Paypal Reversing Transactions of Indian Accounts

In an unprecedented move, Paypal has started to reverse all the transactions sent to & received from Paypal Indian accounts. Ever since such a thing happened, it is one of the most talked topics in many webmaster forums.Within minutes,  many Indians started to complain about reversal in their transactions. Paypal is the most commonly used online payment processor in India,  especially by companies & individuals who are into online services for sending/receiving money.

What Happened ?  Paypal seems to have put a check on the personal payments feature between accounts. According to the official communication from Paypal sent to account holders in India – “We reversed this payment because we have stopped allowing personal payments to be sent to or from India.”

At the same time, they have also specified some steps for making the buyer to re-credit the amount.  It says  –

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.

Looking for Paypal Alternative: Indian paypal holders whose transactions were reversed are fuming in anger across message boards & online forums. Here are some reactions from users of digital point forums,

Unna says, yes i am sure that paypal is freezing the money of the month of Feb 2010. I lost 3 payments .One for 1 Feb and 2 for 2 Feb. I don’t want 3 for 3 Feb. its horrible. I am going to be mad on my gmail with watching reversal mails

Varun21 says, I’m the author of a popular firefox add-on and accept donations. now all payment has been reversed. Is there something we can do under the Indian or the US law? They haven’t given any prior notices etc. These are not fair business practices.

Eviant says, ‘These kind of policies should have informed atleast three months back’

Aviz reacts, ‘what now if its a bug then they have to fix it, or they are going to lose business from India 3rd leading economic state’

Reason for Confusions

* Paypal seems to have not informed or warned about any change in their policies for Indian account holders. Varun21 also adds, ‘Called their Singapore office and they referred to the US line which is closed until their regular business hours. She did tell me that they did notify/publish a notice about policy changes but at that point she stopped giving any details and just referred me to US cust service.’

* The email sent by Paypal  mentions –

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

So Is this a bug or an error on Paypal`s side ?

The big question that lies infront of these account holders from India is , Will they ever get back those reversed transactions from the buyers – since the service was provided to the buyer after payment. Now, with the reversal, it looks like the service was done for Free

Don’t know how many buyers will resend their payments!!

Update as on Feb 5th:  We had contacted a Senior Employee of Paypal & he has accepted to answer questions relating to this matter. Will update here once we receive their official response.

Update as on Feb 6th: 24 hours ON & still no response from the Paypal Employee who agreed to answer the questions. Infact we sent around 10 questions to know the facts.

The magnitude of the problem is getting bigger every passing day & PayPal has not come out with any explanation to its Indian customers !

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This Post Has 13 Comments

  1. Personal payments to and from India have been suspended while we address some questions from our business partners. You can still make commercial payments. We’re trying to resolve the situation as quickly as possible and we’re sorry for any inconvenience this may cause.

  2. @PayPal_Anuj
    “You can still make commercial payments.”

    No you cannot. Payments for services which are commercial payments were reversed. How can you ask us to encourage our clients to lie by pretending to pay for goods instead of services? You think they don’t have internal audit procedures of their own apart from it being unethical in the first place?

    And why is this happening only for India? I can understand if it’s a bug or regulatory issue in your systems, but it seems that it isn’t. In which case it’s only racial profiling at its best. Please give more information!

  3. Author of above article forget to write about NON receive of WITHDRAWAL funds to Indian Bank accounts for 10 days.Paypal is sitting over millions of thousands of INR now

  4. I think they have loose their money in paypal wishlist promotions and now they are going to recover that lost by removing personal payments.

    To Paypal Team, this is not the way to recover your loss.
    You have lost our trust, from now today I am going to use other alternatives.

  5. I’ve made a withdrawal on 27th Jan 2010 and yet its not reached my bank account.
    Also today one payment, not personal but paid for an invoice (which is created using paypal system itself), reversed and sent back to buyer.

    I’m not too concerned about reversal, as I know buyer very well. I’m sure he will resend when i request it. My main concern is about withdrawal. Exactly last year 18th Feb 2009 same thing happend (withdrawal delay)

  6. Severe issue – no pre-information no data, I guess paypal should componsate some amount for this, Consider for example : When we tried to withdraw money from Paypal to bank account exchange rate was low & now more than 8 days, no money to bank , and exchange rate is high… We could have waited for 8 days & issued withdrawal later & got more money bz of rates..

    Poor piece of wok ~!

  7. i made a withdrawal on 27th Jan 2010 i haven’t recieved my payment till today

    my paypal account funds have been reversed back and my account is showing 25000 USD NEGATIVE BALANCE

    feb payments plus the payment of 27th jan has also been reversed till now.

    i have sent paypal fax and emails with my notice that i will take legal help in this matter as this issue has caused me mental tension and financial loss.
    i want them to give me a proper response without informing without letting us know that paypal personal payments are no more allowed how can they take such action all of a sudden.

  8. Three issues:
    a) Withdrawals not done
    b) Payments made OUT OF PayPal reversed
    c) Payments received INTO PayPal reversed

    The problems are:
    a) There was no notice
    b) There seems to be no valid or credible reason (only vague things like “working with partners”). I mean what “partner” – is RBI or the Indian Government PayPal’s partner? Who else has a say in a transaction between a PayPal buyer and a PayPal seller?
    c) When is it likely to be resolved?

    Please join the Indian Paypal users group:

    Let’s be heard as a group.

  9. Hello.
    Please let me know if the withdrawal issue is resolved.
    I have a premier account and able to send and receive Funds.
    But I am Un clear if we are able to withdraw the Funds.
    I did a withdrawal on 13th FEB and Till now it has not been credited to my bank account.

  10. Recent issues with PayPal withdrawals to Indian Banks & more over payments just randomly being reversed back to the senders will have a deep impact on PayPal’s reputation. It raises so many questions like (THIS MIGHT CONTAIN SPOILERS):

    A) Should we trust PayPal in future?

    B) Are they really concerned about our Money?
    ANS: ABSOLUTELY NO, After a long period of two weeks we receive an apology letter stating that “We are sorry we goofed up opps!”? and stuff like “Your money just got sacked since this is nothing serious to us we are just doing a drill of playing a game with your hard earned money”?

    C) Is RBI responsible for this?
    ANS: UNQUESTIONABLY MAYBE, So, Question is why this is happening in India and nowhere else? Question is why we are being kept behind curtains and dark? Question is why Moneybookers and other Payment systems are working but PayPal is not? you just want to exclude the RBI out of this since they are least concerned with us. Everyone failed here! RBI off course you cant expect them to give you a comforting truth so a comforting lie should suffice you! And PayPal Ow man no shit a multinational company failing to inform and notify of an issue of this magnitude. That was an AWESOME combination of pure frustrating, destroying trust & spreading chaos.

    D) So what does PayPal tell us now?
    ANS: “We are sorry, but your valuable to us so please give us another opportunity to goof up and play some more engaging games with your money” and “We just love to make more profits by giving you a pathetic exchange rate”

    D) What now?
    ANS: DTA (Don’t Trust Anyone) Get your sleeves up against them and find your own ways to get paid over any other medium that serves better, communicates better and keep them in plenty. If one fails other should work out.

    Ive let all my clients know about this issue and advised them (in advance unlike PayPal) to switch over to some other Payment system which is reliable, responsible and does the main thing “ACTION” at PAR. The truth will probably be dead and berried RIP about what happened because the shame and disgust they bring upon themselves is apocalyptic now.

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