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Delhi High Court has issued Notice on a plea seeking direction to stop the operations of online payment portal PayPal in India immediately.

Acting upon a plea filed by Abhijit Mishra a division bench of Delhi High Court headed by the Chief Justice D N Patel and Justice C Hari Shankar has issued notice to Reserve Bank of India & PayPal.

Petitioner contended that PayPal is operating without Authorization which is a Violation of The Payments and Settlements Systems Act – Section 4 Sub Section 1 states that “Payment system not to operate without authorization. —(1) No person, other than the Reserve Bank, shall commence or operate a payment system except under and in accordance with an authorization issued by the Reserve Bank under the provisions of this Act”.

Pleas reads, PayPal is operating with Authorization as a Foreign Exchange dealer for their clients to receive and send money for their Export and Import transactions in violation of the Foreign Exchange Management Act Section 10 Sub Section 1 that states “Authorized person.—(1) The Reserve Bank may, on an application made to it in this behalf, authorize any person to be known as authorized person to deal in foreign exchange or in foreign securities, as an authorized dealer, money changer or off-shore banking unit or in any other manner as it deems fit.”

PayPal is not listed as an authorized operator as per list of the ‘Payment System Operators’ authorized by the Reserve Bank of India to set up and operate in India under the Payment and Settlement Systems Act, 2007 as published by the Reserve Bank of India dated May 27th, 2019.

PayPal though its unauthorized operation in India as Payment and Settlement Systems has unmonitored and unauthorized access to the personal information such as AADAR, PAN, Transaction etc. of the public.

PayPal is not adhering to the Reserve Bank of India circular RBI/2017-18/153 | DPSS.CO.OD No. 2785/06.08.005/2017-2018 dated 6th April 2018 with subject – “Storage of Payment System Data” issued under Section 10(2) read with Section 18 of Payment and Settlement Systems Act 2007. User Agreement Section 1.1 Payment Services makes an admission that “PayPal is a payment services provider and acts as such by creating, hosting, maintaining and providing our PayPal Services to you via the Internet.

PayPal offers the following services in India:

a)  Collection of payments from Buyers outside India for payment to you, in case of an export of goods or services by you from India;

b)  Receipt of payments from Buyers in India to you in case of a domestic sale or provision of services by you; and

c)   Making payment to merchants in India in case of a domestic purchase or receipt of services by you.

The matter would now be heard on 18 September 2019

– India Legal Bureau 

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