PayPal has now increased its export-related transaction value limit

The standoff between electronic payment gateway PayPal and the Reserve Bank of India (RBI) appears to be winding down, with the central bank allowing all such gateway service providers to substantially increase their export-related transaction value limits.

Indian merchants that use PayPal will now be able to receive up to $10,000 per transaction, with the company increasing the receiving limit from the earlier $3,000.

This move, industry watchers say, could be a boon for local outsourcing or exporting businesses that primarily use PayPal and other such online payment gateway service providers as a primary payment mechanism.

“To receive export-related payments, merchants must confirm their email address, and add a permanent account number (PAN), purpose code and local bank account to their account,” PayPal said, in an e-mail to its Indian merchants.

The RBI had earlier effectively grounded service providers like PayPal when it issued a circular that mandated that the value of transactions should not exceed $500. This was later increased to $3,000 nearly two years ago.

The rationale for its initial strict regulations, according to the RBI, was that several service providers had allowed exporters to retain the export proceeds abroad without repatriation, resulting in violation of the provisions of the Foreign Exchange Management Act (FEMA) 1999.

“Online payment gateway service providers have been finding it easier over the last few years, with the RBI easing up on some of its earlier regulations. If all goes well, PayPal may soon be allowed to resume its Indian operations as well,” said a person with direct knowledge of the matter.

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