PayPal: Getting difficult to use in India


There are over 230 million PayPal users worldwide. It is one of the most commonly used payment method used by businesses online, websites for sending & receiving money for products or rendered services.

If you don’t know, PayPal is an eBay company.

Recently, RBI made Strict rules on using PayPal accounts in India. Like, PAN number, service codes, compulsory bank transfers before using that money, no PayPal transfers between within India users and more.

Things changed for good and for bad.

Lately, I added my bank account on it so that I can transfer funds I receive then added my debit card to it so that I can pay for domains, web hosting, Cydia apps, software components, software upgrades etc. I had to add my debit / credit card because that’s the only way I could pay via PayPal on websites which accepts PayPal as a payment method.

I think, about 85% of the websites accept PayPal and other 13% accept other methods while 2% accept payments via cards issued in India including Indian Bank Transfers. (These are my own stats based on my experience and could be wrong too.

If you see, the number of payment methods available for Indian customer are very less except if we buy from Indian website. ( Indian websites do have nice payment methods like CCAvenue, BillDesk etc but these are expensive accounts for website owners)

Back to the point, I added my card on PayPal, verified it with my bank & PayPal. PayPal sent Re.1 to my account so that I can verify. My bank accepted this transfer and that’s how I verified my account.

Even before this , I had verified my bank account & also was able to transfer $85 (approx Rs 3150/-) to my bank account.

Everything was alright until I did not initiate any payment. One fine day I went ahead and chose to pay via PayPal on one of the websites providing web hosting services.

PayPal gave me an error saying ‘I cannot use this card. Try adding another card’. I don’t have more cards so I couldn’t.

I tried and tried with other websites but with no success. So I decided writing to PayPal about it asking, why am I getting such error while I am following all the rules & terms set by PayPal in India?

I received a quick reply from them which I am quoting here. I hope they won’t mind.

"XYZMerchant is not going through because your bank is not approving the amount that you are trying to send. In this case, we ask that you contact your issuing bank and request to speak with someone who works with online transactions for more information about the denial. Rest assured that you can still use the card for your online payments after you fix the issue with your bank."

So, I got angry on my bank & turned to them requesting to resolve this matter. This is the reply I received from my bank

It is unfortunate to note that, you were unable to transact online with your Axis Bank Debit Card. We regret the inconvenience caused to you in this regard.
However, we see from our records that, the Paypal website is unlisted with Verified by Visa / Master Secure code. We take this opportunity to clarify that, only websites that are compliant / enabled by Verified by Visa / Master Secure code can be used for transacting online. Please note that, you must always look for the Visa / Master Card secured code logo when you transact online from now on.

Now, today again I wrote back to PayPal expressing my disappointment over the issue.

PayPal: Getting difficult to use in IndiaRBI last year made it compulsory to use additional password for all online transactions. Banks provided it’s customers with the system & the password. Similarly RBI also made the same rules for transactions over phone or IVR systems.

If PayPal is following RBI guidelines for years why couldn’t they create a system to pay using debit or credit cards issued by Indian banks?

100% of the PayPal India users are going to face this issue and hence will not be able to use PayPal services due to lack of Verified by Visa or MasterCard Secure Code implementation.

PayPal needs to discuss this issue or otherwise they should kick-start a new payment system for India as they efficiently did for eBay India. Or all the Indian banks should offer NetSafe cards like HDFC, to carry transactions through PayPal.

I will update again here once I receive their reply meanwhile do share if you faced any such issue before!

Update #1: Message from PayPal

This is the reply I received from PayPal! I truly appreciate that they want to help & resolve this issue but it sounds totally funny to me (at least)

“Based on our records it showed that your card issuer declined the charge, for us to verify your debit card. Though they did not specify the reason for blocking or denying the verification charge still, it might be due to the following:

  • When you register a card or update your card information, PayPal requests a temporary authorization to that card. This is to make sure the safety of your credit card information. If that amount is not authorized, the card can’t be used or updated.
  • There could be a limit on your credit card that has been exceeded.
  • It’s also possible that the card issuer could be temporarily unavailable to answer the authorization request we sent.
  • Your credit card company could be blocking this transaction because it doesn’t fit your regular spending patterns.

I’d encourage you to contact your credit card company directly to get to the bottom of this, as I don’t have visibility into the details of the denial. For now, I’d like to help you complete this transaction. My recommendation would be to add another credit card to your PayPal account, if you have one available. I am happy that I was able to resolve your concern today. Keep PayPal # 1 by telling your friends about us.”

Hope this helps


  1. Thanks, Debashis.

    That is really helpful. I still am apprehensive about trying that out and failing and having another case to my name. But I need to try it out anyway. And, Tushar, you’ll update in case you go first, right?

    Cheers. 🙂

  2. Hi,

    just came across this page now, i could not avoid writing. I faced same problem using my axis debit card on paypal making payment for ebay purchase. I tried several addition, deletion in name, address etc but all in vain. I contacted paypal who confirmed my account and card is ok by adding thrice Re 1 into my bank account but said its card issuer who is rejecting transaction and so i should contact my bank. When I contacted AXIS bank customer care, they said paypal is not verified by visa or mastercard so transaction failed.

    But I solved the problem today morning myself.

    While making payment, when one login into paypal where credit/debit card details appears with email id and amount of payment in Indian Rupees, see option above to change it to required currency normally dollar (not paypal conversion), transaction completes and amount get transferred.

