Indian PayPal users can once again use local banks to withdraw money from their accounts, resolving a hiccup that for weeks had prevented users in the world’s second most populous country from getting cash from their accounts.
The trouble began last month, when Indian regulators threw a wrench into PayPal’s business in the country as they investigated whether PayPal, the world’s largest online payments company, should be considered a remittances business.
As a result, PayPal stopped allowing users to transfer funds directly from one personal account to another, and also made it impossible for its customers in India to withdraw PayPal funds through a bank, effectively shutting down the only method for retrieving an account’s balance. Person-to-person transfers will likely be suspended for a few months as the company works with regulators to obtain new licenses that will allow it to legally handle remittances.
Though India does not make up a significant share of PayPal’s business, this legal snarl could be a harbinger of things to come as PayPal continues its rapid international expansion.
As we wrote last month:
By operating a global payments business, PayPal faces an enormous tangle of legal regulations. “There are a lot of global and regional compliance matters,” said Ms Robertson. “It is very complex and something that obviously difficult for a global company to manage.”
Ms Robertson added, “In a lot of countries the payments systems are perceived as matters of national sovereignty, so there may be issues when an outside organization comes in and establishes systems that have less direct oversight.”
