How Indian Government & RBI are Hurting Online Business In India

Reserve bank of India
  • Save
Internet business in India is rising, and we all know how badly the government wants foreign investment in the country.

Before I get any further into the point of this article, let me tell you something about myself: I’m not a financial expert. In fact, I have very limited knowledge about finances.

However, one thing that I know well is how freelancing works, how Paypal works, how Payoneer works … and what the Indian government is doing (or not doing) to promote online jobs in India.

India is a growing economy, and there’s no denying the fact that the majority of income sources from freelancing or blogging come from western countries like the U.S. and the U.K, and that there are many payment options available for online professionals in western countries:

  • You can use PayPal, Payoneer, Pingpongx, Bitcoin to receive payment internationally (with limits, of course)
  • You can request monthly check payments
  • You can use direct ACH transfers. (Offered by Shareasale, Amazon Affiliate, etc.)

As a professional blogger, I have accounts on all major affiliate networks including CJ, Clickbank, and many others. Living in India, I can tell you that receiving foreign payment is quite a task. For example, we have to wait two weeks to receive a check, and then we have to wait another 20-25 days for the amount to be credited to our accounts.

So if a foreign check is issued to me on the 1st of the month, I won’t see that money for 40-60 days. That’s an epic up to two-month wait-time!

How the Indian government is making the receipt of foreign payment tough:

Do you remember when Paypal stopped services in India, and when Payoneer completely shut down its services in India? (Note: Both the services are back in India with limited features).

It was a time of great chaos for all bloggers and freelancers. After all, Paypal or Payoneer cards were unquestionably the best way to receive foreign payment immediately, and both were accepted by all major affiliate networks.

Later the Indian government & RBI allowed PayPal & Payoneer to resume its services, but with limitations. Along with the need to provide PAN card details, there is no way to use existing Paypal money for purchases. Additionally, one cannot send or receive payment from one Indian Paypal account to another Indian PayPal account. Also, we can’t enjoy the prepaid card offered by these services.

At a time when e-commerce is growing rapidly in India and PayPal is a popular standard payment system globally, such limitations pose a serious roadblock for an entrepreneur. Yes, there are alternatives, but none that even come close to the efficiency of a system like PayPal or Payoneer.

India is a country full of freelancers, and a tremendous amount of work is outsourced from here.  Paypal and Payoneer are the financial backbones of freelancers. However, with the Reserve Bank of India imposing significant limitations to Paypal and banning Payoneer from doing business in India, they are killing the young Indian freelancing community.

Payoneer has been one of the best services for anyone around the globe to receive payments from various U.S. merchants without any delay. By shutting down Payoneer in India, the Indian freelancing community has been significantly handicapped and is suffocating as a result.

  • How many of you hold a credit card here?
  • How many of you have a PAN card here?

A workable solution to the current situation:

Clearly the RBI has enforced multiple restrictions on the receipt of foreign funds. Even though Paypal has been allowed to resume some of its operations in India, the person receiving the funds must comply with numerous guidelines, disclose the details of every transaction, and provide his PAN Card number. (For readers who are not familiar with the PAN card, it is an alphanumeric number issued to a person for tax reference.)

It is commonly believed that only those who are above the age of 18 can apply for a PAN card. There are many bloggers in India who are under the age of 18. These young bloggers usually conduct business in the names of their parents, using their parents’ PAN card details to receive funds in their name.

The fact is, however, that a minor can indeed apply for a PAN card, (technically called a “minor PAN card”).  While a minor cannot apply for a PAN card on his own, he can do so under the guardianship of an adult representative/parent. There is no special application form for a “minor PAN card” – form 49A is the form to use (see link below). I advise everyone whether over or under 18 to apply for a PAN card, as it is one of the best forms of proof of identity.

Moreover, if you are a minor who has started earning your own money, it is better for you to handle your own expenses and receive payments in your own name.  This you can only do if you have your own PAN card.

