While we have been busy speculating on what is an export code and what it takes to get one issued from DGFT, paypal has issued a clarification that it is not an “export code” but a purpose code which needs to be entered into the paypal site to enable Indian account holders to withdraw from their accounts to the Indian bank account. They have also made the task easy by providing all the codes that would need to be used on their blog post itself.
So much for the storm in the tea cup and the emotional outbursts against the RBI and paypal and all the ravings and rantings of my fellow freelancers who wished to commit a business suicide where freelancing was concerned!
Before talking about the implications of this move and also what Indian freelancers need to look out for in the future, I would like to appreciate the extremely professional and collected manner in which Paypal has handled the crisis. While the Indian business is not very large, Paypal had a commitment to its clients and perhaps all the Asian clients were watching the fall out and outcome of the crisis. Paypal remained tightlipped during the initial phases of the crisis to avoid speculation and panic and calmly set about doing whatever it takes to set the situation right for everyone round. Kudos to Paypal!
Well, the purpose code as Paypal chooses to call it will give a hook for RBI to collect the data and also evaluate the amount of foreign exchange that is being transacted by Indians. It will also help the premier bank frame a policy for how it will handle this type of foreign trade in the future. In a sense this is real good news for the Indian freelancers and could be bad news for those who are making big money in this field and not paying their taxes on Income? There is now a tracking mechanism in place where transactions through paypal are concerned. The good news is that India is getting ready to regularize the largely unorganized sector that operates over the Internet. Maybe Indians will no longer be vulnerable to the scamsters and sharks that populate the Internet. Maybe cyber laws will offer some newer modes of protection to this largely helpless and vulnerable set of small businesses that are mushrooming in India.
One question that needs to be answered is: What about those thousands of Auction sites like Rentacoder, Elance, guru, getafreelancer etc which also do a kind of payment settlement for Indians? They act as intermediaries between buyers and sellers and collect money from buyers on behalf of sellers and then settle accounts with the latter at the end of every month. Do they also need to get a license from the RBI to operate in the Indian context? These sites have a tie up with Paypal and payment agencies like Payoneer or they send checks to Indians by snailmail. Will RBI be contacting them next with requests for compliance? The RBI does not seem to have contacted these sites as yet.
Let us wait and watch. Stay tuned in for more from me on this blog!