    Only thing is during the process of add and deletion of names, address and failed transaction earlier, amount of rs 53 thrice got transferred to paypal which is untracabale excluding verification amount of $2 which was refunded. But let it be, now i can do transaction using payal.

        • I just tried and it worked. WOW from 3 years I am trying to make payment and had given up hope, My debit card worked
          Just click on the “conversion Link’ Then choose the option to bill in vendors currency(NOT Paypal conversion which is the first option)

    • Debashish I love you..(platonic way). Wow this is the first time my paypal went through. I wish I had seen this earlier. This comment is an year old.
      That to tushar too for writing this article without which Debashis would have never replied

  3. @sweta.sweta4 True and thanks for writing :).

    Even Axis Bank’s new e-wallet card is not acceptable on PayPal. Its very difficult to buy different Web or Mobile related products from International sellers using PayPal as the SOLE method of payment.

    I don’t understand why RBI is being so tough on PayPal. There could be more ways to have control over PayPal transactions than completely ignoring them.

    Another point is, if PayPal understands RBI policies and act upon those – then why haven’t they Incorporated Verified by Visa seal for their gateway!

    Both parties in this particular case, looks like non-acting government institutions 🙂

  4. Hey Tushar,

    This is a problem I can identify with. I have almost stopped buying from international sellers, which is sad coz most of the items that I buy aren’t available in India. My Axis Bank Debit Card didn’t go through PayPal and I’ve 2 cases going on at present against me. Duh! It’s weird how RBI’s policies finally hurts only the common man!

    Love the info you provide.



  5. HDFCBank customer support replied to my e-mail yesterday confirming there was a problem with NetSafe cards on Thursday. Also claimed the problem was fixed – NS did not work yesterday either ! Speak up guys – call/e-mail HDFCBank.

  6. Well, I wasn’t using Paypal. I was paying directly using NetSafe cards. HDFC NS cards are one-time use, fixed value virtual cards valid for 24hrs that you can generate online from your account. If you have that, there’s no need to use Paypal at all for payments. So, something seems wrong/changed at HDFC NetSafe to cause the declines.

    • yeah I know 🙂
      but few sites only accept credit cards through PayPal – either PayPal User or PayPal Guest
      yeop, something wrong there in the system may be!

  7. Yeah, I also got 2 declines when using NetSafe cards at US websites yesterday. Re-tried it today, and again declined. This was working for last 2-3 years that I have been using NS to pay at US sites every month. My Rel Mgr at HDFC is yet to get back on this. If anyone has an update, please do post it.

    • Anil
      Yeah, seems there is a major issue at PayPal. But my friend used his HDFC NS 2 days ago for me while I was facing issue mentioned in the post above.
      Weird, eh?

  8. I added a NS card to PP just 10 days back, worked ok, some sites only accept PP.
    Anyway, can someone else confirm if PP is accepting/rejecting NS now ?
    I tried using a NS card directly with a US online store yesterday, NS was rejected even by them. Wondering if there was some problem at the HDFCbank end yesterday.

    • Anon, It works if you do not login to PayPal account & use the card as non-paypal member. But very few websites allow such method to ensure security.

      • Hi

        I am Hozefa,

        I would like to know as still there is issue with using debitcards in paypal, for example can I use axis debit card for making payment via paypal to out of country?

        I will wait for your kind reply


        • @hozefasmile2007 No, not possible yet. It is not a problem with Indian Banks though. PayPal needs to get verified by visa seal as per the RBI rule for online transactions (not for withdrawals from PayPal). We can only use credit cards as of now.

        • Hi, Thanks for your quick reply. Really this site is an excellent forum , I will frequently wander for different matters on this site from now.

          Thanks Again@TechZoomOrg @hozefasmile2007

        • @hozefasmile2007 thanks a lot for your kind words. i would suggest to subscribe for our feed or follow us on Facebook to get latest articles and updates. 🙂

        • @TechZoomOrg@hozefasmile2007 If I make payments & get payments using my paypal accounts should I have electronic banking?

          How can i CONNECT credit/debit card to paypal account?

        • @manab Hi Manab , to accept payment and pay through paypal , you need few things compulsory.

          1. You will have to add a bank account to receive payment directly from payer to the bank via paypal.

          2. Have to provide a purpose code in your profile – These are simple options showing for which purpose you are getting the money, just choose whatever is applicable for you.

          3. You Must have to add your PAN card number also.

          Take care always in “Name on Account” use the name as provided in the PAN , not like it is in your bank account, for example you may have a current account with company name like abc but your pan card name is “Manab Kumar” for example. Then you must write Manab Kumar not ABC as “Name on Account”.

          For making payment through paypal you have to add your credit card or may be debit card ( I had tried my Axis bank debit card, the paypal had confirmed it by taking a small charge of aprox Rs. 100 – $1.99 exact. then refunded the amount back after confirmation. I still have to try it for any online purchase using paypal). As you can see above replies and discussion, may be it possible your debit card will not work or even not accepted by paypal,

          In that case you will have to use your credit card or may create temporary e-wallet card, whose validity is for 24 hours only. In case of e-wallet card you don’t need to add it in paypal just directly use it at online shopping site, if the site accept master or visa card , it will accept your e-wallet card also. There is no change of insecurity because you decide the amount of e-wallet card and it automatically expire after 24 hours even if you don’t use it.

          For adding credit or debit card to your paypal account , go to profile -> add credit card section. at the same place add bank account is given.

          Hope this information will be helpful to you!


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