PayPal announced that effective May 20, it will no longer offer buyer and seller protections for transactions involving NFTs, marking a notable shift in the company's approach to the digital asset market.
Historically, PayPal's protection programs have protected consumers from fraudulent transactions, providing refunds and protecting merchants from chargebacks and false charges.
However, as confirmed in the latest update to the company's Terms of Service, the protection no longer applies to NFT-related transactions.
high value transaction
This decision primarily affects high-value transactions. PayPal no longer guarantees NFT sales exceeding $10,000 due to possible fraud by the buyer or seller.
The company will continue to allow seller protections for NFT transactions worth $10,000 or less if the buyer claims the transaction was unauthorized and meets other eligibility requirements.
A PayPal spokesperson told CryptoSlate that the company is discontinuing NFT purchase protections and reducing NFT seller protections due to “uncertainty around proof of order fulfillment” and other concerns.
PayPal initially announced the policy revisions in a discreet update on March 21 on PayPal's official website. These adjustments reflect PayPal's cautious stance toward the rapidly growing but unpredictable digital collectibles market.
Get out of NFTs
PayPal's updated policy signals a shift in how major financial service providers engage with digital assets amid increasing regulatory attention and market volatility.
By distancing itself from the uncertainty of the NFT market, PayPal is attempting to mitigate potential losses associated with fraud in the sector, especially amid high volatility.
However, this conservative approach may limit the company's participation and growth opportunities in the rapidly growing digital asset market. PayPal has historically been open to exploring the digital asset industry and implemented support for cryptocurrency trading in 2022.
Some industry observers suggest this could reduce buyers' trust in using PayPal to purchase high-value NFTs, but it also highlights the need for consumers to exercise greater caution when engaging in digital asset transactions.
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