Applying for a PAN card is fairly simple process, and you can even do it online by furnishing Form 49A online along with the prescribed fee of Rs. 96.  (Note that if the applicant is a minor, proof of parents’ identity and address will be required.)  The Income Tax Department issues a PAN card which is directly sent to your address.

Thanks to Karan from Charteredclub for his useful input for this article.

Hopefully, in time we will see positive activity within the Indian government moving toward the support of Indian freelancers and bloggers.

If you find that this article contains useful information that may be of help to your friends or colleagues, please feel free to share this post via Facebook, Twitter or LinkedIn.

Subscribe on YouTube

Reserve bank of India
  • Save
Authored By
A Blogger, Author and a speaker! Harsh Agrawal is recognized as a leader in digital marketing and FinTech space. Fountainhead of ShoutMeLoud, and a Speaker at ASW, Hero Mindmine, Inorbit, IBM, India blockchain summit. Also, an award-winning blogger.

38 thoughts on “How Indian Government & RBI are Hurting Online Business In India”

  1. Hello Harsh,

    Nice article ,

    I am working as developer freelancer on pph and upwork.

    I have payoneer account which attach with my bank account.

    But when i apply for credit card they didn’t allow me they are saying this is not your salary and when i apply as a individual the bank asking deposit money.

    How rubbish are there and i think there is also a tax implement on my freelancing worth?


    1. same thing with me my average monthly income is 45k+ but i m not eligible for credit card or bajaj emi scheme. Digital india

  2. Vikram Kumar Raj

    Hi Harsh☺
    Thanks for sharing this valuable information.
    I’m 17 years old. As we know Bank doesn’t provide Credit card in this age and also can’t apply for PAN card.
    I’m belong to a small village mg parents have ATM card but haven’t PAN.
    My question is”How can I receive payment for online works???”
    This article posted 1 year ago please tell me if there is any change made in this period fir transactions.

    PS: sorry. I’m not good in English.🙏

  3. Hi Harsh. Nice post..But is Payoneer still active in India or completely shuy down. I Plan on opening an ecommerce store (Shopify) and then getting an EIN (Us tax id) to accept payments from US customers. Since I do not have an US account and I’m based in india, Payoneer is my only option to receive payments from my customers who buy from my store (apart from PayPal). I want to offer them different payment methods like stripe and not just PayPal express. But to make use of stripe, I need an EIN number and a US bank account. EIN I can get but payoneer is my only option to receive payments since they’ll create an US bank account for me. But I’ve read a lot of posts and not sure if Payoneer is still operational in India. Their website is still active .

    Any suggestion from you would be really appreciated. Let me know if I can do something for you in return for your answer..

    Thanks.. 🙂

    1. Hey Nisch,

      Payoneer is available in India. Regarding your US Bank Account, Stripe also offers that service.

  4. P. K. Sarma Sarkar

    I would like to inform you that without having pay pal ,payoneer,Skrill card freelancer/consultant can received money in INR via direct transfer and express withdrawal from outside India.I have received the same within 7/10 days recently(USD and JPY) from two renowned consultant firm..So freelancers need not to be panic on that..before registering any site they just need to check payment procedures…

  5. Hi. Did PayPal revert the ban, or do they still ban personal payments to India as of this day? I am unable to get a personal payment from the U.S., and the sender gets an error message “This user is unable to receive personal payments.” Everything else is fine on my account, so this couldn’t be because of compliance, as my profile is complete. No errors.


    1. @Sahil
      That guy who is sending you payment, does he have a US account or an Indian PayPal account??

  6. So they are fighting tax evasion. That’s no different than Paypal in any other country. In USA you must provide SSN, in Canada SIN, those are basically Tax Identification Numbers, and you have to pay taxes on your income.

  7. They dont seem to understand that quick moneytransfers can directly lead to money spent in india to develop india as a whole. All they are interested in is how to look out for tax evasions. The amount they spend paying for investigations would probably outweigh the loss. They make things so slow. Delaying money given for a long time and yet paying a pretty big fee. They are surely taking their time to grow..

Leave a Comment

Your email address will not be published.

Scroll to Top
Share via
Copy link