If there was one single thing I’d emphasize in doing business in India, it would be Check The Regulations. Despite the liberalization, India still has a ton of them.
Paypal (or, maybe, its clients) just learned the hard way.
India doesn’t have a freely convertible currency. Paypal’s just discovered that it isn’t actually authorized to transfer funds cross-border there. Until the Reserve Bank of India and Paypal resolve whether it complies with all the regulations, Paypal abruptly put parts of its India service on hold.
Here’s what Anuj Nayar said on their blog: “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.”
The India business – small but fast-growing – isn’t sure how long it will take to resolve the issue; at the very least, some months. Meanwhile, to judge by the comments on its blog, many users have been left with financial issues to resolve.
Paypal is wholly-owned by Ebay, which entered India in 2004 by acquiring Baazee.com. However, the Ebay India site doesn’t use Paypal; it has a similar but independent method called Paisapay. Until recently Paypal did accept financial transfers into and out of India.
(I’d say this is the international business equivalent of “Read The **** Manual” except that the “manual” in this case is hugely complicated and would probably occupy very many phonebooks…)