Paypal Purpose Code for Indian Bloggers/Freelancers/Affiliates & SEO Experts

The PayPal-India issue which started last month and affected most bloggers/freelancers/small-businesses in India, started to finally resolve (almost).

Few days back PayPal officially announced on their blog that Indian publishers will be needing import/export code (IEC code) and Indian blogosphere filled with posts on how-to get IEC code!

In a recent announcement, PayPal cleared the air saying that it is not ‘Import/Export Code’, but a ‘Purpose code’ that Indians need to specify while withdrawing money from PayPal account to local bank account!

Complete list of purpose code is here but its not clear yet that which purpose code we need to use exactly! This is the reason to start this discussion here.

Purpose codes bloggers/freelancers need to consider

Following are codes of our interest. You can see full-list here.

  1. P0801 – Hardware Consulting
  2. P0802 – Software Consulting
  3. P0803 – Data Management and Processing Consulting Services
  4. P0805 – Freelance Journalist
  5. P0806 – Newspaper / Aggregator
  6. P1006 – Brand/Business consulting and management services
  7. P1007 – Marketing/ brand consulting / logo design / event management services

PayPal also made it clear that freelancers need to use one code out of P0801/P0802/P0803 and bloggers need to use one code out of P0805/P0806. For logo design (and related banner/graphics design IMHO) purpose code P1007 should be used. For SEO services and affiliate programs, there are still no clear guidelines. There are some questions that are not clear yet and creating confusion as discussed below…

Confusion #1 – Most Freelancers provide services that are mix of software consulting and data management/processing/consulting services

As an example, our wordpress theme/plugin development, customization services can be categories under software consulting services.

Whereas, our blogger to wordpress migration service will fall under data management or processing service because we are “migrating (processing)” data not developing any codes. Going in depth, we developed a wordpress plugin to facilitate migration service but the payment we get from our client is not for the codes but for the data-migration service. We are actually charging for our time, not codes!

Confusion #2 – Whether bloggers should use P0805 or P0806 or P0802?

By nature of job bloggers are freelance journalist (#P0805). But most bloggers make money from ads sold on their blog which is like newspaper (#P0806).

Most bloggers grow with traffic and ad-rates mostly depends on traffic and quality of reader-base. Whereas a typical freelance journalist makes money through royalties – more like selling articles to newspaper or other media agencies. This is more like paid-blogging job on rtBlogs network!

Added to above confusion, many bloggers makes money from freelancing services on their blog which may fall under purpose code P0802 0r even P0803!

Confusion #3 – What about SEO-services and Affiliate Marketers

There is no clear mention of SEO experts and affiliate marketers. India have many freelance SEO experts and almost every professional blogger is selling something on his blog under some affiliate program. As a matter of fact, we also make considerable money from affiliate marketing! So which code we should use guys!

There are 2 purpose codes seems near match and they are – P1006 and P1007.

For affiliates marketers, P1007 seems the best as it mentions payment for marketing services.

For SEO guys, I am in dilemma. SEO guys can also be considered as marketers as most big SEO campaign involve indirect marketing efforts in terms of paid-reviews/sponsored posts. But overall description of SEO job is more suited to purpose code P1006. As SEO efforts most of the time used to give a brand long-term exposure.

Workarounds… (What I will be doing!)

After much brainstorming here is the plan we will be executing. Please note that this is our opinion and our workaround. Farhad Irani, in PayPal’s official post made it clear that if you are not sure about which purpose code to use, you better contact PayPal customer support.

First thing to note is that while selecting a purpose code, keep in mind that its your bank to whom you may need to justify your “purpose”. For justification you will be needing proofs like print-outs of PayPal transaction details page as well as other goods/receipts.

Next fact to consider is PayPal don’t charge any fees on withdrawal of Rs. 7000/- or more. So you may go unnoticed by making multiple withdrawals of moderate amounts.

Now while breaking one-big transaction into many small transactions, do not simply use mathematical division. Rather you should try grouping transactions by purpose-code!

So personally, I will do following…

  1. Code P0802 – All payments for wordpress theme/plugin and customization work backup work
  2. Code P0803 – All payments for blogger to wordpress migration, apache to nginx migration, wordpress backup-recovery services, etc
  3. Code P0806 – All payments from advertising i.e. BuySellAds, Kontera, Infolinks, etc
  4. Code P1007 – All payments for affiliate marketing i.e. payments form Dreamhost, hostgator, etc and payments for logo-design, graphics design services

Only SEO is missing from above list. But as of now we are providing SEO services only as part of some bigger project.

Apart from this Indian guest/paid-bloggers who receives payment via PayPal, technically should use purpose code P0805. But if you (paid-blogger) and sender (blog-network/media agency) both resides in India, you should always use NEFT  (National Electronic Funds Transfer). It works faster, keeps you away from legal issues related to cross-border transactions and also you get more money by saving in currency conversation charges.

With this purpose code facility, PayPal will resume withdrawal to local banks in India starting from March 3, 2010 (that is tomorrow afternoon in India).

Let us know which purpose code you are planning to use and why? Also if you happen to get any helpful response related to purpose code from PayPal guys, please share with us.

Update: Complete list of purpose code can be found here on Reserve Bank of India’s site (Thanks Webmaster Tips for link)

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  • Baskar

    Dude, why you are confused about SEO services? Dont look at SEO service as per off page link building exercise, marketing, etc. First you are doing on page seo work by changing computer source codes on the page/website. That falls under, Software services whose code is P0802. Lets be consistent about that.

