30 March, 2010 - 10:38

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.