The fate of global online payment service PayPal in India was put in doubt after the firm had to amend policies for Indian transactions as part of compliance with the Reserve Bank of India (RBI) guidelines. Despite this, the company remains determined to go headstrong, capitalizing on the surge of Internet users and credit card owners in the country.
Earlier this year, PayPal had to impose restrictions on merchants using PayPal as an online payment mechanism to disallow them from keeping money in their PayPal accounts for over a week and to limit payments received to a maximum of $500/transaction.
The Business Standard reports that despite such unprecedented changes to its user agreement in India, PayPal remains optimistic, seeing a substantial growth in credit card and Internet usage in the country. Elias Ghanem, PayPal’s managing director and general manager for Southeast Asia and India said:
“The e-commerce landscape in India is booming, and more and more Indians are using PayPal as a solution. We see India as the next big market to develop, either from a buyer’s or seller’s perspective.”
Ghanem explained that the RBI directive was “unlikely to have a major impact on PayPal’s India business.” PayPal focuses on small and medium enterprises, which means the reduced transaction limit would still be enough for a significant number of its customers. Additionally, not being able to reuse online balances only means that buyer and seller flows are made independent and that workarounds are available.
India has about 230 million cards in circulation as of January 2011, a 15% increase from the previous year. The number of Internet users is also expected to grow 96 per cent by the end of this calendar year to 29.9 million.