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Paypal Reverses Payments Made To Indians

Posted by kdawson on from the money-available-but-not-to-you dept.

bhagwad writes "Beginning January 28, Paypal has been reversing the payments made to any Indian provider of services. In addition, Indian users have been unable to withdraw their money to their bank accounts. As a result, a large number of Indian Paypal accounts have negative balances running into the thousands of dollars. The worst part is that users weren't informed beforehand — the funds were just whisked away. Indian providers have gone ballistic, with over 2,000 posts on a thread on the reversal of payments and over 700 posts on this thread about the delay in transfers. Paypal hasn't given any explanation to this behavior other than they're looking into it. Although Paypal claims in the above blog post that payments made for 'Services' are not being reversed, this is not true. All payments not made for 'Goods' with a shipping address have been reversed — in fact, the Paypal e-mail tells the Indian sellers to encourage their clients to lie and claim that they're paying for goods with a shipping address instead."

20 of 509 comments (clear)

  1. Makes me wonder... by lag10 · · Score: 5, Insightful

    Why anyone trusts PayPal with their money.

    1. Re:Makes me wonder... by Anonymous Coward · · Score: 5, Insightful

      Nobody trusts Paypal, but there is no viable alternative. Not yet, anyway, but that can't take long in light of these shenenigans.

    2. Re:Makes me wonder... by Truekaiser · · Score: 2, Insightful

      Digital records can be easily altered and it takes tools most banks don't have to tell when and by whom. Paper records are more secure.

    3. Re:Makes me wonder... by rolfwind · · Score: 3, Insightful

      Nobody trusts Paypal, but there is no viable alternative. Not yet, anyway, but that can't take long in light of these shenenigans.

      They've been saying that about the shenanigans since the beginning of the 2000s.

      The fact is that Paypal acts like a bank but without any of the regulations. A bank can't freeze your assets and the like just because they don't like you or what you do -- only the government can do that. Something's got to give here: the last crisis showed banks can't regulate themselves on a trustworthy level.

      There are alternatives: google checkout and a myriad of others. Since ebay doesn't allow competition to their paypal - it makes it harder though...

    4. Re:Makes me wonder... by AK+Marc · · Score: 2, Insightful

      What would it take to modernize our banking system?

      Burning down all the banks.

      Its 2010; paper checks should hardly ever be necessary anymore.

      The banks like it that way. In most places (outside the US), bank transfers are free. Not in the US. And the banks like it that way, so it will never change. It isn't about tech, it's about business practices.

      --
      Learn to love Alaska
    5. Re:Makes me wonder... by zuperduperman · · Score: 3, Insightful

      The beauty is that you don't really have to trust PayPal. I usually transfer money out of my PayPal account within minutes of it arriving there, and I have made sure never to authorize PayPal to withdraw from any bank account I have.

      Just make sure you have a backup plan so that if / when PayPal suspends your account for some stupid reason you have somewhere else for customers to go.

    6. Re:Makes me wonder... by tftp · · Score: 2, Insightful

      starting in 2018, British banks won't be using personal checks any more.

      Indeed, UK has many problems :-)

      The advantage of a simple piece of paper is that it is not tied to any technology. Maybe Londoners are well connected, but a good part of rural USA doesn't have computers and doesn't really even need them. They use checks to pay for everything. A payment can be concluded in the middle of a field, if necessary. You can't do that with a card or a telephone.

      This also connects with the problem of receiving payments. If you are a small business that, say, repairs stuff, how are you going to receive non-cash payments from your customers? Check is the only method where you do not incur extra costs. So why in the world would you want to pay a few percent of your revenue (not even profit!) for the service?

      The decision to do away with checks can be only seen as one, last push of credit card companies to insert themselves into the payment stream. And of course banks would be glad to reduce their costs even further, holding billions in other people's money without even having to work for it.

    7. Re:Makes me wonder... by Chris+Mattern · · Score: 2, Insightful

      I don't think you quite understand. It's not practical, not because of technical reasons, but because the banks aren't interested in not charging you money.

    8. Re:Makes me wonder... by Mr.+Freeman · · Score: 2, Insightful

      How then, do I safely pay my friend $325 a month for my share of the rent? Cash is too risky if it gets stolen. Credit cards don't work for obvious reasons. Money orders are paper, etc. Paper checks are perfect for what we need.

