<p>We don't have any official word from PayPal about why they prohibit these kinds of transactions. The usual conspiracy theory is that these types of commodities could ultimately compete with PayPal so PayPal wants to hold them back. This really doesn't make all that much sense -- PayPal is not going to decide whether Bitcoin succeeds or fails.</p>

<p>The likely explanation is that these types of transactions have a very high fraud rate, particularly buyer fraud. The buyer simply claims he never got his Bitcoins, and PayPal then has to figure out how to verify the transaction.</p>

<p>You'll notice that most of these sites charge a huge premium (25% or so) over exchange rates. This tends to suggest that they're falling victim to a "fraud spiral". When an exchange has a high fraud rate because of its more liberal policies, they have to raise their rates. Legitimate users just use other exchanges because they prefer to comply with the more restrictive policies rather than paying a 25% premium. Of course, those trying to commit fraud don't care that the rates are terrible, they're not paying them anyway. So high fraud leads to bad rates which leads to legitimate users leaving and thus a higher percentage of fraud, and so on.</p>

CC BY-SA 3.0
2011-09-07T03:41:03.730Z
"PayPal is not going to decide whether Bitcoin succeeds or fails." - True, but they can slow down the adoption rate. Today it's still harder to buy BTC than it should be. Ah, the days where you could buy via Paypal from "Morpheus"...I don't think that high fraud rate is the reason - Mt. Gox would love to accept paypal deposits and deal with the fraud themselves.
ripper234
CC BY-SA 3.0
2011-09-07T03:47:54.920Z
Mt. Gox is asking for the impossible. There is no way for PayPal to not deal with the fraud. PayPal will either have to credit everyone or handle chargebacks. If they credit everyone, what is Mt. Gox going to do?
David Schwartz
CC BY-SA 3.0
2011-09-07T03:54:14.560Z
For example, Mt. Gox can sell only to users they've had a lot of prior successful business with. They will see a very very low fraud rate IMO.
ripper234
CC BY-SA 3.0
2011-09-07T03:58:05.693Z
I find that very, very hard to believe, since Mt. Gox specifically refuses to take credit cards saying: "No, just no. Credit card has no place for this type of trading. You can't even fund your regular stock brokerage account with CC." Why would they want to accept PayPal with all the fraud being their problem and not take credit cards at all, where the fraud would be even lower. (Since they can dispute chargebacks in that case and they have better ID through the bank info.)
David Schwartz
CC BY-SA 3.0
2011-09-07T04:12:35.343Z
well, I don't know about CC, but at the time they simply sent funds only 2 weeks after the PayPal transfer went through. There are people that would be willing to wait 4 weeks or whatnot for the paypal chargeback period to be over (I'm sure you can't charge back a year after making a PP transfer, right?)
ripper234
CC BY-SA 3.0
2011-09-07T04:25:34.653Z
PayPal can't allow that. We were talking about Mt. Gox handling the fraud. Waiting 4 weeks puts the fraud on the consumer. PayPal would, of course, never allow that.
David Schwartz
CC BY-SA 3.0
2011-09-07T04:32:16.827Z
I don't understand why, but I think this comment thread is long enough as it is.
ripper234
CC BY-SA 3.0
2011-09-07T04:32:26.407Z
let us [continue this discussion in chat](http://chat.stackexchange.com/rooms/1300/discussion-between-ripper234-and-david-schwartz)
ripper234
CC BY-SA 3.0
2011-09-07T03:36:55.220Z
2011-09-07T14:14:22.290Z
2011-09-07T14:14:22.290Z
David Schwartz
<p>I run <a href="http://accesscoin.com">http://accesscoin.com</a> </p>

<p>Here is what I have found.
"Selling virtual currency via Google Checkout is allowed though." shamor - Google Employee - 7/31/11 --
<a href="http://www.google.com/support/forum/p/checkout-merchants/thread?tid=3dd3aaeb58f9fd94&amp;hl=en">http://www.google.com/support/forum/p/checkout-merchants/thread?tid=3dd3aaeb58f9fd94&amp;hl=en</a></p>

CC BY-SA 3.0
2011-09-09T15:58:26.830Z
2011-09-09T15:58:26.830Z
Accesscoin
<p>Paypal does not allow their service to be used as a currency exchange. They classified Bitcoin as such, so people are forbidden to trade bitcoins using PayPal (see this post about <a href="http://bitcointalk.org/?topic=2555.msg101084#msg101084">CoinPal</a>)</p>

<p>Google Checkout either considers that bitcoins are Virtual Goods or simply hasn't made any decision yet. These users selling bitcoins with Google Checkout started their business just a few weeks ago.</p>

CC BY-SA 3.0
2011-09-07T03:07:15.313Z
2011-09-07T03:07:15.313Z
nmat
<p>Google built its own library to handle bitcoin. They also have the google wallet and nfc coming out. If you put all this together google could be positioning itself to become the best bitcoin ewallet.</p>

