Finance Money Technology


Written by Medhaavi Mishra

Well, are you a blogger, social media consultant, web designer, Internet marketer and do you not understand purpose codes?! Then, you are the right place for this.

To put in lay man’s term, a purpose code is a code issued by the Reserve Bank Of India to aid and classify the nature of Foreign transactions. It will be very useful for millions of people getting paid by online clients or paying businesses online. It simply aids in cross border transactions.

coins, money, transaction, online payment

Purpose codes also allows the regulators to know the nature of cross-border transactions that take place. There are two types of purpose codes for cross-border transactions. They are:

1.Receipt purpose code: Used for receiving cash.

2.Payment purpose code: Used for paying cash.

purpose codes, types, transactions, PayPal
Purpose codes

Some easy online transaction options:


payoneer, logo, online transaction


PayPal logo, online transaction


PINGPONGX LOGO, online transaction




XOOM logo, online transactions

PAYPAL and Purpose codes:

Paypal is basically an American company enabling online payments to users for transferring money electronically rather than physical coins and cheques. It was founded by Paolo Alto in December 1998 in California.

PayPal logo, online transactions

PayPal is primarily used for the transactions with abroad countries. It assists Indians with cross border transactions. One cannot use PayPal for money transactions within India. PayPal has made purpose codes mandatory for all transactions. When a purpose code is not chose it chooses the default transaction purpose code and proceeds. A purpose code basically explains the reason for the user’s cross border transaction.

online transactions, freelancing, cash
Online Transactions

How to change the purpose codes in PayPal account?

It’s a simple 3 step process that can be easily done within the PayPal app itself.

  1. Go to Settings.
  2. Click Edit -> Purpose Code.
  3. Select a purpose code and then click Save.

How to send money using PayPal?

  1. Tap Send.
  2. Enter the name, email or mobile number of the recipient and tap Next.
  3. Type the amount you’re sending and tap Next.
  4. Choose your preferred payment method and tap Next.
  5. Review the information and tap Send now.
Online transaction, wallet, mouse, payments, cash
Online Wallet

What are the purpose codes on PayPal?

Some examples of PayPal’s purpose codes are:

Repatriation of Indian investment abroad in equity capital (shares)-P0001
Repatriation of Indian investment abroad in branches-P0003
Repatriation of Indian investment abroad in subsidiaries and associates-P0004
Repatriation of Indian investment abroad in real estate-P005
Foreign direct investment in India in equity-P006
Foreign direct investment in India in debt securities-P007
Foreign direct investment in India in real estate-P008
Foreign portfolio investment in India in equity shares-P009
Foreign portfolio investment in India in debt securities including debt funds-P0010
Repayment of loans extended to Non- Residents-P0011 Loans from Non-Residents to India-P0012 Receipts of Non-Resident deposits (FCNRB/NRERA etc.) ADs should report these even if funds are not “swapped” into Rupees.-P000H
Loans & overdrafts taken by ADs on their account. (Any amount of loan credited to the NOSTRO account which may not be swapped into Rupees should also be reported)-P0015

Similarly, there are so many other codes for transportation, travel, communication services, construction services, insurance services, financial services, computational services, royalty services, recreational services, etc.

How safe is PayPal for buyers?

If an eligible item purchased by the user does not get delivered due to various valid reasons, PayPal would reimburse the buyer’s purchase and shipping charges. So your money is in safe hands.

Secured transaction, online transaction, buyers, sellers
Secured Transaction

How safe is PayPal for sellers?PayPal protects sellers against unauthorized payments, items not received claims and reversals due to fraud. If, a buyer files a charge back or payment reversal, PayPal places a temporary hold of funds. Paypal asks for proof of shipment or delivery and fully investigates the matter. The funds will be made available once PayPal confirms that the transaction is eligible for seller protection.


About the author

Medhaavi Mishra