"MY PAYPAL MANIFESTO: WHY PAYPAL SHOULD NEVER BE USED FOR CRYPTO!
OK, I'm not going to tell you a pack of lies. I'm only going to tell you the way it is and will substaiante what I say with links to various pages of the Official Paypal website and refer to a couple of Paypal emails which surfaced a while back regarding Paypal's internal policy on cyrptocurrency related transactions.
This is a very long post but I believe that it contains very important information regarding how you are best NOT separated without payment from your hard-earned cyrtocurrency, be it Bitcoin, Litecoin, Feathercoin or whatever happens to be your crypto of the day.
In this post I have attemtped to be as brief as possible while still imparting the main thrust of the information and to provide affirmative substantiation for my position that Paypal should never, ever be used for any kind of cryptocurrency related transaction.
Let us begin!
Examine this link to items excluded from the Paypal Buyer Protection Policy:
https://www.paypal.com/helpcenter/main.jsp;jsessionid=JwCcRwwQG2rnG2tklpPM0v4HQPJvF3R4Mxy4BHrkY5xNlCnmkT91!-839210079?locale=en_US&_dyncharset=UTF-8&countrycode=C2&cmd=_help&serverInstance=9022&t=solutionTab&ft=browseTab&ps=solutionPanels&solutionId=1229191&isSrch=Yes
Please take careful note (From the citation):
Q: "What types of items are excluded from PayPal Buyer Protection?"
A: " Intangible items, including Digital Goods
(Q): If You Buy Crypto On ebay Are You Covered By Paypal Buyer Protection?:
(A): Yes, when you buy on
www.ebay.com you are covered by PayPal Buyer Protection for eligible purchases.
https://www.paypal.com/helpcenter/main.jsp;jsessionid=MbyyS1PbtZ8QTtGmKqdGvv0WPXR9jkh5hk2TvvllgbPRG6YwqKpV!-1109887407?t=solutionTab&ft=homeTab&ps=&solutionId=166697&locale=en_US&_dyncharset=UTF-8&countrycode=C2&cmd=_help&serverInstance=9022
In short, because Cryptocurrency is a digital item, buyers are NOT elegible for Paypal Buyer Protection!
Now let's take a look at the situation for sellers:
"(Q): What is PayPal Seller Protection?
(A): PayPal Seller Protection is a form of protection that we provide for sellers with a PayPal Account. It is available for eligible payments made through eBay and outside of eBay which involve buyers purchasing through PayPal Accounts in any country.
(Q): What kinds of transactions are not eligible for PayPal Seller Protection?
(A): Intangible items, including digital goods, travel tickets, gift vouchers and services.
Items that you deliver in person, including at a physical store."
"Prohibited Activities
You may not use the PayPal service for activities that:
(2) relate to transactions involving:
(h) involve currency exchanges ................................."
Let us examine further:
"PayPal requires pre-approval to accept payments for certain services as set out in 6 above and detailed in the chart below."
"Activities Requiring Approval:
"Airlines and scheduled or non-scheduled charters/jets/air taxi operators; collecting donations as a charity or non-profit organization; dealing in jewels, precious metals and stones; acting as a money transmitter or selling stored value cards; selling stocks, bonds, securities, options, futures (forex) or an investment interest in any entity or property; or providing escrow services."
Think that you'll cover yourself as a buyer or seller by writing some kind of "No Chargeback" agreement?
Think again! Such an agreement is a contract and Paypal Buyer/Seller Protection does NOT cover contracts!:
http://pages.ebay.com/help/policies/contracts.html"Policy overview
When you list an item that comes with a contract, you're responsible for following the rules of that contract. Since eBay isn't a party to these types of contracts, we don’t review contracts, adjudicate, or take sides in any contract disputes, or enforce terms from third parties restricting the resale of an item.
If you have any questions about your rights under a contract or agreement, get in touch with the company you have the contract with or talk to a lawyer for advice."
Think personal delivery will cover you as a seller or buyer?
Think twice!:
https://cms.paypal.com/c2/cgi-bin/?cmd=_render-content&content_ID=ua/UserAgreement_full&locale.x=en_US#7.%20PayPal%20Buyer%20Protection.
"Items which you collect in person, or arrange to be collected on your behalf, including at a retail point of sale."