      --
      -1 disagree is not a modifier for a reason. -1 troll, flaimbait, redundant, overrated are NOT acceptable substitutes.
    9. Re:Makes me wonder... by Rophuine · · Score: 4, Insightful

      Paper records can be easily forged and it takes tools most banks don't have to tell when and by whom. Electronic records are more secure.

    10. Re:Makes me wonder... by jsoderba · · Score: 2, Insightful

      The question is why the banks have a say in the matter. The obvious solution is for the government to mandate simple and free transfers. Most European governments did this long ago, and the Singe Euro Payments Area will do so for the EEA+Switzerland by the end of this year.

  2. Banking Reform by PingXao · · Score: 5, Insightful

    Banking reform in the US should include subjecting PayPal to all the rules and regulations that apply to banks. I find it strange how they've managed to avoid being classed as a bank all these years in the first place. Current regulations leave a lot to be desired, but making PayPal adhere to them would be a good first step.

    1. Re:Banking Reform by zuperduperman · · Score: 2, Insightful

      People may *use* PayPal like a bank but if they do they are misusing it.

      PayPal is not your bank. PayPal is the cash till in your register. No business owner leaves cash accumulating in their register day after day. They count it and clear it out at the end of each day and bank it because the register is a fundamentally insecure and unreliable place. If people treated PayPal more like that there would be less issues (not saying PayPal doesn't have problems - just that people's tendency to accumulate large balances is part of the problem).

      If your turnover is such that large balances accumulate even inside a single day then you should really be getting a merchant account somewhere and doing things properly.

  3. Yet another reason by Dracos · · Score: 3, Insightful

    Why PayPal needs to be regulated as a bank, and why I refuse to use it.

  4. Re:Paypal is not a bank by smallfries · · Score: 3, Insightful

    No you are completely and utterly wrong. There is a very authoritative document from the Fed that explains how banks expand the money supply, but a simple starting point for you would be the wiki page on Fractional Reserve Banking.

    --
    Slashdot: where don knuth is an idiot because he cant grasp the awesome power of php
  5. Re:Paypal is not a bank by socsoc · · Score: 2, Insightful

    It wasn't created. This is what caused the Great Depression, if you were asleep through that class.

  6. Holy shit by Anonymous Coward · · Score: 2, Insightful

    Somebody used "begging the question" correctly.

  7. Fail to see the problem by pla · · Score: 3, Insightful

    As a result, a large number of Indian Paypal accounts have a negative balances running into the thousands of dollars.

    Does anyone else see that as a good opportunity to cease their relationship with PayPay (for those stupid enough to have kept using them anytime in the past, oh, decade)?

    Remember - Not a bank, by their own maneuverings. You can't actually owe PayPal money, because they don't sell anything or provide any (direct for-cost) services. Sure, you can owe their other customers money, but PayPal itself?

    Negative balance? Yeah, time to close that account. Thanks, PayPal, but you can keep "my" negative money. Funny thing, about forced arbitration clauses - You can stack the system as much in your favor as you want, but to get government sponsored armed thugs to go shake down your clients, you need to step in to a real court of law and risk setting some seriously unfavorable precedents.

  8. Re:MOD THIS UP!!! PAYPAL NEEDS TO DIE. by Omestes · · Score: 2, Insightful

    Note that gunpal is the official payment processor of http://www.auctionarms.com/ [auctionarms.com] It's not some little fly-by-night company.

    As a person who has never heard of "auctionarms.com" until this very moment, I don't understand how this precludes them from being a "fly-by-night" company. And even if working with this somewhat obscure website (at least I have never heard of it) gives it a patina of legitimacy, that still means nothing. Ebay is a VERY large and popular company, meaning (by your logic) Paypal is not a fly-by-night company, but Paypal still sucks and operates in the most ethically dubious of manners.

    Sorry for being a bit confrontational. I've always viewed Paypal, and any other company that operates in the same niche as highly dubious. And just having the endorsement of the NRA doesn't cut it. I have nothing against the NRA, but they do, often, attract the lunatic fringe. The association itself, doesn't lend too much credibility.

    --
    A patriot must always be ready to defend his country against his government. -edward abbey
  9. Re:MOD THIS UP!!! PAYPAL NEEDS TO DIE. by Neoprofin · · Score: 2, Insightful
    They may not have the street cred you're looking for, but as you point out:

    they do, often, attract the lunatic fringe

    and a highly armed lunatic fringe at that. Sounds like a dangerous customer base to screw around with.