Pathik Shah

IMPS ( Interbank Mobile Payment Service) – How It Works, and Why It’s Awesome!

There hasn’t been any single mobile payments solution in India ever, which just works. Sure, there have been a lot of startups which have tried to crack mobile payments using e-wallet services, but most of them pretty much suck. Some like mChek have been good, but they failed to gain much traction. Even Paypal isn’t an option anymore, after the recent RBI crackdown.

Though I have been a huge fan of NEFT (National Electronic Fund Transfer), it is not as usable as I’d like it to be. There is a significant delay in the completion of the transaction, and to effect a transaction, you need to give out your complete account details, which could make anyone a bit apprehensive about using the service.

IMPS allows you to send and receive money using just your mobile number and an MMID (Mobile Money Identifier) which is allocated to you via your bank. You also use an MPIN (password) in order to verify the transaction.

The best thing about IMPS is the ease of use. Soon, all major banks in India will be offering IMPS as a service. All transactions are real-time, enabling you to send money to any IMPS user within a matter of minutes.

You can use it either via SMS or via a mobile application. Most banks will be launching mobile IMPS apps for all major platforms.

More details: IMPS (Interbank Mobile Payment Service)

With IMPS, we now have a robust mobile payments system in place, and we are inching closer to financial inclusion in India.

What Next?

An awesome Payment Gateway, please.

I really hope that the government also launches a standard payment gateway API in collaboration with NPCI, RBI which supports all major Indian banks and allows users to conduct e-commerce transactions easily and securely. (CCAvenue, EBS, DirecPay all suck from a usability perspective.)

Such a move would address one of the major pain points that all e-commerce startups in India face, thereby encouraging more users to buy stuff online and trigger a massive e-commerce revolution in India which could potentially make Flipkart look undervalued even at the rumored $1 billion valuation.

Every few months, Paypal decides that it wants to screw Indian freelancers, fucks them in the arse and then dashes off a politely worded email to them saying that they “regret any inconvenience caused”.

This time, it’s this:

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With effect from 1 March 2011, you are required to comply with the requirements set out in the notification of the Reserve Bank of India governing the processing and settlement of export-related receipts facilitated by online payment gateways (“RBI Guidelines”).

In order to comply with the RBI Guidelines, our user agreement in India will be amended for the following services as follows:

1. Any balance in and all future payments into your PayPal account may not be used to buy goods or services and must be transferred to your bank account in India within 7 days from the receipt of confirmation from the buyer in respect of the goods or services; and

2. Export-related payments for goods and services into your PayPal account may not exceed US$500 per transaction.

We seek your understanding as we continue to employ our best efforts to comply with the RBI Guidelines in a timely manner.

We regret any inconvenience caused to you and hope the advance notice will enable you to plan your future use of our services accordingly.
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Most of the times, including today, they just blame it on the RBI and its guidelines. I don’t know whose fault this is, but now Indians can’t store money in their Paypal accounts and also cannot receive more than $500 per transaction. Indians also cannot buy anything with the money in their Paypal accounts now.

All this is very irritating for Indian freelancers who rely on their online income for a living. I can’t understand the point of having a $500 limit on payments. RBI should atleast increase the limit.

Google, take note here, stop chasing after social, and make a robust an viable alternative to Paypal. Google Checkout, in its current state, really sucks. So does Paypal, but there is no other alternative. Having some good competition in online payments would be great.

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Paypal will stop withdrawals by electronic fund transfer to India from July 29, 2010. It seems that the electronic fund transfer is working at least for now. Though the charge for withdrawal via check is only $5, it takes around 10 days to be delivered whereas the electronic transfer took only 3-4 days. I’m not sure if the check withdrawal method will also be stopped soon too “in accordance with regulatory instructions”. I would advise all Indians to withdraw their Paypal cash soon, preferably today while the electronic fund transfer option is still working.

Note: Some good news though, Paypal will refund the $5 check withdrawal charge for Indian withdrawals until further notice.

