Paypal has been forced to restrict its
services in India as a result of new transaction guidelines set by
the Reserve Bank of India (RBI).

In a bid to comply with the new
rules laid out by the RBI regarding the processing and settlement
of export-related transfers via online gateways, Dickson Seow of
Paypal’s Corporate Communications team confirmed in a statement on
the company website that Paypal will be altering its Indian

From the beginning of March 2011, Indian
merchants will no longer be able to receive payments of over $500
from countries abroad.

Furthermore, Indian merchants will no longer
be able to make purchases directly from their Paypal
accounts. All funds must be transferred into Indian bank
accounts within seven days of the confirmation of receipt from
the buyer.

“We truly value your ongoing support and we’re
committed to providing you a high level of customer service,” said
Seow to PayPal’s Indian users in the statement.

“We hope this 30-day advance notice period
will enable you to plan your future use of our services
accordingly. We sincerely thank you for your understanding and
patience as we continue to comply with the RBI guidelines in a
timely manner.”

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This is not the first time Paypal and the RBI
have encountered difficulties with each other. Paypal had its
payments suspended for a month in February 2010 until they
received approval from the RBI.