How to Create PayPal Account with Debit Card in India

With the fast growing E-commerce industry and the rising trends in global businesses in India, the use of international payment systems for cross-border transaction has become more prominent.

Whether you are a freelancer who works with international clients or simply a shopper who wants to buy goods from international merchants online, PayPal is a reliable payment platform to receive and make payments.

PayPal is one of the most popular payment gateways that facilitate online transaction globally and it has a wide user base. According to Statista, PayPal has around 179 million active users worldwide. It has also established a wide user base in our country.

I’ve designed this post to not only teach you how to create a PayPal account but explain the various aspects of PayPal account opening.

Being a PayPal user in India is not the same as being one in other parts of the world because of the existing regulations laid down by the Reserve Bank of India.

While anybody with a debit/credit card and a PAN number can open a PayPal account, they may not enjoy the same privilege as PayPal users in other countries. Therefore, I’ve mentioned all vital aspects of PayPal sign-up process.

Hence, this is going to be a lengthy post for you. If you’re only interested in the steps required to create a PayPal account, feel free to skip to #8 in the list given below.

1. Using PayPal in India: PayPal India Rules & Regulations
2. Your Purpose of Opening PayPal Account
3. How to Become Verified on PayPal?
4. How Indian Debit/Credit Cards Work in Online Payment Mechanism?
5. What Kind Of Indian Debit Card Does PayPal Accepts?
6. Why Indian Debit Cards are Denied in international Payments?
7. What is the Solution?
8. How to Create PayPal Account with Debit card in India? Step by Step with images

Using PayPal in India

RBI, being the apex authority of India’s monetary affairs works with the best intention to maintain the existing security protocol of online payment mechanism. But it often gets overbearing with its rules.

Considering some potential security issues, RBI introduced certain guidelines due to which PayPal could not operate as smoothly in India as it could internationally. Moreover, RBI has always been strict on the terms and conditions and has imposed many unpopular regulations on the use of PayPal in the past. Thus, PayPal has to take down some of its services in India.

PayPal India Rules & Regulations

• The value of the product or service in no event can exceed USD 10,000 per transaction.
• The transfer of the Balance into your bank account is to take place immediately upon receipt of the Buyer’s confirmation and in any event no later than 7 days of transfer by PayPal to the authorised dealer bank.
• It only acts as a facilitator of online payment, not as a repository or custodian of buyer’s charges.
• You cannot use your PayPal balance for any other purpose such as transfer of money within the country or local online shopping.
• It is exclusively used for cross border online financial transaction.
• You can only use the debit card or credit card for payment. No other means is acceptable.
• PAN is mandatory.

Learn about country specific user agreements of PayPal

Your Purpose of Opening PayPal Account

The PayPal account as an international payment gateway helps you with two major purposes.

• Receiving payments
• Making payments

In order to receive international payments, the PayPal account must be linked with,

• An active bank account
• PAN card

And to make international payments, it must be linked with a debit card or credit card.

However, if you want to use PayPal just for online shopping, you can go without a bank account or PAN card. But, it will remain an unverified PayPal account with limited withdrawal and payment access. To use the payment services without such restrictions, you need to get verified on PayPal.

How to Become Verified on PayPal?

In simple words, a complete PayPal user account is a verified PayPal user account. It means, once you have provided all the necessary information to confirm your identity and complete you user profile, you become verified on PayPal. Basically, it needs you to add your bank account and debit or credit cards to the profile and provide PAN details properly. Apart from that, you need to accomplish some other tasks as well in order to verify the account. Then it removes the withdrawal/payment limits and allows you to receive payments.

As a verified PayPal user, buyers and sellers value your verified status because, it indicates that you have passed the PayPal security checks.

All you need is log in successfully and follow the steps flashing on the profile summary page itself.

How Indian Debit/Credit Cards Work in Online Payment Mechanism?

There are four types of cards in India- VISA card, VISA Electron, MasterCard and Maestro.

As per the rules, all the domestic online transactions made using debit or credit cards must pass through a 2-factor authentication method and it’s mandatory.

The first layer of security asks you to enter the card number, expiry month and date, name on the card, and CVV etc. while the second layer requires authorization via 3DSecureCode or VerifiedbyVisa.

As per the second layer of security, you need to register your card in your banks portal and create a password for it, in order to authorize your online transactions.

For VISA cards, the password is called VerifiedbyVisa or VbV and for MasterCard, it’s called 3DSecureCode.

Following the guidelines, all the Indian cards (debit cards in particular) exclusively work with the websites that offer 2-factor authentication process for online transactions within the country.

