How PayPal’s Paper-Check Payments Will Affect Lives in India? [FAQ]

PayPal suspended electronic withdrawals to India. This article answers question on how their only withdrawal option, paper-check, will affect lives in India.

(Update: Issue is resolved now. PayPal resumed electronic withdrawals again. I doubt, if they were suspended ever!)

This morning, like most of Indian PayPal Users, I woke up to read an email by PayPal saying,

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

Few lines down the lane the said electronic withdrawal option will be disabled for Indian users. Normally, PayPal charges $5 as fees for withdrawal by check but in this case, that fees will be refunded.

Their official newsletter, like other official newsletter leaves many questions unanswered and below are my own answers to some questions I received from fellow bloggers and publishers.

Which currency PayPal use while issuing a check – USD or INR?

I haven’t used PayPal’s check-withdrawal method but except Google AdSense, all paper-checks I received till date are in USD.

So I am sure that PayPal checks will be in USD. PayPal representative confirmed that will send check in local currencies i.e. INR.

How many days will it take to clear PayPal Checks?

After requesting a PayPal check-withdrawal, PayPal takes 4-6 working days before actually issuing you a check. Added to it are postal delays. My Google AdSense checks arrive in 5-7 days from Singapore.  But PayPal check will take more time as they are coming from US.

Finally, if you have account in same bank through which PayPal issued your check, check will get cleared on the same day or on next working day by latest. If your bank is different, it can add upto 5-7 days interbank clearance delay.

So total time can vary from 15-30 days, where as PayPal officially estimate upto 45 days time.

Do Indian banks charge for depositing foreign currency checks?

(UPDATE: PayPal sends checks in local currency i.e. INR, so this question of currency conversion doesn’t arise in PayPal’s case. Still following info is still valid for other USD checks deposited in Indian banks.)

Yes. Most banks do. Processing fees (or service/other tax) can vary from bank to bank. Also, it may depend on transaction volume. Moreover, it may or may not reflect in your account statement as it can be added directly to the currency conversion charges only.

Example: To further clarify this, let us assume you are depositing a check of 100USD in Indian bank and you read currency conversion rate is 1 USD = 47.00 INR. Now, Bank-A might give you flat currency conversion rate of 45 and deposit 4500 INR in your account. Another bank, Bank-B, might give you better currency conversion rate of 46 but will charge 100 INR as transaction fees and 10.3% service tax on it. This way Bank-B will deposit first 4600 INR in your account and then will deduct 103 INR as fees, leaving 4497 INR in your account. 😉

This must be a temporary issue as PayPal is not charging $5 as check-withdrawal feed. Right?

Only god, Government of India (specially RBI – Reserve Bank of India) and PayPal officials know if this is temporary issue or not.

PayPal is not charging $5 because as any good corporate house, it’s not wise to charge your customer for an option when you are not giving them alternative. Plus, even if PayPal decides to bear $5 fees, they will be already earning much more than that from each publishers as their per transaction fees!

How should I plan my withdrawal?

Unfortunately, in this case we do not have many choices to plan.

On an average, it takes 15-30 days for any USD-paper check, issued from US, to deposit in your Indian local bank account.

Its time to recall “saving” lessons taught by our parents! 😉

What are PayPal alternatives?

There are same old and not-so-pretty alternative available – MoneyBooker, Xoom, etc.

Out of all of them, I used Xoom only in past. It was much faster and better than PayPal then but I am not sure if Xoom is still working.

If you have used any alternative in past, please let us know. 🙂


Mad Geek @beingPC July 28, 2010

I just withdrawal all my money today, RBI sucks!!

Rahul Bansal July 28, 2010

I am also disappointed by RBI.
But they (RBI) have reasons like national security to justify their steps. 🙁

Techsputter July 28, 2010

Is it so…? , i will try to pass the message to all my buddies…
good share mate, thanks for posting, was useful really 🙂 🙂 🙂

Rahul Bansal July 28, 2010

Unfortunately, this is true. 🙁

Mayur July 28, 2010

I’ve some answers to your points.
One can receive the Paypal checks in INR currency, which are Payable at Par at all Citibank branches in India. So checks will clear fast, without any fees (if bank is local) but the delivery may take long time.
See this PayPal check:

Rahul Bansal July 28, 2010

That looks like a fake screenshot!
Check this –
It is complete walkthrough of withdrawal process published officially by PayPal for indian users.

You can see there is no option to convert currency there.
Also I am shocked to see monthly withdrawal limit of $2500 there.

ravindra July 28, 2010

@rahul bansal The screenshot you saying fake is genuine original screenshot.. and in my case my account not showing any monthly withdrawal limit of $2500 for checks withdrawal . i think it depend on PayPal account type..

