PayPal leaves Indian customers in the lurch

PayPal is blocking personal payments to and from India, in a sudden move which has left many without access to funds.

Customers can still make commercial payments to India, but merchants won’t actually be able to get at their money, as they will not be able to withdraw funds in rupees from local Indian banks. Personal payments are being returned to the sender.

It’s only a few months since the company introduced a personal payment facility. It’s widely used by freelance programmers and web designers in the country.

“Personal payments to and from India and transfers to local banks in India have been suspended while we work with our business partners and other stakeholders to address questions they have about the service,” says the company in a rather brief blog posting.

Paypal doesn’t specify what those concerns are, although they may be related to new legislation; late last year the government introduced new money-laundering laws requiring financial institutions and their agents to verify the identity of anybody carrying out international money transfers.