This is incorrect. The CEO of PayPal David Marcus has already denied these claims:
To clarify: we have no policies against using PayPal to sell Bitcoin mining rigs.
We don't support any currency txn whether fiat or BTC for a host of regulatory
issues. But we treat BTC and any FX txn the same way. We're believers in
BTC though.
Paypal is banning any account which deals in currency exchange. They are still allowing hardware such as Bitcoin mining devices. The gray area are Casascius Coins which they are banning because it involves currency exchange even though it is sold with a physical item.
By the way, my post title was changed by someone else. Paypal is NOT banning anything Bitcoin related, they are only banning Bitcoin exchanges for fiat currencies.
Although that open letter received a lot of attention, nothing has changed since then: No transparency which admin "corrected" the title, not even an indication that this kind of manipulation happened at all. So you as the submitter receive all complaints about the crappy title.
@pg: Note that I fully understand that we HN submitters should not be encouraged to use link-baity names for our submissions. And that we should prefer the original title wherever feasible. But some articles' titles are crap. Some are uninformative, some are misleading, and some titles are even wrong. If it is recommened to remove link-baity numbers from titles ("10 Ways To Do X" -> "How To Do X"), why isn't it equally feasible to replace misleading/wrong titles with informative/correct titles?
The justification for the current behavior is that the mods don't have the time to read the articles and verify whether a custom title is better than the original.
I suggested via email that they could let veteran users flag inappropriate (link-baity/editorialized/inaccurate) titles and have moderators change them in that case, but I never received any answer.
He's not denying that they don't allow trading of any currencies, including BTC. What he says they allow is selling BTC-related products (such as mining machines).
Is the Bitcointalk poster lying, then? One of these two stories can't be true, and the poster has no reason to lie... (Not that people on the internet need one.)
I doubt they're lying, what they are doing is mislabelling their experience as representative. Low level PayPal employees have previously made mistakes that has resulted in people who are selling mining equipment finding their accounts suspended, however these are misinterpretations of the rules by the lowest level of PayPal employees. The David Marcus statement was in response to a story (almost identical to the story of the bitcointalk poster) from a couple of weeks ago.
Neither the bitcointalk poster nor Paypal's CEO were lying, although the poster's conclusion is now proven to be incorrect.
The OP was selling casascius coins, which contain bitcoin private keys (digital currency) and are therefore against the terms of service. The CS rep the OP talked to incorrectly communicated that ALL bitcoin related items were banned. Later Paypal and their CEO issued a statement clarifying that only digital currencies themselves were banned.
I guess David Marcus didn't (nor anyone else at Paypal) read the FinCEN regs because Bitcoin exchange is not considered "currency exchange" for regulatory purposes because FinCEN says it's not a "currency."
They likely did, you clearly did not: "... a person is an exchanger and a money transmitter if the person accepts such de-centralized convertible virtual currency from one person and transmits it to another person as part of the acceptance and transfer of currency, funds, or other value that substitutes for currency"[emphasis mine]
I didn't say you get out of money transmitter rules. Just that Paypal's "currency exchange" reading and analogy is wrong - see: "...a person who accepts real currency in exchange for virtual currency, or vice versa, is not a dealer in foreign exchange under FinCEN's regulations."
You're still not getting it. Paypal isn't subject to the foreign currency rules of the FinCEN regulations because virtual currencies aren't foreign currencies. Paypal is still subject to the other rules that apply to money transmitters.
Ha, come on! That's what I said, we agree! David Marcus is the one saying that it's like Foreign Exchange, which is weird because we both agree it's not under FinCEN rules.
I never said that Paypal isn't a money transmitter, nor that there are not any other FinCEN rules both PayPal and others have to follow.
As the other responder pointed out, Paypal would be a money transmitter under FinCEN regulations. What FinCen was saying is that Bitcoin and other digital currencies aren't "currencies" in the legal sense because they have no government backing. However, they are "virtual currencies" in the sense that they otherwise function and behave as true currencies. Consequently, the FinCEN regulations apply to Bitcoin and other digital currencies.
FinCEN further stated that miners and persons who are using Bitcoin in non-currency transactions(i.e., paying for services, physical goods, or non-digital-currency intangible goods) are not subject to the FinCEN regulations because they aren't exchanging one currency for another, directly or indirectly, and they aren't functioning as commercial money transmitters.
That was predictable, Bitcoin is a huge source of chargebacks and fraud. My bank had issues with people stealing online banking credentials and using them to buy Bitcoin, there's a bit of a blanket ban on that sort of service now I think. It's a fairly common occurrence for sellers on localbitcoins too, I've talked to sellers before who have been ripped off to the tune of thousands of dollars due to similar situations.