    • http://devilsworkshop.org/ Rahul Bansal

      @Baskar
      SEO can be done without changing code directly as well. It depends on SEO campaign. I already mentioned that we do SEO for limited clients, usually with big projects only.
      That is where we can term it under P0802 – software development.
      But if we buy paid posts from other blog (off-site) SEO that will be under marketing i.e. code P1007.
      And if we do both on same project then we must have an option on paypal to specify multiple project codes!

  • http://www.solidblogger.com Bapun

    Great article. Very well written.

    But here is one confusion. Lets say I have got $100 from Kontera (P0806), $100 from Hostgator (P1007) and $100 for a review post (P1006) in January.

    Now if I choose to withdraw the earned amount from specific sources separately, I can provide the respective Paypal Purpose Code. But which code should be used if I decide to withdraw all available amount at once?

    Paypal made the matter pretty confusing…

    • http://devilsworkshop.org/ Rahul Bansal

      Bapun its really a good point. As any amount you withdraw below Rs. 7000 i.e $150, will have paypal’s withdrawal fees applied to that.
      On personal note, I guess if you are withdrawing so small amount put any closet matching purpose code and go ahead.
      It won’t get noticed anyway (IMHO)… ;-)

  • http://freestuffinindia.com Mridul

    Hii Rahul

    What if i am Withdrawing Money which i have recieved as prize from any site and its above 150$??

    which code shd i use ??

    and wat all proof do i need to show to the bank for tht ?

  • http://freedom2blog.com Jatin Sapra

    Thanks a lot for more clearance. I withdrew 158$ today but there was no code field yet and its still pending.

  • Devesh

    I am a freelance interaction and usability designer. Which code will be appropriate for me – will it be 802 (software consulting) or 1007 (graphics design)?

  • Orit

    I am a freelancer and i write content buy ads for clinet and a do all other SEO and content writing work so what code should i take P0802 or
    P1006

    I am very confused can any one please help me

    Thanks

  • Pingback: Finally Paypal Resumed Indian Bank Withdrawal with Purpose code()

  • http://chaaps.com Chethan

    This is an Excellent Post! I am so Happy that I dont want to stand in Queue to get my IEC code!
    Thanks Paypal for Purpose Code!

  • http://bellthebull.com/ khalid

    Really its a very happy moment for all fellow bloggers.
    Thanks for updating over here.

  • http://kea2010.co.cc Rahul

    Definitely helpful post, it cleared a lot of confusion and i’m looking forward to my transaction with a lot of confidence! Thanks to you.

  • http://www.HowToStartABlogFast.com/ Sourish | Friendly Blogs

    i have withdrawn money as freelance journalism today , though i earn from RAC or direct payment from clients for blog setup .

    Lets see what happens :)

  • Kavly

    I make websites for individuals (outside of India) and not companies so I receive my payment via email which almost never makes mention of the service. I have a Premier account so I’m interested to see how that will be handled. I’ve withdrawn without problems before…if the Purpose Code works then that’ll be great for everyone in similar situations. I’m going to wait to see more feedback on how it goes for others…don’t feel like being the guinea pig on this one considering all things.

  • john

    nice post.. thanks dude

  • Minil

    ‘Hi, I am a freelance photo
    retouching artist, what purpose code do i need to enter while withdrawal
    to bank?

    Regards
    Minil somanadhan

  • http://www.HowToStartABlogFast.com/ Sourish | Friendly Blogs

    Hi , i just received my money from paypal in my bank account and blogged about it. hope you will like to see :

    Indian Banks Processing Paypal Withdrawal Request

  • Kuntal

    Hi,
    I don’t have any credit card but already add my SBI account details on Paypal on 23rd Feb,2010. But Paypal yet not deposite any small amount (as they told in site) in my SBI account for bank verification. And I am now confused about my withdrawal procedure from Paypal to SBI account.
    Can you give any clear information regarding this. I really need to transfer fund from Paypal to my bank account.

    Regards
    Kuntal

    • gauravthind

      it is not possible they send you a small amount of money like : 1.00 or 1.08 you can check your passbook it shows like NIFT CITI . you have to enter the amount after pan card details it will take to days for 2 small amount

  • http://goviral.co.tv Oswald Rodrigues

    Which code is applicable to those who sell e-products (i.e. downloadable items such as ebooks and software)?

  • http://indian-citizen-forum.com Rafe

    Great Detailed posts.

    I think its up to us how we present our business.

    for affiliates and advertisement advertising sounds perfect.
    for SEO we may opt for consultancy and create invoice accordingly.

    But what is the purpose of this purpose code ?

  • Jaanvi

    I am blogger. I usually inform my clients about the payment due through email. i am confused about what proofs to provide to the bank in support of the purpose code. Will it be copies of the email confirming amounts? Can you help?

  • Janu

    I just pulled some funds in from Paypal to SBI successfully. During the transfer process in Paypal I was simply asked if it was for Goods or Services and I was not asked for a Purpose Code. I have an unverified Premier Account…if this helps. Seems its possible that Paypal has come to understand that Services are Services and it’s rather tedious and pointless to have to categorize them.

    • gauravthind

      no you have to verified you account first

  • http://www.imagingdesk.com/ khandla

    I am a blogger and earn some money for placing ad link on my site. Will I need to obtain IEC code for this service?
    [ I’m asking for News agency services and not for withdrawal .]
    My Monthly income is about 100$ / Rs. 4500 from bloggin.

  • smith

    ‘Hi, I am a freelance SEO /SEM
    retouching Link Building, what purpose paypal do i need to enter while withdrawal
    to bank?

  • gaurav

    i made some money through paid to click site (ptc) which code i should use to withdrew money from papal to indian bank a/c.

  • barua

    What will be the purpose code of Paid To Click (PTC) user?

    which one should be selected?

    • vamsi28

      i also ve the same doubt. i earn money from minuteworkers. is it a freelancing site? what shld be the purpose code for this?