PayPal woes in India hit IT workers?

We sort of take PayPal and similar services for granted these days. We forget that they represent a powerful alternative to banks in some ways. A good reminder comes from India, where the central bank has suspended the service.

PayPal was a common tool among IT workers and small technology companies, which used the service for payments from overseas clients, many in the U.S. It was much cheaper and easier than traditional bank transfer services. The suspension stemmed from a 2008 law that requires registration of cross-border money transfer services. PayPal apparently never registered.

This has been a huge inconvenience for many IT employees. While personal payments have been shut down, people can still receive "commercial" payments, but they are unable to move money from PayPal into their bank. A lot of personal payments were made as commercial payments to avoid fees. The episode highlights the success of services like this. We have to wonder if more countries will act in like fashion, if only to develop the payment mechanism as a revenue source.

For more:
- here's a New York Times article

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