The fact is, if Paypal were not permitted to statistically discriminate, they wouldn't exist. Is it really a moral travesty that they are using nation of origin as one of the predictors?
There's lots of reasons it's not great to be a Nigerian in Nigeria - fixed elections, corruption, violence, low standard of living, tension between the north and south, nasty tropical diseases, relatively lower education opportunities, weak arts community, flowover from ethnic tension in neighbouring states.
In the scale of things, concern over ability to make internet payments is probably pretty low, and a concern that would be pressing only to a small elite in the country.
(1) Concentration of power: there's a qualitative difference between a large organization making an absolute and sustained decision on a corporate basis, and many distributed small organizations or individuals making ad-hoc iterated decisions on a case by case basis. Normal statistical variation means that in all likelihood, the market will simply be smaller, not all but extinguished.
(2) Your guess may be incorrect: I find it difficult to recollect an attempted online commercial transaction that I aborted owing to fear of a scam. Now, if you knew my personal circumstances, perhaps you'd be able to direct my attention to such cases; in lieu of that, can you be more specific in your guess, and at least give me a few examples? A few points on my behaviour: it's my personal policy never to buy anything in direct response to any advertisement or inducement, whether in person, over the phone, via email, or online, if I do not have a prior independent non-commercial relationship with that entity. I will pay more for a service or product that I have found myself rather than accept a similar service or product for a lower price if that service or product was directly advertised to me; I infer that the extra expenses in reaching me directly will be more than recouped via means that are not immediately obvious to me, such that the savings are probably illusory. Any time I have ever engaged in online commerce, it directly or indirectly started out with a Google search for the product or product category in question, or for a store name found either in a previous search, by recommendation, or an online version of a brick-and-mortar store.
(3) Freedom of action and the rewards to that action: most Nigerians in Nigeria have little scope for changing their situation to evade these policies; from the original position, I would not like to be in their situation. In converse, the problem of not being able to find customers is distinctly different: one may choose to sell something else, to a different market, and via a different medium. One of the risks of creating a business is that there may not be a viable market, but one of the rewards is profit when the market is viable. The risk / reward correspondence with consumers doesn't seem convincing: at best, the consumer can obtain what they wanted at a fair price; the upside is very limited.
That's not to say it may not be effective, on average, in limiting losses. But effectiveness is something distinct from fairness.
As long as businesses will be required to eat the losses caused by attempts to be 'fair' I predict this situation will continue.
You're making a utilitarian argument, but it seems predicated on some kind of zero sum, that the only way of protecting the world from Nigerian scams is to prevent consumers in Nigeria from being able to buy things from elsewhere. I question that assumption.
I'm sure there is at least one person in Nigeria that goes against the flow here and that is an honest person simply trying to get by but with the odds that bad you really can't fault the conclusion that Nigerian traffic so risky that the risks far outweigh the benefits.
Merchants typically run a very fine line between operating their business and having their accounts yanked due to 'excessive fraud', any measures they can take to protect themselves from this happening will be implemented without any remorse, it's a survival thing.
For the record, yes, we block Nigerian transactions, and several other countries besides.
How can dis even be possible? You mean not even one out of the possible millions in a day is legitimate? Haba!
It's sad, but it's really true.
The possible millions make use of free services they're not possible millions of e-commerce consumers.
You wish. If Nigeria had millions of legit e-commerce consumers the situation would be quite different.
There will never be "millions of legit e-commerce consumers" from Nigeria if the main e-commerce gateways such as PayPal continue to block the entire country.
They've already been excluded before they've started.
Obviously, a "which country to do business in" decision is not done by algorithm. That doesn't mean Paypal isn't using objective metrics to make that decision.