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

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