In a country where the penetration of mobile phones is better than toilets and job creation is pathetic, right along with the employability of products of a crippled education system and a government perpetually short on funds for crucial development, one would imagine that encouraging people to do business so that it goes through banks would be a high priority.
Not in India.
If you decide to make and sell handmade toys online in any other country, you'd just make them, upload photos and put a Paypal button next to them. In India, you can't take payments from Indians using Paypal.
The government is paranoid about black money.
This has to be a joke, because there is far more black money thriving under the government's nose everywhere. Besides, there are PAN numbers attached to accounts and it should be a simple matter to force Paypal statements to be submitted with accounts. Even the hyper paranoid measures taken, that currently prevent Indians to do anything with their Paypal balance than withdraw it (and incur higher fees if amount is less than 7,500) would still force money to pass through the banks. It makes no sense for transactions between Indians to STILL be disallowed.
Perhaps it could be argued that Paypal is a foreign company that will mint money from transactions within the country. But then the government should be looking at enabling more alternatives.
To accept payment online, other than putting your bank account number on the page and asking people to email you transaction details when done, most options you have are expensive.
If you make a Rs.50 trinket to sell, whether anyone buys it or not in the future, you'd end up spending at least Rs,50 to courier your documents to the payment gateway provider. Many of them require you to make phenomenal payments upfront and are clearly designed to suit businesses dealing with large sums online.
Why is this so? Why cannot a LEGAL, netbanking account be the verification of itself? It exists, does it not? Why cannot the ability to pay from it and withdraw to it be all the verification needed?
Some say that this is to prevent fake accounts. But why is this the headache of payment gateways or users? Why cannot banks be expected to be responsible for verifying who makes accounts with them?
There is tremendous economic potential and a shift from black money to white possible, if anyone with a netbanking account could use it to sell any (legal) service or product online. Selling a 50 rupee book? Go ahead. Got your vegetabe vendor's phone number? Pay him for groceries with a bank transaction. Purchasing organic millets from a farmer? Go to his blog page on some free blogging service and buy online and pay into his bank account directly.
Why is there such a handicap about online economic activity in a country pretending that it wants to be a superpower? It almost seems as if the government is doing all it can to prevent economic productivity and then grudgingly allowing it only to those who are already thriving without it.
I have spent two days trying to figure out a payment gateway to sell really cheap subscriptions for a children's newsletter. There isn't a single option available that will not charge phenomenal amounts for the privilege of using their service or need documents I don't have because another arm of our government seems to have forgotten to send me my corrected PAN card. The only possibility appears to be instamojo which is a sort of workaround that charges your buyers on your behalf and transfers money to your account twice a month.
Forget what I want to do. It can be managed offline too.
But really, in a country with so many people in poverty and unemployment but rich and commercially viable resources of traditional crafts and labour, rapidly selling small products or services on whim shouldn't be so difficult if you are interested in them earning their way to a better life.
It is almost as if the government doesn't want India to earn unless it is the elites.