Earlier this year, there were reports that online payments company, PayPal, was looking to apply for a domestic payment license in India. MediaNama has learnt from sources that PayPal has already received an approval for it. According to an internal e-mail sent by PayPal India GM, PayPal is now authorised to offer domestic payment processing services in India, and that the solution can be offered for online, mobile, offline (PayPal Here), for all industries as permitted by law. He also mentioned that PayPal’s India office would be the test-bed for its products, as soon as it can accomodate the required changes needed for India, and that it will focus on launching the product and implementing the auxiliary things. We had written to PayPal asking for a response, but PayPal has issued a boilerplate statement which does not confirm or deny the development:
“We do not comment on our discussions with regulators and partners in India. At this point, we are completely focused on helping Indian merchants of all sizes to grow their business by facilitating receipt of export proceeds when they sell to our 113 million active accounts in 190 markets worldwide.”
PayPal in India: PayPal is available in the Indian market for international remittances and payments. However, it is crippled as it does not allow users to receive more than $3000 per transaction, and automatically transfers them to the user’s bank account on a daily basis, due to RBI guidelines on export related remittances. It does not allow users to make payments using their PayPal balance, although they can use a linked credit card or bank account for the same purpose. PayPal, part of eBay, has development centres in Chennai and Bangalore.
Regulatory guidelines: At the moment, domestic remittance services are mostly offered through banking correspondent tie-ups, since the RBI has enforced strict guidelines and require KYC (know your customer) documentation. Although the central bank had proposed relaxations in the guidelines, and had removed the Rs 50,000 cap on mobile money transfers, the services haven’t really picked up in India.The move makes more sense as the e-commerce segment in India matures and digital downloads gain more acceptance, but the tricky part is that in case of Semi-Closed wallets, users cannot withdraw money. It would be interesting to see how PayPal is integrated along with other payment methods, and whether PayPal would allow users to store and use money received through remittances. A few weeks back, Ogone-owned online payment gateway service provider E-Billing Solutions (EBS) had partnered with PayPal, to become its first channel partner in the country, allowing over 5,000 online merchants using EBS payment platform, to add PayPal as a payment option to their EBS merchant account, and sell goods to 113 million active PayPal accounts in 190 markets, globally.
Competition: The company had stated that it was planning to open a new office in India, next year. That being said, it is not yet clear if PayPal will tie-up with Banks to launch a money transfer service, competing with NPCI’s mobile money transfer platform IMPS which currently covers all the major Indian banks and similar products from companies like ZaakPay, PayMate, Beam and mChek or launch a consumer product in form of a semi-closed wallet to compete with services like Airtel Money, Itz Cash, Done Card, Oxigen and Beam.
