The move from the court comes after a petition was filed by Abhijit Mishra, blaming PayPal for violating Section 4 (1) of the Payment and Settlement Systems Act, 2007.
The act states that no person other than the Reserve Bank, shall commence or operate a payment system except in accordance with an authorisation issued by the RBI.
Paypal, an American company was established in 1998 as Confinity. It is a worldwide online payments system that supports online money transfers and serves as an electronic alternative to traditional paper methods like checks and money orders.
The company operates as a payment processor for online vendors, auction sites, and many other commercial users, for which it charges a fee in exchange for benefits such as one-click transactions and password memory.
According to Mishra, PayPal Payments Private Limited is not listed as an authorised operator as per the list of the ‘Payment System Operators’ published by the RBI on May 27, 2019.
The petitioner also alleged that PayPal has unauthorised access to the personal information of the citizens such as Aadhaar and PAN, thus violating Article 21 of the Constitution of India.