PayPal Excludes NFT Transactions Over $10K, Following Various Scams
Payment giant PayPal has excluded NFT transactions above $10,000, effective March 21.
Per a revised seller protection program, PayPal laid out its amendments, affecting non-fungible tokens (NFTs). It stated that items represented by NFTs including art, collectibles, and media both physical and digital that are over $10K in transaction amount are ineligible under the program.
The merchant-focused program aims to protect online sales transactions from chargebacks, reversals, and fraud. The seller protection boots if a transaction gets reversed due to successful chargeback by a buyer.
The new norm follows a number of instances of NFT thefts and scams that cropping up recently. Many NFT buyers think that there might be previous instances of NFT frauds on the payment platform, which has led to this amendment.
I’ve made multiple transactions over $10,000 with PayPal that qualified for buyer protection — it’s how I manufacture stuff!
I’m pretty sure someone paid a lot for an NFT, got scammed, and PayPal had to pay out for buyer protection, and that’s why we’re seeing this change.
— Aaron Reynolds (@aaronreynolds) February 12, 2022
As NFT Craze Increases, So Does Scams
The revision of seller protection norms come at a time when tax authorities in the U.K. seized NFTs linked to an alleged $1.8 million NFT fraud case. With increasing NFT scams, several sites have cautioned consumers to check if they are legit.
The U.S. Treasury also revealed that the burgeoning NFTs can be used for money laundering.
Some of the common NFT scams are fake minting, deadlinks, and discord hacks, where fraudsters gain administrator-level access to a discord server and post a fake minting link.
“Having a system that is managed with professional validators makes it feasible to fully protect consumers from NFT frauds,” Tom Anderson, CEO Devv.io, a blockchain and NFT security company, told FXEmpire.
PayPal’s move restricting NFT transactions that are beyond $10,000, not only prevents buyers from losing money in a lump in case of fraud but also helps cut scammers.
PayPal’s Pro-Crypto Moves
The new crypto-friendly feature allowed U.S. PayPal account holders to hold cryptocurrencies and shop with them at its 26 million merchants. The California-based company also extended the service to its peer-to-peer payment app – Venmo in 2021.
Additionally, PayPal and Venmo have let their users who dabble in cryptocurrencies, move their digital coins to third-party wallets such as Coinbase.
Earlier this year, PayPal announced plans to launch its own stablecoin dubbed ‘PayPal Coin’ backed by the U.S Dollar. The company also formed an advisory council for cryptos and blockchain, involving six individual experts in the industry.