withdrawals to Indian bank accounts.

We expect to have this issue resolved within the next few days. In the meantime, we’re going to restore the amount of your recent withdrawal into your PayPal balance so that you can know your money is safe in your account. You should see the balance restored within 24 hours. In addition, you will see a reimbursement of any withdrawal fees charged. We will ensure that you are not adversely affected by currency fluctuations during the last week.

In your transaction log, you will soon see that your PayPal withdrawal request has been reversed. We ask that you wait to submit another bank withdrawal request until we have addressed the processing issue. We will contact you again in a few days with an update and, if the issue is resolved, you can initiate another withdrawal at that time. In the meantime, you will have the ability to spend your balance to purchase goods or services if you choose.

Again, we apologize for the inconvenience this has caused.

Thank You,

PayPal

But still no update for the reversed personal payments.

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