Seems like PayPal and Indian bloggers have love and hate relationship. Earlier Paypal imposed some new rules for Indian PayPal users. One of them was withdrawing money from PayPal account to bank account within 7 days. Though I faced no issue with this feature and seems like PayPal has come up with another solution to make it mandatory for Indian users.
Also see: Paypal Guide: Everything You Need to Know
PayPal started offering automatic withdrawal for Indian users. Interesting thing is, apart from FAQ page PayPal has not made any official statement or comment regarding this new Auto withdrawal feature.
How to use PayPal auto withdrawal feature?
Login to your PayPal account and hover on Profile link and click on add/edit bank account. (See screenshot)
On the next page select bank account or you can click on Add bank account to add a new one. In my case I selected my existing bank account and clicked on make auto withdrawal.
Though there are many unanswered question like  What will happen if withdrawal amount is less then 7000. (Update: See below for an update on this). As Paypal charges INR 50 for withdrawal amount on 6,999 or less. I believe we will have answers to such question soon. Another drawback is now we can’t hold money in our account to wait for good foreign exchange rate. We will cover more on this But for now I suggest you to check out FAQ page from PayPal.
PayPal FAQ page has added some information regarding the auto withdrawal feature for Indian users.
Here is useful excerpt from the FAQ page:
What is auto withdrawal? Auto withdrawal is the process of automatically transferring your funds from your PayPal account into your bank account in India. Where will my funds be auto withdrawn to? Your PayPal balance will be auto withdrawn to your bank account in India. If you have one bank account added to your PayPal account, it will be set as your auto withdrawal account. In case you have more than one bank account added to your PayPal account, you will have an option to set your auto withdrawal account. Why are my funds being auto withdrawn? This is an Indian regulatory requirement and applies to all PayPal users in India. When does auto withdrawal happen? Your PayPal balance is auto withdrawn to your local bank account in India daily. You can check your bank account within 5-7 working days after your funds have been auto withdrawn from your PayPal account.
Another news is Indian Paypal users still can’t use their money in PayPal account for any purchase and with this new changes, I believe we don’t expect it be back again for Indian users. So any money receive on your PayPal account, Indian users can only withdraw it directly to bank account.
Though it’s sad to see PayPal dying in India and especially when it’s considered as one of the standard for online payment. Anyways I will keep you updated with latest and update on PayPal and India Love hate relationship. For now you can check out Alternatives site to PayPal.
Update: So finally we got answer to some of the unanswered questions and first of them is there will be  no withdrawal charges for Indian Paypal users. No matter how much amount it is, it will be withdrawn into your bank account without any charges.
Though for newbie PayPal users, you need to have your PayPal name and bank account exactly the same, else you won’t be able to link your bank account. In case, if you have used misspelled name or nickname, you can contact PayPal and provide them with PhotoID proof and they will update your profile to match your bank account name.
So if you are an Indian PayPal user, you need to update three things in your account instantly:Â Pan, Bank account and Paypal purpose code.
It’s good to see that PayPal has made things clear now and despite of all the restrictions like we can’t make Payment using existing credit  on PayPal account, I believe as a webmaster we will continue using it, since it’s a standard mode of Payment globally.
What’s your take on new withdrawal policy of Paypal for Indian users?
Well, it’s pretty tricky now for Indian Users. Intially, they had a scheme wherein anything below Rs.7000 had a processing fee of Rs50 and anything above it, for free. Now, it is mentioned no withdrawal fee but actually it is pretty tricky. Look at what they say below.
“If foreign exchange or currency conversion is required to complete any transaction, this will be performed by a licensed financial institution. The foreign exchange rate is adjusted periodically on a daily basis to reflect market conditions and includes a 2.5% processing fee which is retained by PayPal. The exact exchange rate that applies to your transaction will be displayed to you at the time of the transaction.”
