San Francisco: Online payments' service Paypal has halted personal payments to India following new government regulations that were designed to crack down on money laundering.


Paypal Monday did not cite a specific reason for the suspension apart from concerns raised by PayPal's "business partners and stakeholders". The company noted that commercial payments to merchants in India would continue as normal.



The move is expected to have a serious impact on the thousands of Indian freelancers who are paid via Paypal for web design, writing and software development, PC World reported.



The move is reportedly related to the Indian government's crackdown in November 2009 on international banking transactions, when it instituted new reporting and verification requirements on all banks and financial institutions to prevent international money laundering.

PayPal Halts Personal Payment Transactions From And To India


PayPal isn’t working properly in India. eBay’s electronic payment juggernaut appears to be blocking personal transactions to or from accounts of India-based users. It is reversing personal transactions; transactions involving businesses are still allowed.

A reader checked in with us yesterday to let us know PayPal notified him that the company had stopped allowing personal payments to be sent to or from India (full e-mail can be found below).

This does not appear to be an isolated incident: see here, here and here for more reports, although we gather commercial payment transactions are unaffected at this point.

This is the standard notification e-mail people are receiving in their inbox:




Asked for more information, Binary Turf received a meatier but equally vague response from the customer service department:




The wording seems to suggest that this is a temporary decision, but it’s still unclear why the company decided to take such drastic measures with no prior warning on policy changes whatsoever, and why this appears to be occurring in India only.

We’ve contacted PayPal and will update when and if we hear back.

Update: Anuj Nayar, Director, Global Communications at PayPal tells us:



Guess we’ll have to wait until the issue is addressed.