PayPal announces changes to its buyer and seller protection policies for NFT transactions, effective May 20, 2024. Under a new PayPal policy, effective May 20, NFT purchases will no longer be backed by the company’s buyer protection program. In addition, NFT sales worth more than $10,000 will not be protected against false claims and chargebacks.

Why the Change?

The move comes as PayPal cites uncertainty around proof of order fulfillment and other factors in the evolving NFT industry as reasons for the shift in policy. The changes were quietly made public on March 21, but largely remained under the radar until now. A PayPal spokesperson explained the decision, emphasizing the need to adapt to the unique challenges posed by NFT transactions.

Seller Protection Revisions

PayPal is also revising its Seller Protection Program, with NFTs above $10,000 no longer eligible for protection. Exceptions are made for cases of unauthorized transactions. Previously, PayPal’s buyer and seller protection programs covered NFT transactions, but support for sellers was later restricted.

PayPal’s Interest in Blockchain

The move comes amidst PayPal’s broader interest in blockchain-based digital assets. In 2022, the company introduced support for cryptocurrencies and filed a patent for an NFT purchase and transfer system offering users royalties.

PayPal’s decision marks a significant shift in its approach to NFT transactions, reflecting the unique challenges and uncertainties present in this rapidly evolving market.