Here’s the official email:

Dear Pathik Shah,

In accordance with regulatory instructions, we would like to notify you about a change in our withdrawal functionality in India starting on August 1, 2010. At present you can request for either an electronic or cheque withdrawal of funds from your PayPal account if you are an India user.

From July 29, 2010 onwards, you will only be able to request for a cheque withdrawal of funds from your PayPal account.

While we are working hard to restore the electronic withdrawal service, in the meantime, we are bringing this matter to your attention so that you can plan your future withdrawal activities accordingly.
To request for a cheque withdrawal:
Log into your PayPal account, click on 'Withdraw'.
Click on the 'Request a cheque from PayPal' link.
Enter the withdrawal amount and select your mailing address, then click 'Continue'.
Click 'Submit' to confirm your request.

In order to help you with this change and until further notice, we will refund the $5 USD cheque withdrawal fee to you for cheque withdrawals made on July 29, 2010 onwards.

For any questions, please log into your PayPal account and click 'Contact Us' at the bottom of the page.

We apologise for any inconvenience caused from this change in our withdrawal functionality. We will provide ongoing updates to you here. We thank you for your attention and patience as we work tirelessly to resolve this situation as quickly as possible.

Thank you,

The PayPal Asia Team

Pay for Android and iPhone Apps via Paypal in the iPhone Appstore and Android Market

Great news for all Android lovers. With Android hitting 50,000 apps, news has leaked out that Paypal is going to integrate Paypal payments in the Android Market. This is an exciting development, as the only option to pay for Android apps earlier was Google Checkout, which in addition to not being available in most countries, pretty much sucks.

The addition of Paypal as a payment option should drive many more sales as almost everyone has a Paypal account (You can set one up with a credit card in a couple of minutes). This should make Android application development a viable proposition for most developers, atleast comparable to the Apple Appstore.

Paypal has announced that it will enable both application payment options as well as in-App purchases in both the iPhone Appstore and the Android Market.

Thanks, iPhoneclub.

How to get the IEC Importer Exporter Code for Paypal in India

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Update – 02/03/2010

We don’t need a IEC code for Paypal bank withdrawals. What we need is a Purpose Code. You can find more details on the Paypal Blog. Most of us should have to use the codes – P0801, P0802, P0803 or P0805, P0806.

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This guide will show you How to apply for the IEC Export Code for enabling local bank withdrawals via Paypal to India.

Local Bank withdrawals in India by Paypal should start by March 3, 2010. You will need to enter the IEC / Importer Exporter Code / Export Code when withdrawing money to your local Indian Bank account.

What is the IEC?

IEC is the Importer Exporter code which is granted by the Directorate General of Foreign Trade (DGFT), to any bonafide person or company for carrying out import / export. Here is a Sample IEC.

The IEC forms the primary document for recognition by Government of India as an Exporter / Importer. On the basis of IEC, companies can obtain various benefits on their exports/imports from DGFT, Customs, Export Promotion Council etc.

Why do you need the IEC?

If you are a  Paypal user and need to withdraw money from your Paypal account to your local Bank account, you will need the IEC according to a recent RBI directive.

How to apply for the IEC “Import Export Code”?

You can apply for the IEC at the Zonal Directorate General of Foreign Trade (DGFT) office.

The application form can be downloaded here – IEC Application Form

Just fill the IEC application form (Parts A,B,D in case of a new IEC) and submit it along with the application fees – Rs. 250 DD.

If you are an individual, you can apply for the IEC as a Services Provider Proprietorship Firm.

Both savings and current accounts are accepted. You do not need a current account.

Documents Needed:

1. Covering letter
The cover letter should be on the letterhead of your firm.

2. Completed Application Form
Complete sections A,B,D of the IEC form

3. Bank Certificate
The bank certificate has to be obtained from the bank which manages your savings/current account. The format of the bank certificate is in the IEC form.

4. PAN Card – 2 copies

5. 2 passport photos

6. Self Addressed Envelope

Useful Links:

DGFT Website

DGFT FAQs

Import Export Code FAQ

IEC Application Form