I agree for EBay transaction between 2 private individuals.
However, from a consumer / vendor perspective, paypal acts more as a regular payment processing. In that market, the vendor is the client, most of the features you enjoy as a user of services like Paypal or VISA (protection, credit, free transaction, ...) is paid for by the vendor. So their point of view is what matters and right now, they are not happy.
Of course as you noted, Bitcoin on its own is not a competitor to anything except "mailing a check" type transaction. But it can enable creating competing services much more easily than before.
I'm not really well versed in Bitcoin, so I could be misunderstanding the mechanics of it, but I think Bitcoin would be really good for PayPal.
As you suggest, they would continue to provide their service, but instead of PayPal accounts being funded through Visa/MasterCard (X% txn fee) they could be funded through Bitcoin (0% txn fee).
That's completely and thoroughly possible, and doesn't at all conflict with the way eBay operates. I'm not sure if users would accept it particularly readily though, there's other escrow services that require no trust in the escrow agent, why would they use Bitcoin? I'm not particularly opposed to the idea, I don't mind PayPal particularly, I'm just not sure how well it would be adopted.
Getting something that costed you X% to 0% is not always prefferable. Even if you're a business.
Sometimes you go for what most of your customers already know or want, or you go for whats easier and handier, or you go for what is a known quantity and wont have legal or other problems down the line, you go for what's less volatile, etc etc.
The only reason a big company like PayPal would ever use something like Bitcoin as it is today, is not to "take advantage of what it offers", but as a "early adopter marketing ploy", to get some tons of free press and publicity (while still relegating it safely to 1/10000 of their actual businesses).
Completely agree that any involvement in BTC at the moment would be "early adopter marketing" & on some of the other concerns established businesses could have with fundamental shifts in their industry.
I don't think PayPal would go out of their way to push BTC. They're almost certainly taking a "wait and see" approach. The primary thing I unsuccessfully was trying to get across was that PayPal probably does not particularly fear or seek to undermine Bitcoin. It's likely to be upside for them.
You can't do chargebacks in Bitcoin, though, so the entire process would have to be much more escrow-orientated (only release funds once customer is satisfied and has no more recourse).
No surprise. My personal experience with paypal: Apparently I am permanently banned for life because I refused to cover my "negative balance" that resulted from a scammer buying my old laptop on ebay, claiming he never got it (despite having proof of delivery), then somehow reversing the Paypal transaction just by speaking to a representative. He used a brand new ebay account, mine was at least 7 years old with 100% positive feedback. Have they resolved this issue yet? I keep hearing similar stories from friends, who have obviously stopped using ebay/paypal for this reason.
So Paypal customer support apparently just does whatever they want to do, at the individual agent level.
Sold a Blackberry on eBay and shipped with tracking. The seller claimed it didn't work with their network and despite me listing it as 'no returns' sent back a different (cheaper/older) Blackberry to me.
I told eBay and they told me to contact the police but not before returning the money to the buyer and putting my account in the red.
I immediately removed all my bank and card details from Paypal and requested my account be closed.
I waited a week and opened a new account using new card and bank details. Thankfully they've never linked the 2.
'No returns' in eBay World means 'the buyer keeps the item and receives a refund' if the item is not as described / non-functional etc. Or even if the buyer bought it in error.
It doesn't mean 'all sales are final', as many sellers appear to think.
This sucks and is pretty much a known scam. Ebay and paypal don't do what they want so much as just automatically side with the buyer. The buyer could have also claimed they got a defective product. I guess the only way to protect yourself is to purchase insurance.
This is a 'feature' of the credit card system, it has nothing to do with PayPal.
If you buy something with a credit card, you can chargeback by claiming a defective product and get your money back from the card companies. Then the card companies go to the seller to get their money back. In this case, the credit card companies only have a relationship with PayPal, not you, so they come to PayPal to get their money back. PayPal fights them but if they lose then they pay up, then they come to you to get the money back from you, and you obviously refused to pay. You can imagine what this kind of thing does to PayPal's business.
Paypal were the ones that ended up getting screwed in that transaction. Just be glad it wasn't you.
I understand chargebacks. This wasn't a chargeback, it was a straight up Paypal reversal. And if you count not being able to use Paypal for anything as a penalty, then I got screwed too.
Sometimes when all of the businesses (PayPal, Visa, MasterCard, AMEX, Amazon, etc.) in a particular industry behave the same way, it is for good reasons.
