How Indian Government & RBI are Hurting Online Business In India

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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.

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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. PayPal is the worst payment gateway ever… they blocked my account telling that I have multiple accounts which is not true…now I cannot create another account with them… I called them hundreds of times…but no help….so I started using a 2 new gateways 2Checkout and ZaakPay (Indian Startup) both are superb and they all accept credit card payments.. also freelance sites support check (I don’t mind waiting). PayPal charges some 3-4 percent + 2.5 percent on currency….I think the best way to receive money from individual clients who know you well is to use a service called

  2. Sachin Bille

    This is great piece of writing Harsh!. Glad to see that you have adding more streams to Shoutmeloud by writing about Online Business in India. You are really digging it right direction. Best luck!

    Its true that Indian government really killing the freelancers and bloggers in India by taking such stupid steps. Thanks for taking initiative to make some noise against such stupid acts.

  3. I am a victim of RBI and their rules. I wants to jump into wordpress from blogger. But I need a credit card to map my domain with wordpress. I can buy a domain with my bank ac at godaddy. Can anyone help me?

    1. Bradford Risbert

      It would be a great idea to go in for a credit card. It makes it so easy to join any business you wish. is a great hosting site. Very cheap and their service is awesome. They have a live chat platform and queries are sorted out on the spot. I’m presently using their hosting services.

    2. rakesh kumar

      Godaddy suppport indian debit card , so you can use any standard debit card and purchase domain name and hosting plan.

  4. I wouldn’t blame the Indian government.

    A lot of people were using Paypal for earning money and spending it on goods they want without paying taxes. So RBI had to step in to prevent black money issues (Yes, if you earn money and don’t pay tax for it or file it in your returns, that’s black money!)

    I am using 2checkout for receiving payments, and I get it within a week. No more hassles. Just go with a payment processor (If you are not running a service business or are getting a few dollars a month it might not be worth using a payment processor).

  5. Nice Article Sir,
    but in my views PayPal is still a good option for teens like me to use their parents PAN cards and debit cards for buying a domain or hosting account.
    me myself got my domain only with Paypal.

  6. I belongs to Pakistan. But i always give example of India, that receiving payments of freelance work in India is much easier than Pakistan. But really sad to know about the new change in India. We have no Paypal in Pakistan. That’s why difficult for us to receive payment for us.

  7. Giving PAN card details as per government regulation is not bad. You are going to earn and you should be honest to abide the laws of country you are living it. And eventually pay taxes as you go to that bracket.

  8. The reason that Govt of India got tougher was because these workers were not paying taxes on the income from abroad, they were not reporting it and there was no other way to know who got what without the Pan Card. In USA you cannot open an account with any bank or even PAYPAL without a Social security number or a Tax ID No. So what is the difference. Indians expect everything from the Government without paying for it. If Indians want to emulate west then they also emulate western work standards, western tax paying rituals also. Sorry but that is the truth. The lunch is not free.

    1. now ,we given our PAN card numbers why they are not allowing us to hold money in Paypal ..present scenario is money comes to paypal—>than goes to bank automatically—>than as freelancers has lots of online things than he has to do same things again from card to USD ..why Can’t I use same USD ..why ?? Also,How much government is reporting us what they are doing with our taxes ..Swiss bank investment..ryt ..

      1. I totally agree, paypal should allow to hold money as freelancer, we have to make many payment directly via paypal. But rather it gets transferred to bank and then we have to pay it again from bank, so it becomes 12-15% costly with paypal charges.

  9. I was unaware about it. But now got to know about the freelancing payment system little more 🙂

    I think CCavenue is a good option as it directly credits the your account..
    Recently I applied for hosting on godaddy but canceled due to less comfort hosting environment and requested a refund.

    There was no issue in refund as they said within 3 to 4 Business days. ccavenue credited the full refund to my account.

  10. Totally agree with you. I released my ebook recently, at last moment while tesing the checkout flow using ejunkie cart I found my card is not working. Then I had to use two cars one for Indian users and other which can be used globally.. so sad 🙁

  11. Thank you. But, shall i need to pay anything to to install to host at godaddy.ok.does blue host also support debit card?

