San Francisco, (DMA Newsdesk): Online payments' service Paypal has halted personal payments to India following new government regulations that were designed to crack down on money laundering.

Paypal Monday did not cite a specific reason for the suspension apart from concerns raised by PayPal's "business partners and stakeholders". The company noted that commercial payments to merchants in India would continue as normal.

However, in a blog posted on its website, PayPal spokesperson Anuj Nayar wrote "... 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".


Without giving any further details for the unusual suspension, he added that the company is working "to resolve the situation as quickly as possible."


"During this time, customers can still make commercial payments to India but merchants cannot withdraw funds in rupees to local Indian banks," he said.

The move is expected to have a serious impact on the thousands of Indian freelancers who are paid via Paypal for web design, writing and software development, PC World reported.

The move is reportedly related to the Indian government's crackdown in November 2009 on international banking transactions, when it instituted new reporting and verification requirements on all banks and financial institutions to prevent international money laundering.

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