Paypal has abruptly suspended personal payments to Indian users of their service following questions from the Reserve Bank of India (RBI) last month over whether PayPal complies with (new) Indian laws on cross-border money transfers.
Indian users of PayPal face a long and frustrating wait - PayPal says in its blog that its personal payment service for India would be
"suspended for at least a few months".
The problem is over the Payment and Settlement Systems Act, which came into effect in India in August 2008. The RBI says that under this act, any money transfer scheme has to be authorized by the Indian authorities, which PayPal is not.
Some Indian PayPal users are small businesses and freelancers such as software developers & web designers, for whom the system is a quick and effective way to transfer funds.
Neither PayPal, which is based in the US, nor the RBI was able to say when the issue might be resolved.