PayPal: Only Cheque Withdrawals for Indian Users

Starting August 1, 2010, PayPal will disallow electronic payments for Indian users, accepting only cheque withdrawals, in accordance with regulatory rules.

PayPal made this announcement via an email circulated to PayPal's Indian users today. The email announced "a change in our withdrawal functionality in India starting on August 1, 2010." PayPal currently allows electronic or cheque withdrawal payment options to Indian users, but that will change starting August.

This move seems prompted by RBI's earlier claim that PayPal was unauthorized to carry monetary transactions in India. The new cheque-only withdrawal of money seems to be "in accordance with regulatory instructions," the email from PayPal states.

The PayPal email further instructed users that from July 29, 2010 onwards, "users will only be able to request for a cheque withdrawal of funds from their PayPal account." For immediate and future transactions, Indian PayPal users are now requested to log in their PayPal account and opt for 'Request a cheque from PayPal' after clicking on 'Withdraw'. PayPal has said it will refund the US$ 5 cheque withdrawal fee to Indian PayPal users' cheque withdrawals made on July 29, 2010 onwards.

PayPal also mentioned that it is working hard to restore the electronic withdrawal service.

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