Paypal, an American-owned worldwide online payments system since 1998, has declared that it will stop offering customers payment protection on transactions associated with online gambling. The large-scale currency company announced the move quietly last week through some changes made in the terms and conditions of its payment protection policy.
According to the amended section appearing on the Paypal User Agreement, from this day forward, Paypal will no longer provide customers a financial safety net for deposits meant for "gambling, gaming and/or nay other activity with an entry fee and a prize".
Furthermore, the giant payments processor will also stop offering purchase protection on payments made to crowdfunding websites as well as "anything purchased from or an amount paid to a government agency."
Paypal stated that the countries mainly affected by this new amendment include Brazil, Canada, Japan and the United States. The changes will be implemented on June 25; however, some other news sources are reporting that these rules will soon affect all countries.
DFS and Online Poker in the US Affected
Paypal was once the largest processor of online gambling transactions all over the world, but it willingly withdrew itself from all markets in 2003 after merging with eBay and also due to that time's legally gray nature of the gambling sector in most countries.
In the year 2010, Paypal began approving gambling transactions again, but this time it was reserved only for licensed operators in jurisdictions where online gambling was fully regulated and deemed legal. In 2015, thanks to a deal with WSOP.com, it quietly started to offer its services to the regulated US online poker markets of New Jersey and Nevada, and it also processes payment processing transactions for daily fantasy sports (DFS) in the US.
To be precisely clear, the cessation of payment protection on deposits for online poker is unlikely to have a significant effect on the consumer market. In other words, the regulated industry of online gambling with which Paypal currently engages itself with is highly unlikely to run off with anyone's money anytime soon.
This new policy might expose gaming operators to a somewhat slightly higher risk of fraud, but in truth, e-wallets like Paypal are considered to be one of the payment methods that have a far lower risk ratio by most in the gambling industry than credit cards, for instance, which are subject to unwanted chargebacks and are more vulnerable to unpleasant incidents like identity fraud.