[nangz]

PayPal couldn't act as an on-ramp for anything crypto because PayPal is run on soft money (reversible credit card transactions or potentially hacked bank accounts).

Allowing conversion of soft money to hard money (a btc with 6 onchain confirmations) means every criminal will use you as an on-ramp to convert their hack cc details and bank accounts into immutable hard money.

[andrewla]

Why not? They're not a party to the transaction; it is the vendor selling cryptocurrency that is taking on the risk. Paypal can reverse the transaction and the vendor has to eat the risk, same as for any PayPal transaction.

If I buy a sweater from some company through PayPal, and the company sends me the sweater, they're out the sweater if they get a chargeback. They can fight it, but PayPal is just the middleman.

Cryptocurrency vendors would have to figure out a policy to deal with it, so it might be that nobody would be willing to sell crypto for PayPal, but there's no reason for PayPal to block it.

[mactrey]

I'm guessing that because sweaters are not money, and furthermore are actual physical objects that have to be sent to a physical address, criminals aren't attempting to convert stolen identities into sweaters at any rate the federal government cares about. That may not be true for BTC.

[BillinghamJ]

Right but because this conversion is possible, it's very attractive to fraudsters, which means it will attract high chargeback rates, which is a big problem for PayPal, as it affects everything else they do

[andrewla]

> which is a big problem for PayPal

I mean, it's a big problem in a sense, if vendors don't expect it. But by necessity the bitcoin vendors will have to deal with it as a prime scenario, which means they'll either have to offer a meaningful user identification story (i.e. KYC or similar protocols) or offer a settlement period before the bitcoin is available -- credit the customer's account, but don't let them withdraw for 30 days / 90 days / whatever.

This requires that the vendor take on some risk (because if they make the trade and the price moves but the trade is cancelled due to chargeback the price may have moved) and they have to price this in to the deal; maybe charging a premium for using PayPal, etc. This is all fairly standard and Coinbase, for example, had to deal with a ton of this when they accepted credit card purchases.

But there's no risk to PayPal.

[liuhenry]

The risk to PayPal is that Visa/MC no longer allow PayPal to transact on their network if aggregate chargebacks exceed some percentage.

I don’t know how the exact details iron out but this was a concern when I worked on a payments platform. PayPal enables transactions for merchants who don’t have a relationship directly with Visa/MC and thus are themselves responsible at some level.

[nkohari]

> The risk to PayPal is that Visa/MC no longer allow PayPal to transact on their network if aggregate chargebacks exceed some percentage.

PayPal processed 711.92B USD of transactions during 2019. [1] It's feasible that they'll hit a trillion dollars in PV this year. While it's true that Visa/MC could lock them out if they so chose, it's incredibly unlikely.

[1] https://www.statista.com/statistics/277841/paypals-total-pay...

[tzs]

How many of those transactions were with buyers who if PayPal were not available would have used their credit card directly instead?

[BillinghamJ]

You misunderstand, it is indeed an issue of their chargeback rate as a platform - not isolated to particular merchants.

Having high rates has significant consequences - leading to fines from card schemes, lower authorisation rates from issuers, higher interchange costs as it harms negotiations for custom deals with issuers.

Even quite small numbers in the enormous pond of PayPal can have serious impacts when it's well optimised.

Also keep in mind, where it is possible to do this kind of thing, it can very rapidly grow to a huge problem when fraudulent end users learn they can do it.

[fortran77]

This was my feeling, too. It wasn't a Big Conspiracy to suppress Bitcoin. It was an effort to stop transactions that had a high percentage of fraud issues.

Same thing with Facebook and crypto ads. There were just too many pyramid schemes and get-rich-schemes with a cryptocurrency angle that were being advertised.

[rebuilder]

Back in the day, it wasn't that PayPal didn't let people buy crypto, it was that you were mad to sell for PayPal credits. The system favoured the buyer so much it was just too risky. So I'm not really sure this policy matters - if nothing else has changed, selling crypto for PayPal creds is just asking to be scammed.

[macinjosh]

Indeed don't attribute to corporate malice what is in reality government regulation. The cherry on top is that the regulations are often pushed by corporate industry players to push out other possible players.

[asenna]

I get this reasoning but I'm curious, what has changed now? That issue still exists right?

[darawk]

They aren't letting anyone withdraw their crypto.

[unreal37]

The easy solution is: 1) double-verify the identity of the credit card holder using MFA or another way 2) don't allow refunds or chargebacks on cryptocurrency transactions.

Not every PayPal transaction is refundable.

I've bought Bitcoin using PayPal before.

[lawtalkinghuman]

> don't allow refunds or chargebacks on cryptocurrency transactions

In practice this just means: when a hacker gets into your elderly family member's PayPal account, they need to buy as much crypto as they can since then there's no chargebacks for fraud.