Quick take:
- PayPal said the “uncertainty around proof of order fulfilment and other variables” led to the policy tweak.
- Sales exceeding $10,000 are excluded from protection against false claims and chargebacks.
- Transactions below $10,000 will be protected if the buyer “claims it was an Unauthorised Transaction and the transaction meets all other eligibility requirements.”
PayPal has tweaked its buyer and seller protection policies for NFT purchases and sales. According to an update on the company’s Amendment to Purchase Protection Program section, the global payments giant said it is revising the program to exclude from eligibility non-fungible tokens (NFTs).
This particular update relates to payments that users initiate via a third-party platform using their PayPal Balance account and assigned account and routing number (PayPal’s Direct Debit functionality).
The company also amended its seller protection program to exclude NFT transactions exceeding $10,000 are excluded from protection against false claims and chargebacks. For transactions equal to or below $10,000, PayPal said they will be protected if the buyer “claims it was an Unauthorised Transaction and the transaction meets all other eligibility requirements.”
The company said the new amendments will take effect from May 20, 2024. Explaining the reasoning behind the amendments, PayPal said the “uncertainty around proof of order fulfilment and other variables” led to the policy tweaks.
This announcement coincides with a period when the crypto market, in general, is bouncing from multiple fronts, including cryptocurrency prices, Web3 funding and an insatiable demand for new asset classes like tokenises real-world assets and crypto restaking.
PayPal’s policy update comes following the company’s notice, published on March 21, which showed that it plans to stop protecting some NFT transactions.
Although PayPal did file a patent application for an NFT marketplace with the USOPT, the digital art segment of the online payment giant’s digital asset strategy has failed to keep up with other verticals like the PYUSD stablecoin and support for traditional crypto transactions.
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