What Kind Of Indian Debit Card Does PayPal Accept?

If you have a credit card, you may not face any issues while linking it to the PayPal account. But, with a debit card, you might.

Only those Indian debit cards, that are enabled for international payment or usage will be accepted by PayPal.

International payment is not a default feature in Indian debit cards, not even in those branded as ‘International debit cards’.

You can use International debit cards at ATMs and Point of Sale located abroad. But, you may not use them for international payments domestically, unless the same feature has been activated by the authority.

Hence, in order to link a debit card with your PayPal account, you need to make sure it allows international payment. Otherwise, it will fail to forward your request every time you try doing this.

Why Indian Debit Cards are Denied in international Payments?

This is mainly because of the guidelines laid down by RBI with regards to the online payment mechanism in India. Although, these are meant to enhance the security in electronic payment system in the wake of cyber attacks, it often causes inconvenience to users who want to use debit card for international payments.

The 2-factor authentication method, applies to India and some specific countries.

Most of the international merchants such as iTunes, Google Play Store, or eBay which are American in specific don’t use VbV or 3DSecureCode to authenticate an online transaction.

Thus, when you try to buy something from these international stores using an Indian debit card, your bank keeps looking for the VbV or 3DSecureCode in the background and finds nothing since their payment gateways don’t use the second layer of security. Eventually, the transaction fails as Indian debit cards are typically designed for the payment gateways that use 2-factor authentication method.

However, you won’t find such problems with credit cards. Credit cards are more dynamic and work fine across all payment platforms, whether domestic or international.

What is the Solution?

Going by the problems with Indian debit cards, you just need to make sure the debit card you have is enabled for international usage.

There are certain banks that recognize the growing needs for international usage of cards. Hence, they provide international payment enabled debit cards to their customers from the beginning.

Here are some banks that offer international usage enabled debit cards. They can be used for PayPal account opening as well. Those are,

• HDFC Bank (Platinum Chip Debit Card)
• ICICI Bank
• AXIS Bank (Chip Card)
• Indian Bank (EMV MasterCard World)
• Standard Chartered Bank
• Kotak Mahindra Bank (Gold Chip Debit Card)
• CITI Bank

If you think your debit card is not in the list, don’t worry. There is a solution.

As per an RBI circular,

“All ATM/Debit cards by default may be payable only in India, Nepal and Bhutan and if any card holder wants to use his ATM/Debit cards abroad he should either obtain separate PIN before he leaves India or international usage may be separately activated either online or through call centre.”

All you need to do is, speak with your bank’s customer care executive and ask whether the debit card can be used in international payment gateways, PayPal in specific.

If they have the provision, they can certainly activate the international usage from their end. But if they don’t, then probably you cannot go ahead with the debit card. Either you have to get a credit card or open a bank account in any of the banks mentioned above and get the appropriate debit card.

The same RBI circular also says that, all the debit cards enabled for international usage will have to be essentially enabled with EMV Chip and Pin.

EMV stands for Europay, MasterCard and Visa, a global standard for inter-operation of integrated circuit cards (IC cards or ‘chip cards’) and IC card capable point of sale (POS) terminals and automated teller machines (ATMs), for authenticating credit and debit card and transactions.

Virtual Cards: A Secure Solution to PayPal Account Verification and Online Payment

Virtual Credit Cards are a brilliant solution to PayPal verification and often the best alternatives to credit cards and debits cards in online payments.

With VCCs you don’t have to expose your actual card details, hence the chances of fraud are minimal.

There are several banks, wallet based applications, and non-bank websites who offer virtual cards for free. And the process is really simple and easy.

The banks who offer Free Virtual Credit Cards are State bank of India, HDFC, Axis, and Kotak Mahindra. Other popular options include Lime wallet by Axis, Pockets by ICICI, Entropay, Oxigen Wallet, FreeCharge Go.

With Entropay Virtual card you can verify your PayPal account and make online payments on several international websites. You just have to fund the Entropay Virtual Card by drawing funds from your personal credit card or debit card.

Likewise you can create virtual cards provided by the banks mentioned above and use them for online payments. However, you cannot use State Bank Virtual Card for international payment since this is only compatible with Indian merchant websites. Similarly, the Lime wallet and Pockets app are not ready for international payments yet.

The Complete Guide to Create a Free Virtual Credit Card in India.

Now if you are ready with your debit card, PAN, bank account, and active email id, your PayPal account sign up process will only take a few minutes.

How to Create PayPal Account with Debit card in India

(Step by Step with Images)

In this section I have described how to open Individual PayPal account in India.

