Using PayPal in India as a Merchant

About PayPal in India

PayPal Services in India are provided by PayPal Payments Private Limited located at Mumbai in the state of Maharashtra.

You can send & receive payments in INR and supported international currencies via PayPal in India. Sending of payments for purchasing goods & services internationally is also possible using cards issued in India.

Although globally PayPal is considered a fund transfer wallet, it does not function as a funds storage or digital wallet for Indian users. It functions more as a payment gateway/processor.

PayPal is already being used as a payment gateway by many well-known brands in India such as FirstCry, BookMyShow, Myntra, etc. and this trend is increasing.

Using PayPal as a Merchant

To start using PayPal as a merchant you have to signup for an account on the PayPal website. Signup is quick and free of cost, and the signup process includes steps for account KYC.

KYC Requirements for PayPal in India

PayPal conducts two levels of Know Your Customer (KYC) based on merchant need to accept payments. You can find KYC requirements listed here.

The KYC requirements for receiving International Payments is minimal. To additionally also receive local INR payments you will need to provide documentation.

Domestic INR Payment Settlements by PayPal

You can receive domestic INR payments in India from Indian PayPal users (all account types), and from cards (Premier/Business accounts only). Service charges are 2.5% + ₹3 + GST @18% (on charges) currently. Since the merchant is located in India, there are no currency conversion fees on receiving setlements for INR payments.

International Payment Settlements by PayPal in India

sample paypal fee calculation for international payments to merchants in india

You can receive international payments in supported international currencies from PayPal users (all account types), and cards & bank accounts (Premier/Business accounts only). Service charges are 4.4% + $0.30 + GST @18% (on charges). According to PayPal, you can apply for lower rates when your account is in good standing and you’ve met a qualifying monthly sales volume.

paypal india fee for international payments

Additionally,PayPal’s local bank also levies a charge of 3.5% on balance for currency conversion to INR followed by NEFT transfer. PayPal will deduct this amount from your settlement. sample calculation sheet

For GST-registered merchants, PayPal’s Indian bank (Citibank) provides Foreign Inward Remittance Certificate (FIRC) to merchants on payment of an additional fee. You can find the details here.

Receiving settlements from PayPal in India

To receive payment settlements in India you need to link a local Indian bank account. There is no list of supported banks available. Generally any bank with an IFSC, to which funds can be transferred using NEFT, should work with your PayPal account.

As per a RBI directive, all money received in your PayPal wallet is auto-swept into your bank account by the end of the day. So the funds reflect in your bank account in India within 24–48 hours of the payment transaction.

For GST-registered merchants, GST charged by PayPal in India can be used as Input Tax Credit.

Contacting Customer Support for PayPal in India

PayPal offers several options to get support. To access these support options, you need to sign-in and visit this page.

Additional benefits of using PayPal in India

Another benefit for merchants using PayPal in India is their Seller Protection program. This protects merchants from fraudulent claims or chargebacks on eligible products. PayPal currently is not charging any fee for this program and any eligible product sold via PayPal is protected by this program.

PayPal Presentation Terms

According to PayPal the following clause will be added to their agreement:

1.5 Presentation of PayPal

You agree to provide equal treatment to PayPal and/or other payment methods or marks you offer at your points of sale (e.g. websites or mobile applications). This includes at least equal or substantially similar: logo placement, position within any point of sale, and treatment in terms of payment flow, terms, conditions, restrictions, or fees, in each case as compared to other marks and payment methods at your points of sale.

In representations to your customers or in public communications, you agree not to mischaracterize PayPal as a payment method or exhibit a preference for other payment methods over PayPal.  Within all of your points of sale, you agree not to try to dissuade or inhibit your customers from using PayPal or encourage the customer to use an alternate payment method.  If you enable your customers to pay you with PayPal, whenever you display or exhibit the payment methods that you accept (either within any point of sale or in your marketing materials, advertising and other customer communications) you agree to display the PayPal payment marks at least as prominently, and in at least as positive a manner, as you do for all other payment methods.

This morning PayPal India announced upcoming changes to their legal agreements effective 13th November 2018.

One of them will introduce a requirement on how PayPal payment option is displayed on user websites/mobile apps.

We are already compliant with this upcoming requirement and present PayPal payment options in the same manner as the other payment options.

If you have any other places where you have displayed PayPal as a payment option, you may want to take a look at their presentation again.