Visa steps on PayPal toes
By Sandhya

Tens of thousands of Indians, many of whom are software developers, technical writers and website experts, use American site PayPal to get paid in India.  It had worked well till the beginning of February, 2010.

By early February, 2010, it was clear that PayPal had stopped personal payments and local bank transfers in India without giving any due notice to recipients in India.  Also without explanation, PayPal starting reverting some payments to senders. 

By Feb 10, 2010, PayPal finally explained its action.  A financial company needs registration with the Reserve Bank of India to offer money transfer services.  And PayPal did not have the requisite permissions. By March, 2010, PayPal was able to provide bank withdrawal services to exporters registered with the Indian Government.

In Feb, 2011, PayPal blogged about its March 1, 2011 deadline for new restrictions for India to take affect.  These included any balance in and all future payments into Indian 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 Export-related payments for goods and services into Indian PayPal accounts may not exceed US$500 per transaction.

PayPal has now lost many of its clients in India.

Visa has now announced that it is entering the Personal Payments market on a global scale.  Even though this facility is only offered to US customers at this point in time, this Visa feature will allow consumers to receive and send funds to any eligible Visa credit, debit or prepaid account, anywhere in the world. The breakthrough service extends the utility of Visa’s network from enabling payments at the point of sale, to enabling consumers to pay one another.

How does this Visa feature work? Bank customers of participating financial institutions will have the option to select a Visa account as the destination for funds when making a personal payment. By simply entering the recipient’s 16-digit Visa account, email address or mobile phone number, consumers can send funds directly from their bank account to a recipient’s Visa account. This makes sending money to a niece for her birthday or to a son in college simpler, faster, and more convenient than before.

How soon before this Visa inroad into PayPal market share reaches India as well?  Will it be as easy as Visa card holders in USA making payments for micro outsourced services via Visa cards used by Indian technical writers and Web Developers?