Let me share some of the major issues when using PayPal in India and PayPal alternatives I have decided to move to.
PayPal slowly but surely is Implementing RBI Guidelines which means using PayPal for Indians almost impossible. Let me touch upon some of the issues we come across when using PayPal.
PayPal Issues in India
1. Forex Losses
You cannot use your PayPal balance to buy anything online but need to be using your credit card for all payments. This is perfectly fine but then forex rates of PayPal make it virtually impossible to use PayPal. Say I have $100 in PayPal and I want to make a payment of $100 for some purchase. I will be withdrawing my $100 in my PayPal at a USD to INR conversion of 43* and making the payment at 46*.
* Rates are approximate rate.
2. Large payment problems
You cannot accept payment above $500 which means PayPal can only be used for micro payments but not for large payments though you can split the large payments into small parts like a payment of $800 can be split into two parts of $400 each but you cannot accept $800 in one go.
$500 is now $3000.
3. No clear Policy updates
You have to withdraw your PayPal funds in 7 days and so at times you may need to pay additional (though very nominal) PayPal withdrawal fees but there are lot of confusion as to what happens if one does not withdraw it. For example PayPal allows you to withdraw a minimum of $10 but what if one has less than $10 lying in the account for more than 7 days. You have to get into such a position and see how PayPal will behave because no one including support knows what will happen.
So having so many issues I have decided to move to other PayPal alternatives and so I am using couple of them.
I receive lot of payments from my direct clients. So I refer them to pay me using Elance instead of PayPal. Yes I pay Elance fees of 8.75% but it is at par of what PayPal fees + Forex charges. PayPal fee for receiving payment is 4+% and on top of that PayPal have a Forex rates lower by roughly 2%. This means you actually pay 6-7% when using PayPal and now I pay 8.75% for using Elance. More or less similar charges yet lot more convenient. It also helps me in a way that client feels much more confident when I don’t ask them money upfront but ask them to use escrow of Elance as well as makes my Elance profile grow.
You can’t accept all the payments in Elance and so next option I prefer is using Moneybookers. They provide lot more benefits than PayPal and so let me share the benefits of Moneybookers here.
- Very low fees – Receiving money is free and sending money costs only 1% up to 0.50 EUR which is almost 80% lower than what PayPal fees is.
- Support Local Currency Balance – In PayPal you cannot have an Indian Rupees balance but in Moneybookers your account balance is in your own local currency.
- Withdrawal Fees – Though PayPal withdrawal fees is NIL unless you are withdrawing very less amount, Moneybookers’ charges 1.80 EUR for Visa and bank transfer and 3.50 EUR for Check per withdrawal. Unless you have large payments, you can be paying lot of withdrawal fees in Moneybookers and so I am using Moneybookers for payments which cannot be accepted in PayPal i.e. payments above $500. So withdrawal fees don’t hurt me lot because I am saving $10+ in transaction fees of receiving money in PayPal anyway. A point to note here is – PayPal in India transfer money to your local bank account using NEFT and so you don’t pay the forex fees to the bank but to PayPal. Moneybookers wire transfer’s the money to your bank account and so Forex rate is what your bank offers to you.
- Escrow – Buying through PayPal can be dangerous (See how here) but Moneybookers’ provide Safe escrow option instead.
- Better Support – PayPal has horrible Support where you seem to be interacting with some person but replies are always automated. Check for Yourself
I am using Elance, Moneybookers along with PayPal for receiving money and Google Checkout for making payments. What PayPal alternatives are you using? Share your PayPal alternatives in comments below.
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