PayPal announced that it would no longer offers protection of buyers and sellers for transactions involving NFTs starting May 20, 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 sellers from chargebacks and false claims.
However, the protections will no longer apply to NFT-related transactions, as confirmed by the company's latest terms of service update.
High value transactions
The decision mainly concerns high-value transactions. PayPal will no longer cover NFT sales over $10,000 against potential fraud for buyers or sellers.
The company will still allow seller protection on 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 dropping NFT purchase protections and reducing NFT seller protections due to “uncertainty around proof of order fulfillment” and other concerns .
Paypal initially announced the policy review in a quiet update on March 21 on the official PayPal website. The adjustment reflects PayPal's cautious stance toward the booming but unpredictable digital collectibles market.
Stay away from NFTs
The implications of PayPal's updated policy are significant, signaling a shift in how major financial services providers interact with digital assets amid increasing regulatory attention and market volatility.
By distancing itself from the uncertainties of the NFT market, PayPal is attempting to mitigate potential losses associated with fraud in the industry, especially amid high volatility.
However, this conservative approach could also limit the company's involvement and growth opportunities in the booming digital assets market. PayPal has always been open to exploring the digital asset sector and implemented support for crypto transactions in 2022.
While some industry observers suggest this could reduce buyer confidence in using PayPal for high-value NFT purchases, it also highlights the need for consumers to exercise greater diligence when making purchases. engage in digital asset transactions.