PayPal Auto Withdrawal and Receiving Limit : How to Get Around PayPal Issues

An article by Susanta    1 Comment

With PayPal imposing fresh restrictions on their Indian users, many small and medium scale web start-ups must be panicked and scouring for alternative solutions. Today, many Indian PayPal users must have received a very depressing email from PayPal on two more changes in the way we do business with PayPal. Here’s what the email says:

As communicated earlier this year, we are working to implement RBI’s Guidelines regarding the processing of export-related payments. As a result the following changes will be made to your PayPal account:

1. Effective 26th September 2011, you will not be able to receive overseas payments exceeding US$ 500 per transaction into your PayPal account.
2. Any balance will be auto withdrawn out of your PayPal account daily.

We understand the impact this may cause to your business and seek your support and understanding as we continue to work together with the RBI. We will keep you updated as our conversations progress.

Many view PayPal as a very arrogant body that doesn’t seem to comply with RBI guidelines although PayPal may have its own commercial interests at stake.

RBI on the other hand, has been relentlessly after PayPal to comply with their regulatory mandates, which has resulted in PayPal imposing overnight restrictions on Indian users time and again. With last two changes already functional with immediate effect, India PayPal users must be wondering if they could use any alternative PayPal platforms to run their web start-ups.

When PayPal woke everybody Indian PayPay user with a start with their very first imposition back in 2010, many vented their frustrations on PayPal and RBI alike. But, we at Top League Technologies started deliberating on various alternative platforms available for running our business in an efficient manner. After using a couple of other services, we wrote a post on “How to rescue your funds from PayPal“.

The situation back then wasn’t as bad as it is now. PayPal has imposed Daily Auto Withdrawal which means you can’t have any balance in your account. And, the receiving limit is to remain intact.

One of the best ways to get around PayPal issues at the moment is to switch to Wire Transfer. It is convenient, quick and saves a lot of money if you consider the unreasonable PayPal transaction fees.

However, Wire Transfer has two problems: First, your clients will have to pay certain fees to the bank. It is usually fixed and may not make sense for your clients if the invoice is very small amount. Plus, your clients may find it as a chore to visit the bank to send you the money. If the total amount on your invoice is less then say 500 USD, you can ask your clients to pay your bills once in every two months. That way you can save their time and money as well.

Technically, PayPal charges you nearly 4.5 USD per every 100 USD. Suppose your total bill for a month is 1000 USD, you clients will need to send you 1050 USD to compensate for the PayPal fees (nearly 45-50 USD). Again, PayPal will decide its very own currency rate regardless of the standard currency rate in the International market. Usually, PayPal takes away 1.50 rupee per every USD withdrawn by you. This literally eats into your resources and hard-earned money.

If you switch to Wire Transfer and ask your clients to bear the fees at their end, you will be able to receive your funds directly from client without PayPal’s interventions, which also means you get the best currency rate per USD. One more thing – regardless of whichever bank account you have linked your PayPal to, make sure you contact the branch foreign remittance department to offer you a good rate. Generally, they have the discretion to bring the rate down for you. The key lies in knowing how to handle them.