Rahul Bansal July 28, 2010

I am only going by what PayPal officially put here –
Being in India, I will be happy to get PayPal checks in INR. 🙂
And I know Sandip @bogsdna but I failed to find a post in which he used that screenshot.

Mayur July 28, 2010

It’s not fake and this screenshot was posted by Sandip of blogsdna sometime back. I personally asked him and he said it comes in INR.

Rahul Bansal July 28, 2010

Its good then. Because I haven’t received answer from PayPal clearing this question.
And on their official site, they showed payments in USD only for check-withdrawal.

Mayur Somani July 28, 2010

And XOOM is still working.

Rahul Bansal July 28, 2010

Glad to know that. 🙂
But looking at circumstances, XOOM might get banned as well.

ravindra July 28, 2010

@mayur A person Who receive paypal check in INR currency. his name is Sandip Dedhia from

Anshul July 28, 2010

I spoke to ICICI bank. For foreign currency checks they charge 0.1% or Rs. 250 whichever is more. After doing some calculation, I figured that I will be better off by using electronic transfer. (For others it might be the other way round).

Rahul Bansal July 28, 2010

As I mentioned in my post, most banks have different policies.
If PayPal send checks in INR, as some comments suggest, we don’t have to worry about currency conversion at all. 🙂

Gourav Jain July 28, 2010

My condition is really miserable. Paypal has turned my account to ” limited ” . I’m not able to withdraw funds either electronically or through cheque.

Abhijeet Mukherjee July 29, 2010

Rahul, Paypal sends checks from their Singapore office and it’s in INR. I ordered a check (or cheque ) this Feb when they had the problem for the first time. It was sent in INR. In fact, when you withdraw using the check option, the conversion is done right there so that you know the amount you’ll get.

I am hoping they haven’t changed anything since then. The checks do take time to arrive though.

Rahul Bansal July 29, 2010

Thanks for info buddy.
I received official info on this from paypal and i will update this this post in sometime. 🙂

Shekhar July 29, 2010

Can you please tell me how to transfer my pp funds to xoom ?

Rahul Bansal July 30, 2010

Process mentioned by Gourav is partially right.
In my case, I was not charged any feed for transfer from PayPal to XOOM.
Also I found a promo code last time, which waived my fees for transfer from XOOM to Indian bank.
I received much more amount last time but XOOM was never as reliable as PayPal.
But if I find any promo code this time, I will publish them here. 🙂

Gourav Jain July 29, 2010

Re Shekhar : First of all, you need to register at Xoom

They will give you option to add funds from various sources (Including Paypal). Then you can transfer the amount to most of the Indian Bank Accounts.

But it will charge you multiple costs, i.e. fees to transfer payment from Paypal to Xoom and fess by Xoom to transfer funds to your account.

There may be some new policies which I may not know. So, you should better contact Xoom Support.

Suveer July 30, 2010

I just spoke with a PayPal rep on the phone. He said and reconfirmed that cheque withdrawals to India Users would ONLY be in US Dollars. This means that you need a USD account in India to encash the cheque.
Also, can someone explain this: ?
Is it a fake?

Rahul Bansal July 31, 2010

PayPal replied saying INR currency for the same question which I sent them via email.
So at the moment, both possibilities are there. is genuine PayPal portal and is linked from official PayPal blog.

By the way electronic withdrawals are back on track! 🙂

Gourav Jain July 31, 2010

@ Rahul

That’s right Rahul. I have also got the same mail from Paypal yesterday.

Electronic withdrawls are back. We can take a deep breath !!!

Rahul Bansal August 5, 2010

I guess electronic withdrawals were not suspended at all.
Partly because timezone difference. 😉

Suneel August 2, 2010

Excellent article there to help us all.

Thanks for sharing the woes and pains to get our own money from the leechers.

Rahul Bansal August 5, 2010

Its wrong to call PayPal as leechers IMHO.
They do not have any reason to keep our money with them.
For any business, its in business’ best interest that customers remain happy! 🙂

Deep August 2, 2010

I didnt get any mail, i wonder why..:(
But m happy that everything is normal now. 😉

Rahul Bansal August 5, 2010

I got email bit late.
I was monitoring their site for updates.

I guess PayPal should have used twitter to keep people updated in real-time.

Muhammad Aamir November 14, 2010

Can i withdraw money from cheque to my BANK OF INDIA Accounts?
We can only deposit money in Citibank? Or we can deposit the money in other accounts. like bank of india, state bank of india,

Plz help me