Oops! There's another good idea down the tubes!
And last but not least; think you're covered by taking a "Personal Payment" or "Gift" through Paypal?
But NO!
Paypal will not charge back on such transactions but if the Paypal account has been funded by a credit card instead of the Paypal balance or a bank account, the buyer can go back on the seller through the issuing credit card company!
Here's the kicker!
It is against the User Agreement to prohibit payment through Paypal in transactions funded by credit card!
From the Paypal User Agreement:
Prohibited Items:
"Items equivalent to cash, including prepaid or gift cards."
Crypto may be considered by Paypal to be equivalent to cash at any thime and there you go!
https://cms.paypal.com/c2/cgi-bin/?cmd=_render-content&content_ID=ua/UserAgreement_full&locale.x=en_US#7.%20PayPal%20Buyer%20Protection.
And FINALLY:
Here are the true skunks in the woodpile!
Emails from Paypal regarding the use of the service for cryptcurrency related transactions:
(1) "Hello [name removed],
We have reviewed your PayPal account and found that you are selling bitcoin mining machines. Per our current Acceptable Use Policy for Money Service Businesses, PayPal may not be used to operate a currency exchange, bureau de change or check cashing business including the sale of bitcoins, bitcoin mining units, and other related bitcoin products.
To continue using your PayPal account, we need some additional information from you. Keep in mind that we have placed a limitation on your PayPal account, and this limitation will remain until we receive and review this information. Please provide us with the following:
• A brief affidavit stating that you understand and will comply with PayPal's terms and conditions. • The type of payments you will send and receive, including the type of goods or services you will accept payments for in the future.
Below you will find suggested affidavit language. Please make sure that the requested affidavit is signed and notarized.
I the undersigned do affirm that I understand and will comply with PayPal's policy regarding the use of PayPal Accounts to sell e-currency, such as bitcoins, bitcoin mining units, and other related bitcoin products. I understand that PayPal may not be used to sell e-currency, such as bitcoins, bitcoin mining units, and other related bitcoin products. I further affirm that any further detected violation of the policy may result in the immediate closure of, or restriction to access to the account.
Please log in to your account and go to the Resolution Center to find out what you need to do. Your account will remain limited until the issue is resolved.
Additionally, in the future, if we find that your account is selling bitcoin products, we will need to sever our business relationship with you.
We look forward to hearing from you and thank you for choosing PayPal as your business partner.
Sincerely, Mike PayPal Compliance Department PayPal, an eBay Company
Please do not reply to this email address as it is not monitored and we will not receive your response. You can get in touch with us by clicking "Contact Us" at the bottom of any PayPal page.
Copyright © 1999-2013 PayPal. All rights reserved."
Paypal Official Policy on Bitcoin related transactions:
(2) "Clarification on Bitcoin merchants using PayPal 6/10/2013 8:58 AM (-05:00) Impacted market: EMEA
We’ve received a number of escalations regarding Bitcoin merchants using PayPal. Any merchant seeking to sell or buy Bitcoins with PayPal is operating as a financial exchange. Please be aware that Financial Exchange merchants are prohibited unless pre-approved by PayPal. This process involves getting VP approvals from both Risk and Compliance, and only licensed financial institutions are considered.
Merchant contacts
If we receive contacts on Bitcoin sales, instead of escalating further, kindly advise customers that they need to be licensed financial institutions to be considered for approval. However, there are some acceptable cases, as outlined below.
Acceptable Bitcoin business models for PayPal
Merchants with a business model that is related to Bitcoin but does not sell Bitcoins may be acceptable. For example: Merchants offering Bitcoin education packages Merchants selling computer hardware designed specifically for mining Bitcoins. In this case, kindly ensure that the merchant isn’t pre-selling and actually has the equipment ready to deliver.
Please note – All Bitcoin-related e-commerce should be considered high risk."
http://www.reddit.com/r/Bitcoin/comments/1g23w2/paypal_email_to_employees_policy_regarding_bitcoin/Paypal can lock up BOTH the seller and buyer accounts for up to 180 days on the basis of "suspicious transactions"!
In short.........................
DO NOT USE PAYPAL FOR ANYTHING CONNECTED WITH CRYPTOCURRENCY IF YOU WANT TO GET PAID AND STAY PAID!
My $.02.
Thank you for reading!"
