What is PayPal purpose code? What are the available options for purpose code in PayPal and what purpose code a developer or a writer should choose?
What is the Purpose Code?
Purpose code helps regulators in identifying the exact nature of a cross-border transaction. So, it is a requirement for any cross-border deal in India.
One can’t use PayPal for payment within India. It is for receiving payments from abroad. So specifying a purpose code is a must for all transactions in PayPal. So PayPal has made it mandatory to provide a purpose code.
Purpose code in PayPal is a one-off selection. It remains as a default purpose code for all your transactions until you need to specify a different Purpose code.
What Are Options for Purpose Code in PayPal?
PayPal offers the following Purpose code options for us to select.
What Purpose Code to Choose?
Some of the options in PayPal purpose code looks overlapping. So I will help you make the right choice of purpose code for you.
The choice of purpose code will be based on where you get most of your PayPal payments from. For me, software consulting is perfect because most of my PayPal payments comes from my web development and consulting clients.
Yes, I do get some payments for the advertising revenue of my websites. But most of my payment is from my clients for web development and consulting. So my default purpose code is Software consulting under Information Technology or P0802
Software consulting will be the best-suited purpose code for all freelance developers.
Cross-border delivery of goods and services can also be valid for developers where a developer is delivering his or her services overseas. If you look the category of the purpose code in bold, it is under Export of Goods (not an export of services) which I don’t see as the right category for a developer. So I avoid it as purpose code should be under the services and not under the export of goods.
If you are a writer where clients pay you for writing, the purpose code can be Other information services.
Remember the choice of purpose code is to allow regulators to identify the nature of a transaction.
Further Reading …