PayPal has suspended all payments and transfers in India, though the eBay-owned payments platform was vague on the reason. The company says that there are "questions" that need to be addressed before enabling the service in the country again. What those questions were or how long the block will last the company wouldn't say.

"I’m writing to let you know that personal payments to and from India and transfers to local banks in India have been suspended while we work with our business partners and other stakeholders to address questions they have about the service," PayPal said in the short blog post.

What this means is that no one in India will be able to make any payments through PayPal, a huge inconvenience especially in a country where other online payment options are limited. This is a much bigger problem for online merchants in the country, though, as they will not be able to retrieve any money they may have in their PayPal accounts.

"During this time, customers can still make commercial payments to India but merchants cannot withdraw funds in Rupees to local Indian banks," explained Anjul Nayar, a PayPal representative.

The move exposes one of the biggest problems with online payment systems, like PayPal, which have absolute control over your money. They offer much more freedom and flexibility than a credit card, but at the same time can be much more limiting. The speculation is that the move is related to harsher rules governing financial institutions in India to prevent money laundering.

"We’re trying to resolve the situation as quickly as possible and we’re really sorry for the inconvenience that this may cause our customers in India and around the world," PayPal added.

PayPal likely didn't take the decision lightly, but it's clear that it will have repercussions in the country. India may not be its biggest market, certainly not in terms of revenue, but others may begin to wonder just how much control do they really have over their PayPal account, a slippery slope. Trust is crucial for any company handling your money. PayPal has spent years building that trust, but could lose it much faster.