I read the TechCrunch article yesterday about Paypal limiting payments to merchants in India to $500 beginning March 1st, and I think it will make an impact on the domain business. If merchants need to accept a higher payment amount, they need to look elsewhere. The restrictions have been put in place by the Reserve Bank of India rather than Paypal, and it was announced on the official Paypal blog yesterday.
In my opinion, this news could be very bad news for Indian domain investors and could also be a big annoyance to others who live outside of India but who do business with Indian companies.
For just about all transactions that are under a few thousand dollars, I use Paypal. From my perspective, this limitation would pose a problem for me if I am buying a relatively low value domain name for a domain investor in India. The cost of using a service like Escrow.com might be prohibitive on a low value deal (but above $500), yet the seller wouldn’t be able to accept a Paypal payment.
Similarly, for web development projects, it doesn’t appear to be possible to pay Indian merchants more than $500 via Paypal. I’ve worked with companies in India (found on Elance), and this would impact them, and consequently, it would impact my business.
Unless I was buying a domain name or working on a significant project that was critical to my business, it would be highly unlikely that I would opt to use another payment service like Western Union or something else.
Last night, I spoke about the Paypal situation with Andrew Allemann, who works for Indian-based Directi, the company that operates Skenzo, Big Jumbo, DomainAdvertising.com, and others. According to Andrew, his companies “use a payment processor for all of our payments, and this payment processor won’t be affected by any of the changes.” That’s a bit of good news.
If you are doing business with merchants or domain investors in India, you need to be aware of these Paypal restrictions that are coming soon and make sure you and they are covered.