PayPal’s Latest Withdrawal Policy for Indian Users is out

The much awaited post by PayPal is out. And we bring out the detailed analysis of the post.

On the PayPal’s official blog thePayPalblog, Mr.Farhad had posted on Friday that the new policy would be out by March 1, and the withdrawal would be continued from March 3^rd, 2010.

So surprisingly, as promised, Mr. Farhad blogs today.  The post has cleared the system, not actually the mess created by PayPal. It seems that it would still take time for the system to be in work.

Let’s begin with the Big Thing.The post says that there is no need of IEC (Import Export Code) for withdrawing money; instead, it has introduced PURPOSE CODES.

The purpose of these Purpose Codes is simple; tell the purpose of your money. The Purpose Code would help the Indian Banks to tell Reserve Bank of India about the details, type and actual purpose of the transaction. This is being done to simply trace the money coming into the country.

The PayPal Account holder would have to specify the Purpose Code while completing the withdrawal transaction. You would also require submitting invoices or receipts to your bank about the money you have earned.

The next BIG thing, what happens to the stuck up money in PayPal accounts.

The blog posts states that the withdrawals done before March 1^st, would be restores back to the PayPal accounts minus the fee and the charges. The fee and the charges would be restored by the weekend separately. You would again be able to withdraw your money only after March 3^rd, 2010, with mentioning your Purpose Code.

There are around 15 Purpose Codes described and categorized on the basis of Industries. There are Purpose Codes for freelancers also. So this is good news for freelancers that they can still work and get their money through PayPal. The only thing which Freelancers would have to do now is manage proper records of receipts of their work (which freelancers never did J ).

There is a question answer series in the Blog, and in fact one of the question and its answer brings us in doubt about the actual working of the new Policy.

“Q. My account says I am not allowed to withdraw. I see my balances are restored but I am unable to provide a withdrawal instruction

A: We may have suspended withdrawals from your account as we work to incorporate changes in the withdrawal process.  We will be requiring additional verification regarding the nature of the transactions you are performing.”

This clearly explains that you would still have to suffer for a few days more. We expect that PayPal would say that it is “undergoing up-gradations”, and you would have to wait. There might be cases that you would have to provide more information for verification purposes.

There a few of BAD NEWS also.

1. There would be no personal payments anymore, so people who used PayPal as a medium for Inward Remittance would not be able to use the services of PayPal. They should be switching to Xoom, most obviously.

2. Charity Organizations would also not be able to use PayPal, as there are no Purpose Codes for charity, the blog says that PayPal would only support payments of Goods and services into India

3. The third and last thing, is that freelancers would have to work out more on managing their documents, rather than just working, earning & spendingJ.

So let’s hope that everything gets back to normal by the end of this week, and people can still go and eat samosas and go shopping again with their PayPal money in Bank accounts. We would keep you updated with more details regarding this matter.

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