Why someone insisting on pay as "Friend"

[Shubzy]

I am trying to pay a friend for something. He is insisting that I pay as a friend which I don't mind doing. But I wanted to know if the friend fails to keep up with his commitment, can I raise a dispute/claim on the same?

Friend is in a different country, I am in India. 

[kernowlass]

@Shubzy 

A friends / family (or gift payment) is intended as a transfer of funds from family or friends to one another. For this reason, there is no processing fee when payment is made with bank or PayPal balance.
However as it is a gift payment, there is also no Buyer protection as no goods or services should have been exchanged.

If he was not a close mate or family member you should never use that option as it enables the seller to evade paying his paypal fees and negates your buyer protection at the same time.

You would also not be able to open a dispute apart from one citing an unauthorised transaction but that would be automatically closed as you did authorise the initial payment.

Be careful as using that option for purchasing goods is against Paypal rules and can lead to account limitation.