According to PayPal’s latest policy updates, purchases and sales of NFTs will no longer be protected under PayPal’s Protection Program. In other words, if users buy an NFT and it’s not what they expect and want to return it, or they don’t receive it, PayPal won’t be able to help them get their money back.
Buyers and sellers face challenges as PayPal’s updated policy excludes NFT transactions from its protection program.
Similarly, NFT transactions that exceed $10,000 (or equivalent local currency) are excluded from PayPal’s Seller Protection. For NFT transactions below $10,000 USD (or equivalent local currency), sellers are only protected if the buyer claims it was an unauthorized transaction and other eligibility requirements are met.
No More Guardrails
The amendments will be effective on May 20, 2024. The withdrawal of these protections will remove a layer of security for NFT transactions on PayPal.
Previously, NFT purchases and sales were covered by PayPal’s protection programs. Buyers could request refunds for misrepresented items, and sellers could be safeguarded against fraudulent payment disputes.
The updates come after PayPal announced plans to stop providing protection measures for some NFT-related transactions late last month.
Since 2022, PayPal has actively engaged with cryptocurrency and blockchain. The company began offering cryptocurrency buying, selling, and holding services in 2022. Besides, PayPal has also filed patents related to blockchain technology and NFTs.
Last month, PayPal announced a new feature launch that facilitates the use of its stablecoin, PayPal USD (PYUSD) for cross-border payments.
The firm has actively experimented with blockchain-based solutions to streamline financial transactions and drive widespread adoption.
Big Brands Are Leaving NFTs
PayPal is not the only big brand to announce a move away from NFTs. Earlier this year, Starbucks announced it would pause Odyssey Beta NFT starting March 31, 2024. The system was developed in partnership with Polygon. Starbucks chose Polygon because of its speed, affordable transaction fees, and 99% lower greenhouse gas emissions than its competitors.
The firm launched the NFT-based reward point accumulation system in September 2022 amid the crypto industry’s downturn. Starbucks Odyssey targets the American market, letting customers receive and trade NFTs.
Given the lackluster performance of Starbucks’ first NFT sale in April 2023, the decision to shut down their NFT program comes as no surprise. Their first offering, priced at $100, failed to sell out, unlike the previous collection, “The Siren Collection,” which enjoyed immediate success.
NFTs Are Risky
Another major name that recently abandoned NFTs is GameStop. The retail game provider announced in February this year that it would close its NFT marketplace platform. The move followed the termination of its crypto wallet service in August last year.
The shutdown marked GameStop’s official closure of its foray into the crypto sector. The company appears to have had an unsuccessful experiment with the industry.
The announcement came when the market just came out after a long bearish period. However, it’s undeniable that the effect of the crypto winter is still relatively heavy.
GameStop launched its NFT trading marketplace in July 2022, integrating with Ethereum’s Layer-2 scaling solutions Immutable X and Loopring. This move, coupled with their earlier launch of a non-custodial cryptocurrency wallet in the same year, was seen as the company’s digital asset ambition.
However, the harsh cryptocurrency market downturn and an uncertain regulatory landscape ultimately hampered GameStop’s NFT ambitions.
Unlike other companies, Google has taken a more open stance on NFTs. In July of last year, the Google Play app store updated its policy to allow apps and games that integrate NFTs, enabling users to purchase, sell, or earn them.
Previously, Google’s stance on blockchain-based applications was unclear, with apps being randomly approved or rejected.
However, the company’s position has gradually shifted. More blockchain apps are allowed on Google Play. Plus, Google Cloud also inked strategic partnerships with several digital asset players.
Source: https://blockonomi.com/paypal-revises-nft-terms-removes-safeguards/