What's the alternative? For them to err in favour of the merchant, occasionally screwing consumers? When bad stuff happens in transactions (online or offline) merchants should be prepared to sometimes take the hit. It's so much better than loss of consumer confidence.
Look at the general willingness of large retailers to accept returns. They do it because they want consumers to buy without second thoughts.
Amazing that the author has--and is keeping--$6k in PayPal. Even after they threaten to ban and freeze him.
They're well-known for freezing accounts at a whim, and as a merchant I keep nothing in PayPal longer than a day. I don't keep anything in there as a buyer either; they're perfectly happy to fund purchases directly from a bank or CC account. It's just plain safer if PP has as little of my money as possible.
I'm more amazed by how they can just "freeze" other people's money, with no repercussions at all. I'd expect the police to get involved fast every time they do that.
There are calls on that forum to start 'boycotting' paypal as they have 'gone too far.' The sad thing is: PayPal have been doing stuff like this for years. I've had hundreds of GBP held by them for months for no reason. When I say no reason: I mean that the agent that finally solved it for me admitted there should be no reason this has happened.
Paypal is the worst way to process payments, no one should use them (use any of the alternatives). Paypal will never support anything like Bitcoin unless they absolutely have to because it involves "risk". I wish consumers weren't so use to the easy checkout process, because they're terrible to develop with and will stifle virtual currency adoption.
While I support the idea of Bitcoin (and have some Dogecoin), I do realize that the central banks (note I did not say government) will act swiftly and mercilessly to crush any true competition.
Look at what happened in the Worgl experiment - http://en.wikipedia.org/wiki/W%C3%B6rgl - once the idea gained traction the central bank outright banned it, so that other towns considering it, could not start up a competing currency.
Can Bitcoin be banned? Not without crushing the Internet; but if made illegal (or just subject to very onerous reporting requirements) such that businesses in the USA could not easily use it, it would stop Bitcoin's growth dead.
The history of Wörgl is a bit debatable. There are some accounts that state that their alternative currency quickly devolved to essentially circulating within the city hall, because others became disillusioned about it, in particular its loss of value.
The problem is: I cannot find the link to this article anymore, because searches invariably turn up tons of positive articles that all use suspiciously similar wording - kind of as if somebody with an agenda was consciously working on copy&pasting similar texts all over the internet.
At its core, the idea underlying the Wörgl experiment is actually very simple and most likely true: When a monetarily sovereign government isn't afraid of spending, they can do good things.
You don't actually need an artificially value-losing currency for that, you just need the political will for spending.
Also the amount of scamming involved in the virtual currency market is pretty substantial. I assume they're doing this to curb the headache that's generated.
Or, perhaps Paypal is a company whose interests aren't well served by the availability of electronic money transfers with little or no transaction costs.
Just as a general rule: positing that one individual entity is acting in its own, legal, self-interest is not a "conspiracy theory". It may or may not be correct, but it's not a wacky, crazy, tinfoil hat conspiracy theory.
They are banning the sale of non-physical items. So miners/hardware, even your GPU :) is safe to sell. Basically if it can be shipped in a box, it's fine.
Can you link me to the seller policy? I have an app I'd like to sell (no bitcoin involved - except maybe taking it...maybe), and I've been wondering about the seller policy, but couldn't find it.
1. I don't see how Bitcoin being sold on Paypal is competition to Paypal. Why wouldn't Paypal love to be a place where people sell bitcoins down the road? Bitcoin is a competitor to money, not to Paypal.
2. I've talked to reps at Paypal who have told me transacting BTC using Paypal or even in apps that use Paypal but transact money in other ways is against their TOS.
I lot of people violate PayPal terms of service and then they whine about it. I've been using PayPal as a merchant since 2000, I've been getting nice emails with advance notices when policies change. I wish others had such system in place as well!
The obvious conspiracy here is that David Marcus asked that a bunch of bitcoin related accounts get frozen, then bought a shitload of bitcoin as soon as it tanked before eBay "hastily" declared they "believe in bitcoin"
I pulled them straight out of my ass but it's unlikely I am wrong. Seeing how there is basically no real reason to spend your bitcoin on legal activities (1. because the price fluctuates too much and 2. because nothing valuable can be bought with Bitcoin yet) the only reason why you would be spending this coin is when you want to make semi-anonymous transactions in the illegal circuit.
Oh, the humanity! The nerds and their hoarded pseudo-currencies trying to fleece their IT-ignorant neighbors as payback for having to always fix their PC! If the nerds can't find a Greater Fool to dump their pumps, what next?
https://twitter.com/davidmarcus/status/422632561882316800
https://twitter.com/davidmarcus/status/422632849670299648