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The decision to amend its protection programs for NFT transactions was quietly disclosed on March 21, 2024, through updates to PayPal’s policy documentation.
American multinational payments firm, PayPal Holdings Inc (NASDAQ: PYPL) says effective May 20, it will no longer provide buyer protection for Non-Fungible Token (NFT) purchases. This is a significant shift from its buyer and seller protection policies concerning non-fungible token transactions.
The update in its terms of service marks a departure from its previous policy in the digital asset market. The implication is that from the twentieth of next month, PayPal will no longer provide any form of buyer and seller immunity.
PayPal Changes Buyer’s and Seller’s Protections
Based on the revised terms, PayPal explicitly states that NFTs will no longer be eligible for protection under its Purchase Protection Program, regardless of the transaction amount. Furthermore, NFTs valued at $10,000.01 USD or above will be excluded from PayPal’s Seller Protection Program, while transactions below this threshold may still qualify when the transaction meets specific eligibility criteria related to unauthorized transactions.
The online payment platform first filed for NFT marketplace in March 2023 at the United States Patent Office to enable the company to maximize the potential of NFT for tokenization. The move helped PayPal expand its range of crypto offerings to users.
According to its website, the decision to amend its protection programs for NFT transactions was quietly disclosed on March 21, 2024, through updates to PayPal’s policy documentation. Despite the announcement, these changes have largely gone unnoticed until now.
The new policy update represents a partial reversal of PayPal’s previous stance on NFTs, where both buyers and sellers enjoyed coverage under the platform’s policy. However, PayPal gradually scaled back its support for NFT sellers over time, climaxing in these recent policy adjustments.
Implication for Market Dynamics
The decision comes amidst PayPal’s broader foray into the blockchain and digital asset space, as evidenced by its introduction of cryptocurrency support on its platform in 2022. Moreover, the company filed a patent application for an NFT purchase and transfer system, indicating its growing interest in leveraging blockchain technology for innovative solutions.
Market watchers speculate that the changes may impact the risk profile associated with NFT transactions conducted through the company’s systems. Just last month, PayPal suffered a downturn in the circulation of its stablecoin PYUSD. Reports revealed that total circulation plummeted by as much as 38%.
As online platforms like PayPal continue to balance risk mitigation measures for both users and the platform itself, it remains to be seen how market sentiments will react. It is also speculative whether this policy will trickle down to other crypto products on offer by the firm. Experts say the primary focus for such firms is to maintain innovation.
Early in 2024, PayPal announced the launch of six innovative products that tap into artificial intelligence meant to keep its approximately 400 million customers and 35 million merchant accounts engaged at a personalized level.