CC BY-SA 3.0
2011-09-07T21:01:31.620Z
The Bitcoin projects you are referring to were not written BY Google, they were written by Google employees "20% time." There may indeed be Bitcoin-related projects in the works at Google but if there are, they're keeping tight-lipped about them.
David Perry
CC BY-SA 3.0
2011-09-07T19:38:49.293Z
2011-09-07T19:38:49.293Z
BitcoinMedia
<p>Presumably because Paypal is an arm of eBay which has to tread water on its own, making Bitcoin a fair threat, since it does away with the standard payment processing system.</p>

<p>Google Checkout is just a service of Google, which doesn't really factor into Google's overall earning strategy.</p>

<p>Also, google tries to appear nerd chic, which is easier if you don't anger your IT guys.</p>

CC BY-SA 3.0
2011-09-08T02:28:35.627Z
2011-09-08T02:28:35.627Z
technowizard12
<p>I can't speak for why Google Checkout seems to have no problem, it may simply be that they are unaware of Bitcoin as of yet. <strong>Edit:</strong> <em>A Google Checkout employee has <a href="http://www.google.com/support/forum/p/checkout-merchants/thread?tid=3dd3aaeb58f9fd94&amp;hl=en">replied</a> that they explicitly allow virtual currencies - at least for the time being.</em> PayPal, on the other hand explicitly bans "the sale of traveler’s checks or money orders, currency exchanges or check cashing" in section 3(f) their <a href="https://cms.paypal.com/us/cgi-bin/?cmd=_render-content&amp;content_ID=ua/AcceptableUse_full">acceptable use policy</a>.</p>

CC BY-SA 3.0
2013-04-14T04:51:48.403Z
Where can I buy bitcoins using google check out? I can easily move money from my US bank account and transfer that to my indonesian account this way.
user4951
CC BY-SA 3.0
2011-09-07T03:19:20.240Z
It would be hilarious if someone followed Mt. Gox and sued PayPal on the grounds that Bitcoin is not a currency. https://bitcointalk.org/index.php?topic=41317.0
ripper234
CC BY-SA 3.0
2011-09-07T03:30:30.067Z
I've been arguing that it's more like a commodity than a currency for some time (based on the way it's held, traded and speculated in). I somehow managed to miss this post so thanks for the link, it was a good read.
David Perry
CC BY-SA 3.0
2011-09-14T15:22:36.190Z
@David for now they've explicitly allowed it.  I'm adding the link to the question and you probably want to update your answer.
eMansipater
CC BY-SA 3.0
2011-09-07T03:04:29.543Z
2011-09-14T15:59:50.217Z
2011-09-14T15:59:50.217Z
David Perry
<p>Paypal claimed they were not allowed to sell Bitcoins, while currently it seems Google Checkout is a viable option.</p>

<p>So ... what's the story on this?  Is this true, and if so does anyone know why?</p>

CC BY-SA 3.0
2011-09-16T15:39:27.610Z
Hope you don't mind the extensive edit, ripper234, but this phrasing feels a lot more on topic for the site.  Let me know.
eMansipater
CC BY-SA 3.0
2011-09-16T21:15:45.767Z
@eMansipater - no worries, thanks for the edit.
ripper234
CC BY-SA 3.0
2011-09-20T22:41:07.280Z
One main problem with Google Checkout - it divides its accounts to sellers and buyers, so you can only be paid in one type of account (unlike paypal). This only enables websites to sell you bitcoin, but not to buy them back from you.
ThePiachu
<trading><legal><paypal>
Is it true that Paypal banned Bitcoins, while Google Checkout did not (yet)?
ripper234
# Is it true that Paypal banned Bitcoins, while Google Checkout did not (yet)?

(Asked by: username_0 on 2011-09-07)

Paypal claimed they were not allowed to sell Bitcoins, while currently it seems Google Checkout is a viable option.

So ... what's the story on this? Is this true, and if so does anyone know why?

**Tags:** trading, legal, paypal

> **Comments:**
> **username_1**: Hope you don't mind the extensive edit, username_0, but this phrasing feels a lot more on topic for the site.  Let me know.  
> **username_0**: @username_1 - no worries, thanks for the edit.  
> **username_2**: One main problem with Google Checkout - it divides its accounts to sellers and buyers, so you can only be paid in one type of account (unlike paypal). This only enables websites to sell you bitcoin, but not to buy them back from you.  

---

## 6 answers

### Answer by username_7 on 2011-09-07. Score: 17 | Accepted answer

I can't speak for why Google Checkout seems to have no problem, it may simply be that they are unaware of Bitcoin as of yet. **Edit:** *A Google Checkout employee has [replied](http://www.google.com/support/forum/p/checkout-merchants/thread?tid=3dd3aaeb58f9fd94&hl=en) that they explicitly allow virtual currencies - at least for the time being.* PayPal, on the other hand explicitly bans "the sale of traveler’s checks or money orders, currency exchanges or check cashing" in section 3(f) their [acceptable use policy](https://cms.paypal.com/us/cgi-bin/?cmd=_render-content&content_ID=ua/AcceptableUse_full).

