Online Money Making in India gets even tougher with new PayPal norms

Exactly an year back I had wrote about how making money online from India is getting tougher. Things are getting even worse with PayPal and RBI further tightening the Forex inflow norms for online freelancers like bloggers. Many of you must have got this update email from PayPal earlier this morning which in short has introduced the following new rules for the Indian users with effect from March 1, 2011:

  1. The money that you are receiving via PayPal India must be withdrawn to your Indian bank accounts within 7 days
  2. No direct payment from your PayPal balance is possible, instead you should use the linked credit card
  3. A single transaction (i.e. receiving money) cannot exceed $500

The Impact

I can already see a lot of emotional reactions – especially from a lot of youngsters who don’t possess credit cards – following these new norms from PayPal. Henceforth, many of them will be not be able to make payments to their online vendors (e.g. hosting) using the money that’s already received into their PayPal accounts via various blogging services. Many others who were providing PayPal payment options to their Indian customers will not be having that option any longer. Another impact is that the timing of the withdrawal to take maximum benefit of the USD-INR exchange rate, is not possible now as 7 day withdrawal norm is coming into effect. And if you are a big online marketer, henceforth, you are not going to have bigger transactions any more. There may be other side effects as well that I am unable to think of at the moment.

MMO is a risky area

As I have maintained several times in my posts, MMO is not a totally risk-free affair. Sometimes, your fate is in the hands of Google or any biggie out there. Time and again I have been questioned by many people for being so pessimistic about the online risks and sometimes it even resulted in comments like this one. However, I still maintain that it’s a too risky area to be in and not even 1% of the people are really successful there for the kind of time they spend online.

Am I impacted because of PayPal?

Of course! I have been making some decent residual income online and some of the personal impacts are the following:

  • I used to give away a lot of rebates to my referrals via PayPal alone and henceforth I might have to discontinue it or keep using my credit cards every now and then
  • Some of my individual affiliate PayPal transactions exceeds $500, though this has not been the case every month
  • I had the habit of withdrawing PayPal money once every month to help simplify my income tax calculations and now I might end up making 10s of smaller withdrawals every month

Nevertheless, I am a big fan of compliance, rules and regulations and I hope things will get straight soon. But the long term path for Indian online marketers and bloggers is not generating money out of US based marketing and services but more from domestic services. In India, things are happening at a slower pace but the economy is getting so strong that in two or three years most of us online marketers will be making money in Indian rupees without worrying about all these MNC services. That’s when I would call we are all doing some online business with moderate risks than high risks. In the meantime everyone may strictly follow the rules – especially the 7day withdrawal rule – so that your accounts are not banned.

Happy money making!

Reference: PayPal India user agreement notification


  1. I don’t how to post a reply. bad news for bloggers. already my last month payment stucked at Payoneer Card.

  2. You are right saying that its good that complaince, rules and regulations are being put in place.

    But, why only these rules are set for all of us common man in India.

    What about the big shots, politicians who have black money? Why the govt is not giving go ahead to swiss account.

    The truth is common man will ahve to face all this and big shots will get away. I guess this rule applies any country. But, i guess it applies more in India 🙁

    • Exactly Nihar, if they have backbone find black money.

    • @Nihar, a lot of things like corruption and hierarchy are the results of colonial setup that we had. It will take its course to get corrected.

      But think of this aspect. You unexpectedly started making some residual income by blindly trusting Google, PayPal etc. If that stops, you can’t do much about it because it’s not exactly the problem with the government but these noncompliant entities.

  3. I’ve been seeing a lot of posts about this and yours seems to be the most “calm” and is the first that has mentioned making money from services within your own country.

    I use my paypal balance to pay for quite a few things so I would be frustrated if I couldn’t do that. I also don’t like to use credit cards…

    Do you think companies that make payments will be willing to break the payments into smaller amounts for customers based in India?

    • @Kim, I am not panicking because blogging & online marketing is not exactly my first priority. However, I was hoping to have it as a future opportunity if things work well. I was thinking along your logic as well and have requested a couple of my affiliate managers/contact to see if payments can be split if at all it goes beyond $500.

  4. How about using an alternate money service? I know paypal is most common but could moneybookers etc work to?

    Or perhaps a business partner outside the country or someone to handle your accounts?

    • @Donace, yes.. those are the alternatives but many affiliate networks and service seekers prefer PayPal. Yes, having a reliable partnership with a foreign entity will help as well.

  5. Well well looks like money is used by many illegal activities. If we will be big online marketer or blogger who earn more than $500 per month from different revenue stream. I don’t understand how they will get payments. What if i will be able to manage thousands of dollars per month from IM. If i am earning 10k from any thing like clickbank or some thing. How i will get payments. We need 20 payments of $500. And paypal will be benefited by this.

    Looks like RBI wanted to track all the income from every where.

    • @Rahul, Clickbank doesn’t use PayPal anyhow. Most big networks sends you checks. The problem is mainly with those mid-size affiliates like theme, wp plugins and related affiliate schemes.

  6. Hi, I don’t no what is pay pal ? And how about using an alternate money service? I know paypal is most common but could money bookers etc work to?

  7. I’m not in India, but I’m sure there are ways to obtain a PayPal account in another country, and exchange the money into another form (moneybookers, western union) using….

  8. This has been a bad move from RBI for all paypal holders in india.I think we may look for someother payment processors for opting overseas vendors.

  9. I had contacted Paypal and I flamed their staff like any thing.. their monopoly comes to an end in India atleast and I decided to close their a/c in 1st march 2011.
    I will suggest Indian bloggers to start using the following payment gateways for all transactions:
    HDFCBank – free inward/outward transactions no %
    Alertpay – they have now a Mumbai office
    MoneyBookers – they have reduced rates to <2%
    AxisBank – merchant a/c works fine
    CCAvenue – supports netbanking, mobile credit card payments, 3rd party payment gateways and all, really helpful if you can use them
    .. let me know if this was useful to you.

    • @Abhishek, it’s not PayPal created rules. They are forced to abide by the RBI rules and that will be the case (sooner or later) with other payment processing services as well.

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