It is very obvious that we can’t do anything with a PayPal account only linked to Bank Account (Not Credit Card Holders), but to just transfer the amount to our Banks. So, apart from the money they make in currency conversions (they usually take the avg and not the current value), they’ll charge 2.9% processing fee as well.
I leave it to the users to think which option is better. The initial one or the new and if I’m wrong, please do correct me:)
Auto withdrawal is a nice one, but if i do it daily, How can i afford Rs.50 for each transaction… paypal finally ****s.
Looks like this is a good feature for Indian users. I wonder if this feature is offered to the rest of the world?
Hello Harsh,
I m not able to understand that what is the fee procedure and Can you give me the Link to know how to use paypal as I m newbee to paypal.
Does it mean, Our payments will be processed on same day when we will get payments to paypal?
Nice one from paypal, I wonder why they never allow my country to use paypal not to talk of withdrawing to the bank.
So this means that we cannot buy anything using paypal. This will make paypal useless for Indians, may be we should start looking for an alternative to paypal.
You can buy but money will be deducted from your linked credit card or debit card.
This is started by the new RBI guidelines, But i would love to withdraw my money whenever need that.
Its nothing new.
I have been using this feature for over 5 months now!
They charge 50 INR for withdrawal of less than 7000 INR.
Sidhant this post is not about the withdrawal fees but about auto withdrawal implementation from PayPal..
Use Alertpay, unlike paypal their policies very user friendly & available for all countries.
Hope paypal and RBI comes to some agreement soon, so that it helps many paypal users.
Paypal is trying to make indian to use alternate of it .
actually i have a question regarding this system, like when we create paypal account and link it with our bank account than what is the next step to do? As they have sent a mail to check your bank account which is depositted with rs. 1 please help me what to do next
I don’t think paypal is dying in India. Me and many of my blogger friends still use paypal.
Ujjwal even I’m using PayPal and I can’t leave it because at this moment this is standard. Though if in future Google, Facebook or any third company launches any thing reliable, any good alternative, I will switch to that. Since PayPal is causing lots of issues and especially limitations for Indian PayPal users.
” how PayPal is going to manage purpose code for Auto withdrawal? ”
Paypal uses default Purpose code.
You can view them in your ” PayPal Profile” section
http://i.imgur.com/m054u.jpg
Siva that’s a useful input and I completely missed out this feature. Probably never spotted it earlier. Thanks for your valuable comment.
well, that’s a good news for me. some of my advertisers only pay me using paypal, so I can’t leave my account.
That’s a really nice move from PP. But what if I don’t want to Auto Withdraw. They should’ve set a limit for us to choose.
Mani the thing is money in your PayPal account is useless as you can’t use it to buy something or send it to anyone. So this Auto withdrawal doesn’t make any difference infact this will make work automated. Though the problem is processing fees for lower amount withdrawal ….
if i want buy some thing or send some amount to someone so in that case what can i do for it do you have any solution for it
If if get money daily.. they will charge 50 Rs daily? What paypal thinks about us… I will enable auto withdrawal when this rs.50 fees cancelled.. 🙂
That’s one thing which I’m not sure about… Lets wait for their announcement or Email….
Also ,This is also very bad ,I have to give everytime 50INR ..if it withdraws daily ,What the hell is that? As we are top IT services country but we don’t have even our fully functional system like paypal and if other guys are providing services ,our politicians suing them ,We don’t have guts to make system like paypal? How big IT services country are we ..I doubt it ??
Amit it’s not certain if they going to charge for automatic withdrawal or not..Or if the amount with be auto withdrawn once your account reaches 7000 INR threshold. Lets wait for an official announcement…
I don’t think its dying that much , We can still accept most kind of payments.
And for buying stuff & sending money – Credit card will do great job for us. So it’s eventually, it turns out if you have credit card or not.
Isn’t it ?
Indeed but then the conversion rate will make your purchase more costlier and it’s insane that you can’t use the saved money from the same account…
Yup, can’t use the earned & saved money is really insane.