> **Comments:**
> **username_0**: It would be hilarious if someone followed Mt. Gox and sued PayPal on the grounds that Bitcoin is not a currency. https://bitcointalk.org/index.php?topic=41317.0  
> **username_7**: I've been arguing that it's more like a commodity than a currency for some time (based on the way it's held, traded and speculated in). I somehow managed to miss this post so thanks for the link, it was a good read.  
> **username_1**: @username_3 for now they've explicitly allowed it.  I'm adding the link to the question and you probably want to update your answer.  
> **username_9**: Where can I buy bitcoins using google check out? I can easily move money from my US bank account and transfer that to my indonesian account this way.  

---

### Answer by username_3 on 2011-09-07. Score: 8

We don't have any official word from PayPal about why they prohibit these kinds of transactions. The usual conspiracy theory is that these types of commodities could ultimately compete with PayPal so PayPal wants to hold them back. This really doesn't make all that much sense -- PayPal is not going to decide whether Bitcoin succeeds or fails.

The likely explanation is that these types of transactions have a very high fraud rate, particularly buyer fraud. The buyer simply claims he never got his Bitcoins, and PayPal then has to figure out how to verify the transaction.

You'll notice that most of these sites charge a huge premium (25% or so) over exchange rates. This tends to suggest that they're falling victim to a "fraud spiral". When an exchange has a high fraud rate because of its more liberal policies, they have to raise their rates. Legitimate users just use other exchanges because they prefer to comply with the more restrictive policies rather than paying a 25% premium. Of course, those trying to commit fraud don't care that the rates are terrible, they're not paying them anyway. So high fraud leads to bad rates which leads to legitimate users leaving and thus a higher percentage of fraud, and so on.

> **Comments:**
> **username_0**: "PayPal is not going to decide whether Bitcoin succeeds or fails." - True, but they can slow down the adoption rate. Today it's still harder to buy BTC than it should be. Ah, the days where you could buy via Paypal from "Morpheus"...I don't think that high fraud rate is the reason - Mt. Gox would love to accept paypal deposits and deal with the fraud themselves.  
> **username_3**: Mt. Gox is asking for the impossible. There is no way for PayPal to not deal with the fraud. PayPal will either have to credit everyone or handle chargebacks. If they credit everyone, what is Mt. Gox going to do?  
> **username_0**: For example, Mt. Gox can sell only to users they've had a lot of prior successful business with. They will see a very very low fraud rate IMO.  
> **username_3**: I find that very, very hard to believe, since Mt. Gox specifically refuses to take credit cards saying: "No, just no. Credit card has no place for this type of trading. You can't even fund your regular stock brokerage account with CC." Why would they want to accept PayPal with all the fraud being their problem and not take credit cards at all, where the fraud would be even lower. (Since they can dispute chargebacks in that case and they have better ID through the bank info.)  
> **username_0**: well, I don't know about CC, but at the time they simply sent funds only 2 weeks after the PayPal transfer went through. There are people that would be willing to wait 4 weeks or whatnot for the paypal chargeback period to be over (I'm sure you can't charge back a year after making a PP transfer, right?)  
> **username_3**: PayPal can't allow that. We were talking about Mt. Gox handling the fraud. Waiting 4 weeks puts the fraud on the consumer. PayPal would, of course, never allow that.  
> **username_0**: I don't understand why, but I think this comment thread is long enough as it is.  
> **username_0**: let us [continue this discussion in chat](http://chat.stackexchange.com/rooms/1300/discussion-between-username_0-and-username_3-username_3)  

---

### Answer by username_4 on 2011-09-09. Score: 6

I run <http://username_4.com>

Here is what I have found.
"Selling virtual currency via Google Checkout is allowed though." shamor - Google Employee - 7/31/11 --
<http://www.google.com/support/forum/p/checkout-merchants/thread?tid=3dd3aaeb58f9fd94&hl=en>


---

### Answer by username_5 on 2011-09-07. Score: 6

Paypal does not allow their service to be used as a currency exchange. They classified Bitcoin as such, so people are forbidden to trade bitcoins using PayPal (see this post about [CoinPal](http://bitcointalk.org/?topic=2555.msg101084#msg101084))

Google Checkout either considers that bitcoins are Virtual Goods or simply hasn't made any decision yet. These users selling bitcoins with Google Checkout started their business just a few weeks ago.


---

### Answer by username_6 on 2011-09-07. Score: -3

Google built its own library to handle bitcoin. They also have the google wallet and nfc coming out. If you put all this together google could be positioning itself to become the best bitcoin ewallet.

> **Comments:**
> **username_7**: The Bitcoin projects you are referring to were not written BY Google, they were written by Google employees "20% time." There may indeed be Bitcoin-related projects in the works at Google but if there are, they're keeping tight-lipped about them.  

---

### Answer by username_8 on 2011-09-08. Score: -4

Presumably because Paypal is an arm of eBay which has to tread water on its own, making Bitcoin a fair threat, since it does away with the standard payment processing system.

Google Checkout is just a service of Google, which doesn't really factor into Google's overall earning strategy.

Also, google tries to appear nerd chic, which is easier if you don't anger your IT guys.


---

