PayPal Adjusts Policies Amid NFT Market Uncertainty

PayPal has updated its buyer and seller protection guidelines, removing non-fungible tokens (NFTs) from eligibility.

For NFT purchases and sales, PayPal has modified its buyer and seller protection guidelines. The global payments behemoth announced a modification to its Amendment to Purchase Protection Program section, stating that it is changing the program to remove non-fungible tokens (NFTs) from eligibility. 

This specific update concerns payments that users make through a third-party site using their PayPal Balance account, allocated account, and routing number (PayPal’s Direct Debit functionality).

Additionally, the business modified its seller protection program to exclude chargeback and false claim protection from NFT transactions totaling more than $10,000. PayPal stated that if the buyer “claims it was an unauthorized transaction and the transaction meets all other eligibility requirements,” they will be protected for transactions totaling $10,000 or less.

According to the firm, the new changes will go into effect on May 20, 2024. They provided an explanation for the changes, stating that they were made due to “uncertainty around proof of order fulfillment and other variables.”

This announcement comes at a time when the cryptocurrency market is generally experiencing volatility due to a number of factors, such as rising prices for cryptocurrencies, Web3 funding, and an unquenchable need for new asset classes, including tokenized real-world assets and cryptocurrency restaking.

On March 21, PayPal released news that it would no longer cover some NFT transactions, prompting an update to its policies.

The digital art section of PayPal’s digital asset strategy has not been able to keep up with other verticals like the PYUSD stablecoin and support for regular crypto transactions, despite the fact that the online payment giant did file a patent application for an NFT marketplace with the USOPT.