If you are a freelance writer, programmer, artist, web designer or digital marketer dealing with foreign clients, you must have a PayPal account.
PayPal is an easy way to do cross border money transactions. Here, after you setup your account, you no longer have to disclose your personal information and card details. This makes PayPal a hassle-free and safe option for many Indian freelancers.
PayPal has become the no. 1 choice for freelancers who frequently work with foreign clients and receive cross border payments. If you want to have a successful career as a freelancer you must become aware of the nitty-gritty of this payment platform.
Note that, PayPal is only for receiving payment from foreign countries. For this reason, the purpose of receiving money from abroad must be disclosed. PayPal doesn’t allow money transfers between people residing in India.
In this blog post, Indian freelancers will get important information regarding what PayPal Purpose code is? Why it is required? , and which purpose code is suitable for their line of work.
Without further ado, let’s jump right into the important stuff…
Contents
What is the PayPal Purpose Code?
At first, PayPal had declared that Indian users had to use IEC or Import/Export code for transferring and receiving money via the platform. Fortunately, the PayPal blog later disclosed that IEC was not required and Indian users can very well receive money by choosing a suitable PayPal purpose code.
This was news of relief for Indian users since they were saved from the hassle of applying for an IEC number with the Indian Government.
The PayPal purpose code is mainly required by the banks of India and the regulators of PayPal to know the nature of the transaction that led to the payment. You have to choose a suitable purpose code if you want to withdraw money from your PayPal account.
Always keep in mind that PayPal can only be used for cross country transactions it cannot be used for transferring money within India.
Till now you must have understood why PayPal purpose code is necessary. If you want to take extra precaution to have a smooth withdrawal experience from your bank you may want to take a screenshot of your invoices.
The Different PayPal Purpose Code Options
There are a variety of PayPal Purpose codes to choose from and therein lies the confusion. If you see the list of PayPal purpose codes there are many codes that overlap for similar services.
This can become a mindboggling thing for an independent worker or freelancer especially if you offer a mixture of services. The rule of thumb is if your transactions are mainly for a particular service, let’s say web development then you are going to choose the purpose code which closely represents that major service.
If you offer web developmental services then the purpose code that you should be using is P0802. More precisely, choose the code for software consulting. All freelance developers can go with this purpose code under the Information technology category.
If you offer some different services then have a look at the full list of the PayPal Purpose codes.
Some of the major categories listed on the PayPal purpose code list are:
- Exports (of Goods)
- Travel
- Construction Services
- Telecommunication, computer and information services
- Charges for the use of intellectual property
- Other business services
- Personal, cultural, and recreational services
- Maintenance and repair services
- Manufacturing services
Which PayPal Purpose Code to Choose?
To clear some of your confusion, we are mentioning a few of the purpose codes that can be used based on the service you offer to your clients:
- P0805 purpose code can be used by bloggers and freelance journalists.
- P1007 purpose code can be used for marketing, brand consulting, and logo design services.
- P0802 purpose code can be used for freelance coding and software programming services.
- P0803 purpose code should be used for apache to Nginx and blogger to WordPress migration, WordPress recovery, or backup services
- To receive payments from advertising such as Kontera, BuySellAds, and Infolinks use the purpose code P0806.
- For receiving payments for affiliate marketing such as those from Hostgator and Dreamhost use purpose code P1007. The same PayPal purpose code can be used for graphic design and logo design services.
RBI has fixed the code P0805 for news agency services and bloggers. The freelance writers also come under it.
As mentioned above, you may also need to produce related documents while withdrawing money from your local bank.
If you are still confused about which codes to choose for your services its best to avoid any risk and directly contact the PayPal support line.
How to add Purpose code to an Indian PayPal account?
Follow the below-given instruction for adding PayPal purpose code:
1) Go to www.paypal.com/in and login to your account
2) Find the ‘My Account’ option where you will receive prompts to add your bank account, PAN, and purpose code.
3) Select the ‘add links’ options for purpose code and follow the instructions that come up.
PayPal can only be used for goods and services offered. It can’t be used for doing charity and donations.
PayPal also longer can be used for personal transactions. If you happen to have money transferred to you as a gift you can receive it via cheque withdrawal.
Recommended for you:
8 Best Online Payment Alternatives to PayPal
Reasons Why PayPal Is Rejecting Your Credit/Debit Card
How to Get Verified PayPal Account Without Using Credit Card
Final Thoughts
We hope we could clear out all your doubts regarding PayPal’s purpose code. Again, it is wise to have a record of all your invoices and other supporting documents. If the need arises you can easily produce them to your local bank to have a hassle-free withdrawal. For Indian freelancers who cater to clients residing in India, they can receive payment through NEFT itself and donot need to look for other payment modes for transactions.
Let us know which PayPal purpose code you use for your services.
If you have any further queries regarding purpose code you can just leave your comments down in the comment section and we will get back to you soon.
