New regs force PayPal to stop Japanese personal payments

After falling foul of regulators in India earlier this year, PayPal has been forced to suspend personal payments in Japan ahead of new rules set to come into play on 1 April.

In a blog, Kosuke Seto from PayPal's Japan team says that starting tomorrow, customers in Japan "will be unable to send personal payments to individuals using the PayPal "send money" service until further notice".

Continues Seto: "The changes to our personal payment services are necessary in order for us to comply with new Japanese regulations that go into effect April 1st."

The new law requires firms to apply for a license to offer personal money transfer services.

No indication has been provided of how long the suspension will last but PayPal users outside the country can still send money to Japanese residents. Within Japan the service can be used for commercial transactions.

In February the firm was forced to suspend personal payments to and from India for "at least a few months" after falling foul of new government licensing rules.

The regulatory problems are a blow for a firm that has set its sights on the Asian market. Only last month it vowed to double its staff numbers in the region, increasing employee numbers to 2000 by the end of the year.

The new jobs will include positions in both Japan and India, as well as Australia, China, Hong Kong, Singapore and Taiwan as the eBay unit looks to build its presence in a region that saw it process $6 billion of total payment volume in 2009, an increase of 38% from 2008.

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Comments: (2)

A Finextra member 31 March, 2010, 05:07

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This is ovious that all the multinationals should comply countries local regulation before doing any business. However, what I suggest Paypal is that it would be more startegic for them to start business with local tie up (having local partner) as this will significantly reduce their business operation cost. Also local presence have much more impact on brand awarness, business development and customer services. For these type of P2P transfers, instead of offering services in developed countries where they already have tough regulations, Paypal can target lot of other developing countries, where they will be heartily welcomed to operate their services.

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Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 31 March, 2010, 19:17

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I don't know about Japan but there has been no recent change in regulation in India as regards inbound cross-border remittance licensing. According to PayPal's own communication to its customers in India - I being one of them - "the RBI has told us that PayPal needs specific approvals to allow personal remittances to India, which we currently do not have. Until we get these approvals, personal payments into India will remain suspended." It seems like PayPal did business without a license all these years. It's just that its non-compliance with pre-existing regulation got exposed recently.