• Skip to main content
  • Skip to primary sidebar

What are the Limitations of Using PayPal in India?

Reading Time: 2 mins. Posted on February 7, 2018, last updated on April 30, 2020 .

Limitations of PayPal India are: can’t accept personal payments, can’t use PayPal balance, can’t send payment to other Indian PayPal account

What are the Limitations of Using PayPal in India?

Like it or not, but PayPal India has many limitations despite being the preferred method of payment for the US and UK clients. It is the most widely accepted payment method among international clients, and you have to be using PayPal if you want to be a freelancer in India.

As a freelancer, blogger, or a webmaster, it’s not a matter of choice, but it is a must to have a PayPal account.

Also read:
How to Create and Verify an Indian PayPal Account?
How to Create and Verify an Indian PayPal Account?
Verified PayPal means a valid PAN card, verified bank account and a purpose code. A step by step guide to verify an Indian PayPal Account

I have been using PayPal since 2002 when we Indians had no choice to withdraw money to the bank account. One could only receive money and utilize it online with international merchants who accept PayPal. Nowadays, PayPal is the bread and butter for hundreds of small companies hiring hundreds of individuals.

For me, PayPal is one of the top channels for getting paid despite its higher fees and lower forex rates, as very few clients prefer an alternative to PayPal. Some clients now have started using Payoneer.

PayPal isn’t a bank but only a payment processor. So there are additional restrictions by RBI. Indian PayPal accounts have more limitations than ever before. I have listed the significant limitations I find quite troublesome when using the Indian PayPal account.

Can’t Accept Personal Payments

PayPal worldwide has a couple of payment options – business payment and personal payments. The good part is, personal payments don’t have PayPal transaction fees.

Non-Indian PayPal accounts can send and receive personal payments, but Indians aren’t allowed to collect personal payments through PayPal.

Personal payments were very popular in India to accept payments from clients as personal payments and skip the transaction fees.

Now, as one can’t have a PayPal personal payment, so one has to pay the PayPal transaction fees, which are close to 5% to receive payment from clients.

Can’t use PayPal Balance

Personal payments aren’t an ethically right thing to be doing, but the second limitation of PayPal India is – we can’t use the PayPal balance for payment.

The payment received in the PayPal account can’t be used for the purchase of any goods or services. One has to withdraw to the bank account only. To make a payment for any products or services, one has to pay via the debit card or credit card only.

It adds a lot of extra forex expense to accept payment and make a payment. The effective transaction fee for sending money in PayPal is close to 9%, including the credit card charges. It is on the back of a 5% transaction fee for receiving payment. Moreover, the forex rates difference can make the total cost close to 20%.

Also read:
What is Purpose Code For Receiving Foreign Currency Payment in India?
What is Purpose Code For Receiving Foreign Currency Payment in India?
Purpose Code is a code issued by Reserve Bank of India (RBI) to classify the nature of foreign currency transaction.

Can’t Send Payment to Other Indian PayPal Account

Indian PayPal account can pay to a non-Indian PayPal account using a credit or a debit card. Similarly, a non-Indian PayPal account can make a payment to an Indian PayPal account.

The real limitations of PayPal India is an Indian merchant with an Indian PayPal account can’t accept payments from other Indian PayPal account because payment from an Indian PayPal account to different Indian PayPal account isn’t possible.

I am not sure why this is an issue, but it is how it is. So if an Indian wants to be paying a fellow Indian using PayPal, it is not allowed.

Some of my friends who want to launch an International e-commerce site accept PayPal for international orders, but for Indian customers, they have to offer alternate payment methods.

Also read:
Can Someone Pay in Indian Rupees on PayPal?
Can Someone Pay in Indian Rupees on PayPal?
Can an Indian PayPal account Pay in Indian Rupees to other PayPal Account? Understand all the three use case scenario in detail
You are Here: Home / Money / What are the Limitations of Using PayPal in India?

About Shabbir Bhimani

Blogging Since 2009. If I can leave my high paying C# job in an MNC in the midst of global financial crisis of 2008, anybody can do it. @BizTips I guide programmers and developers to Start and Grow an Online Business. Read more about me here.

May I help You With ...

Upwork Proposal
Finding Clients
Start a Store
Start a Blog
 

Or Help Yourself ..

Primary Sidebar

About Shabbir Bhimani

Blogging Since 2009. If I can leave my high paying C# job in an MNC in the midst of global financial crisis of 2008, anybody can do it. @BizTips I guide programmers and developers to Start and Grow an Online Business.

Get in touch with me on LinkedIn or read more about me here.

Let me Guide You to Start and Grow your Online Business

Download my
FREE eBook NOW
to win more clients.
And it is not an annoying pop-up either

Additional menu

  • Twitter
  • Linkedin

BizTips

Shabbir Bhimani: Start and Grow an Online Business

  • Freelancers Start Here
  • Start An eCommerce Store
  • Start A Blog
  • About
  • Archive
  • Disclaimer
  • Contact
  • Glossary

2009 - 2025 All my content & images are licensed as Creative Commons.

WebTurtles LLP. LLPIN: AAL-5288. Hosted with Linode.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Cookie settingsACCEPT
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Non-necessary
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
SAVE & ACCEPT