If you want to know how to create PayPal account for business, the steps will be more or less similar. The only difference is you have to enter the PAN details of your business. For example, if you have a pvt. Ltd. company and you want to set up a PayPal account in your company’s name, you must provide your company’s PAN details. Besides, all other tasks required to verify the PayPal business account will appear on the notification option once you sign up successfully.

Step 1: Log on to PayPal.com

Step 2: Click on the ‘Sign Up’ button

Step 3: Select Individual account and press Continue.

Step 4: Enter a valid Email id and password for your PayPal account and hit Continue

Step 5: Enter your name, address, and mobile number etc. correctly. Tick the box at the bottom before you hit the ‘Agree and Create Account’ button. Remember, the name you enter must match with the name mentioned on your PAN card.

Step 6: Now, you will be asked to enter your debit card or credit card details. If you are sure that your debit card is enabled for international usage, it will be accepted without any issues and you’ll be forwarded to next step.

Otherwise, a message like this will appear on the screen.

(Here’s what happened with my debit card: I have two normal debit cards without any chip. One is Andhra Bank International Debit Card and another is HDFC women’s debit card. None of them worked with my PayPal account and I couldn’t move forward. Then I tried HDFC Platinum chip debit card of my husband and it was instantly received.)

As you enter your debit card details, an amount of around Rs.66 will be debited and credited back to the card. This is just a process of verification.

Step 7: Now it’s time to complete the account profile. Click on ‘Go to your account’ at the bottom of the page.

Step 8: The page you land in, will show you a notification on the right. It asks you to finish some tasks. Click on it and it will take you to a new page.

Step 9: Below is the task board of your PayPal account. There are four tasks you need to accomplish in order to complete your profile. Go for it one by one.

Step 9.1: Enter the PAN number properly. As I said, the name should be exactly the same. When the PAN is verified, click on ‘go to task board’.

Step 9.2: Check your email and confirm the email id.

Step 9.3: If you see the same task board on the browser, click on start button next to ‘Add bank account’ option. If not, click on the Notification button on the top right of the PayPal account page to arrive on the task board. Enter your bank account number and IFSC code and press continue. It usually takes 3 to 4 days to confirm the bank account. You will be informed through email. Read the instructions from the email and get back to confirm the same.

Step 9.4: The last task on the task board called is purpose code. Press the ‘start’ button to select the purpose code. If you are not the task board page, click on the setting symbol  next to the logout button and go the profile setting page.

Edit the purpose code and select the one you want.

Step 10: Confirm your mobile number directly from the profile page. Click on the confirm button. Or go to the profile setting page like we did in the previous step.

Every time you add information to your PayPal profile, you receive an email confirming the change.

Add a profile picture if you like.

Now the profile is almost complete and it will somewhat look like this.

Once you confirm the bank account, it will reach 100%.

How to Confirm Bank Account in PayPal?

Within 3 to 4 working days, you will receive an email with instructions on how to confirm your bank account on PayPal.

PayPal sends 2 amounts to your bank account each between Rs.1.01 and Rs.1.50. once you receive the email; you just need to log in to your PayPal account => Confirm your bank account(refer to the last inactive circle in the picture above). When you click on it, there will be two boxes where you need to enter the exact amounts and continue.

To know the exact amount, you can

• Log in to your internet banking profile of the bank account
• Use bank’s mobile application
• Update your passbook or request account statement if you don’t use internet banking or mobile application.

However, it’s advisable to use the first two platforms to access your bank account details easily.

Now, PayPal profile should be complete and verified.

Having problems with verifying your bank account? Here’s how to deal with it.

How Many Bank Accounts or Cards can be Added to PayPal Account?

You can add two bank accounts and two debit/credit cards to your individual PayPal account. But the additions will have to go through respective process of verification.

Click on Payment Method button on the account home page to link bank account and card.

For any help and assistance, click on Help Center button at the bottom of the page.

As I have mentioned earlier, I had tried to link my HDFC debit card and it was denied. But as I went on finishing the tasks where I had linked my HDFC savings account to PayPal, I received a phone call from HDFC customer care cell. They asked me if I would like to enable the debit card for international usage, since they have already traced the PayPal connection. After a few thought I said yes and it was activated without any additional cost. Within a few minutes, I tried to link my HDFC debit card to PayPal account and it was taken. A specific amount was debited and re-credited to the debit card like before and confirmation was made. However, they’ve set a specific limit beyond which payment will not be possible as of now.

Hope the article serves your queries on how to create your PayPal account properly and verify it without any issues. Write to me if you have something to add or you can use the comment box below. Your suggestions are always welcome.

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