    1. Harsh Agrawal

      No… using WordPress software is free…But you need to pay for Hosting + Domain…
      As per my knowledge, BlueHost accept payment via Credit card or Paypal..not sure about debit card…

      1. Thanks.ok. I think hostgator accepts debit cards and internet banking. Is it right ? I have seen many bad reviews at godaddy, so I planned to stay away from their hosting. I am very excited , you know. Harsh.

  12. Hi Harsh,
    Nice to see your post, it was helpful to know about system.

    But I have a doubt (I live in Gujarat), If I want to work for a foreign company as a freelancer, and I am going to receive big amount for it every month, then do I need to make any registration with government here or something? or I have to follow any standard procedure according to our government rules? or I can start working directly without doing anything i mentioned before?

    Because I don’t see any guy who made registration or something for freelancing, and the company I am going to work with is good company and they ask me again and again to find out if I need to follow any standard procedure of government here..

    Your response will be very helpful to me..

    And thanks for the blog.

  13. Akash Deep Satpathi

    Hi! I was still thinking PAN Card cannot be applied by minors. Thanks for letting me know, I would definitely apply it for me. 🙂

  14. Hello Harsh! Nice article. I hate it to the length of leaving India that they don’t allow Payoneer in India when rest of the world can use it without any concerns. I mean, why are they doing this? To stop money laundering. Alright great.

    But, can’t they just ask for our PAN Card information and track our income so that they can tax us. Instead, they will just ban the gateway.

    It is these people who ask for the bribe all day long, suck up India’s wealth and then doing the drama of stopping money laundering when effective measures can be taken to regulate it instead of banning it altogether. They just don’t care about the public, they just want to suck the blood.

    I also tried mailing Payoneer to discuss the matter with the RBI or any concerned authority and relaunch Payoneer to India, but they did not seem to care either. I did not get any proper reply from them.

    I have started a facebook page just now, where people can stand together and raise up the issue by constant complaints to the Payoneer through support and in every possible way.

    Those who want Payoneer back to India for its convenience can like this page and also follow up Payoneer by mailing them frequently. Likers are also expected to share the page as much as they can and also get at least 10 more likes to the page and tell the new likers to do what every liker is supposed to do.

    Disclaimer: I am not getting any monetary benefit by Payoneer. I work online and I know how convenient Payoneer is. Sadly, only Indians are barred from this worldwide service.

    Here is the link to the facebook page for bringing Payoneer back to India.

  15. what are you saying about payoneer is not true. i am receiving Payments from some big affiliate networks based in US and UK and getting the money transferred into my bank account in local currency. Its been two years and i never got any problem.

  16. Samir Desouza

    Hi Harsh:

    This is a great post on the merits and demerits of RBI interference in using online payment gateways.

    The government/institutional watchdogs seem intent on curbing personal freedom when it comes to the average Indian’s ability of invest in online ventures.

    Making things tougher for an internet marketer is going to harm the Indian economy in the long run….the greatest market segment that is opening up today is the e-commerce/e-business niche.

    I hope the government opens up and gets more liberal in its policies. As you have right pointed out, once the authorities have your PAN card details, why should they bother about your income as long as it is declared each year?

    Such Victorian age morality with respect to freelancing and our financial system in modern India will only make the nation blush in the long term.

    Samir Desouza

  17. You can use CCNow or FastSpring like payment processors which send you money. FastSpring sends money via PayPal so there is not much wait.

    You can sell items using Gumroad and get paid once in 2 weeks. So the wait time is very less and of course people can buy your items using their Credit Cards too. By the way Gumroad is founded by 19 year old Indian.

    For services you can sell them using Freelancer, Elance/Upwork like platform and earn money and they take care of all the hassles. You get paid again via PayPal.

    So there are a lot more options nowadays available and i am sure with more and more demand there will be more and more options coming up which will enable people to accept payments with ease and without hassle.

    But as of now the ones i listed above should be fine.

  18. honestly if I get a chance to leave india, I will run! no second thoughts at all. I have had it with the entrepreneur unfriendly policies. Make in India and Digital India are major farces when net speed is so slow you cant tell 2g from 4g and I cannot even buy an app from Google App store for my teeny tiny business, with my present Debit card. If I want the app I will have to open a bank account in another bank and get a credit card (we all know how tough that is), maintain a big balance and pay an annual fee or Rs 850. As an entrepreneur we count each paisa. So you can imagine !! Today I am feeling so low. I pray no one has to go through what I am going through as a small business.

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