February has been a terrible month for many freelancers in India, as PayPal notoriously suspended all money transactions to and from India. Freelancers, small businesses, sellers and buyers have raged and ranted about the recent PayPal announcement that all personal payments would be stopped, and withdrawals to Indian bank accounts would be frozen with immediate effect.

On the 6th of February, Anuj Nayar from PayPal revealed that “personal payments to and from India and transfers to local banks in India have been suspended while we work with our business partners and other stakeholders to address questions they have about the service”. After that seemingly cold and distant message, no one heard anything from PayPal during the weekend, leading to several heated outbursts across the web.

Just a few hours ago, Anuj has again posted a blog about why PayPal had to take these measures. Like most suspected, it has got something to do with Indian regulations and regulators which question the motives behind personal payments and if they actually constitute remittances.

Most people have argued that even payments that came under “goods” and “services” have been reversed and sent back to people, leading to a loss of money for Indians. Anuj also reveals that personal payments to and from Indian would be suspended for “at least a few months until we fully resolve the questions from the Indian regulators”.

The silver lining however is that bank withdrawals would be allowed within the next few days. Those who have a negative balance however will have to either use their credit cards to rectify the issue, or ask their clients to send the money again to PayPal, in terms of goods, instead of personal payments if the amount was sent so.

Anuj is still not clear about why payments that were not personal were reversed too. In conclusion, PayPal seems to be bogged down by questions from Indian financial regulators including RBI, and also by the recent anti money laundering laws. Thus, PayPal may not be blamed after all.

For now, those who have been using PayPal have been left to fend for themselves. While one shall have to look for alternatives, the question of which one to use among the many seedy options is a question that is difficult to answer. The best alternative seems to be MoneyBookers, which requires the Indian user to have an account with a SWIFT enabled bank account.

Secondly, options like MoneyGram and Western Union are cool enough, but micropayments may be unprofitable. For instance certain developers work for $20, or $50. In such instances, using Western Union or MoneyGram can prove to be highly uneconomical.

There are also other options such as AlertPay, which comes with a load of limitations unless you buy the upgraded membership. Certain other services like Payoneer, ATMCash and Ikobo provide users with cards similar to Debit cards which can be used time and again in order to receive money. However, the associated fees can be prohibitive.

If you guys can think of any good alternatives in order to send and receive money in India, do share the information under the comments section! I am sure everyone from India who is into Freelancing and development would be interested to know!