EDIT: Downvote all you want for disagreeing... but this (fraud and risk mitigation) is exactly why PayPal "won" the P2P payments space.
But instead, their reason is that these products bypass copyright protections. No mention of fraud or anything related to the actual transactions they're processing, they just don't like the products.
Which, fine, PayPal can choose to support or not support whatever products they like, but I'm not going to applaud them for playing copyright police with products which have, as the Supreme Court would say, "significant noninfringing uses."
I'm guessing PayPal isn't blocking all VPN services, just those which are insufficiently subtle about their ability to use them to bypass Netflix's location restrictions. Maybe UnoTelly should rename to UnoDefinitelyNotForWatchingNetflix.
Maybe PayPal is getting flak from rights holders (even Netflix), which makes VPN traffic too risky right now. Maybe they're really dogmatic about the issue ("we hate VPNs and copyright pirates!") or maybe they really just don't want to get caught in the middle of a political battle that they don't care about.
EDIT: Instead of making a snarky, low-information comment, I suggest you actually refute what I said. That's considered good HN etiquette.
It's not risk. There may be / are reasons, but painting them as "high risk transactions" is entirely disingenuous.
People are criticizing you because it looks like you wrote your first post without understanding the issue and now try to defend it by altering its meaning through redefinition of common terms.
Maybe a few VPN providers are fraudulent, but the major ones aren't. You pay them, you get a VPN. You pay for SmartDNS, you get that service. It's what people do once they have those services that's considered bad by copyright holders, and so they're applying pressure to payment services like Paypal, to get them to stop processing payments for those services.
If you look into the campaigns copyright holders are waging, the major one is an attack at funding sources for all kinds of services: file hosting, VPNs, etc. They are attacking those services and their funding, because trying to go after people who use those services—for things copyright holders don't like—has proven largely futile.
Again, what this article is NOT about: If you try to pay for things offered on a completely legitimate website and you pay with a completely legitimate credit card, but you're browsing using a VPN, it's likely to get declined. Risk of payment fraud or goods purchased using compromised accounts—via VPN which makes fraud harder to trace—is an issue but it's separate from what the article is talking about, and it's distinct from what people in this thread are complaining about regarding the article. While some people might legitimately complain about bans on payment for services over a VPN (it makes it difficult, if you don't trust your ISP or wifi service, to go VPN-only if you can't buy most things), it's fairly clear that such payment-provider or retailer behavior is motivated at combating fraud.
The issue here is entirely about copyright holders being mad and threatening the payment processors of service providers, because service providers are doing things copyright holders don't like, not because the service providers have unacceptable payment-collection risk profiles.
I suspect (without supporting evidence) that PayPal is only doing this in response to external pressure (eg. from Netflix, RIAA, MPAA) rather than making the decision unilaterally. I think it's unfortunate that PayPal has caved. But from a business perspective, I can understand why they've decided to cave: The transaction volume is small relative to the cost of fighting the rights holders (in legal costs, but potentially even in the political arena). Like all other banks dealing with cutting-edge issues (eg. weed legalization), they're being cautious; they have a lot to lose.
I would argue that Paypal being the default payment method for eBay transactions might have been a more significant factor in their success.
Also... the scale wasn't as small as you think. According to the numbers [1], PayPal was doing >$2B in transactions at the time of acquisition. For perspective, estimates from 2014 [2] put Stripe at $1.5B in transactions (and a company valuation of $1.75B). Paypal wasn't small, even in 2002.
[1] http://www.fraudpractice.com/paypal_companyprofile.html
[2] https://pando.com/2014/01/24/memo-to-stripe-winning-the-hear...
They definitely do some dumb stuff but they also process five billion transactions per year and people need to take that into consideration. The scale of the fraud and the scope of worldwide regulations they deal with is way beyond anything you can imagine.
I imagine it's a bit like hosting, where an astounding number of signups are fraudulent.
It's not great that PayPal don't say that directly. Either explanation definitely adds up though.
How are these risky? Or rather "more risky" than the average online transaction.
The number of chargebacks or fradulent transactions reported on your merchant account usually raises red flags and calls for account review. I am sure its pretty easy for paypal to identify such accounts with the data they have.
The most basic anti-fraud check is comparing card issuing country against the IP location. If there's a mismatch, it's a first red flag. If you see someone popping up from a VPN or a Tor exit, it's largely the same thing.
The question is about purchasing VPNs not using them.
This is a stupid move by PayPal.
I have an issue with companies punishing other companies because their customers might be doing something that they don't agree with.
https://www.braintreepayments.com/legal/acceptable-use-polic...
Restricted activities include some obvious sketchy areas (check cashing) and some less obvious sketchy areas (human hair, fake hair or hair-extensions).
When it comes to financial situations, it's all about risk. It's completely within their right to mitigate that risk based on the profiles of the industries they deal with and this is what keeps them in business.
this is not true.