Not only are they
allowed to reject customers at will, but they are
required to by US law. The PATRIOT Act altered US anti money laundering rules in a subtle but important way. It deleted the "mens rea" requirement and converted money laundering into what's called a strict liability crime.
In English, that means any company that routes money around is criminally liable for any crimes committed by their clients - even if they didn't know about them or believed the activity was legal.
In effect, every banker and money transmitter in the world can face a 20 year jail sentence and/or crippling fines if ANY of their clients are themselves considered to be or merely suspected of being, criminals. No trial needed.
This is why you keep reading about banks being involved in money laundering. It's impossible to move money and not be considered a money launderer by the US government these days.
So this puts VISA/MC/PayPal in an impossible bind. They can look at Mega and say, well, this seems like a legal business. There's no law obviously being broken. But the guy is being charged over a previous business, accused of being a criminal. If they give him financial services and then years later this new Mega is also suspected of being criminal (note: suspected not proved) then VISA/MC can find headlines like "Visa found guilty of money laundering".
They have lots of clients, so from their perspective, eliminating all the politically risky ones is a no brainer.
Same thing for Wikileaks, CAGE (UK civil rights group), the entire nation of Somalia etc ... they all lose banking services because they are politically unpopular and therefore expose bankers to AML violations.