PayPal issued a policy update on February 11, stating that the company will not provide coverage for merchants involved in NFT transactions over USD $10,000.
The new measure will take effect on March 21.
PayPal’s statement said:
“Amendments to the PayPal User Agreement. Effective March 21, 2022, we are:
“Revising the PayPal Seller Protection program to expand the list of ineligible items to include certain Non-Fungible Tokens (NFTs) with a transaction amount of more than USD 10,000.”
The new policy assumes that the payments company will not provide coverage for merchants involved in NFT transactions greater than USD $10,000, a relatively low figure for the burgeoning market where a single digital collectible can be worth hundreds of thousands of dollars or even several million.
NFTs mentioned in PayPal’s protection policy
PayPal outlined the move in a separate document detailing amendments to be applied to the consumer protection program. As such, the company stated that art transactions, physical or digital, will be excluded from its protection program when the value exceeds $10,000, or the currency equivalent at the time of payment.
“Art, media, antiques or collectibles, in physical or digital form, represented by a non-fungible token (NFT), with a transaction amount of more than US$10,000 or equivalent value in local currency calculated at the time of the transaction,” the company said in a section describing ineligible items and transactions.
It should be noted that PayPal’s seller protection program is intended to provide merchants using the payment service with some protections against chargebacks and other disputes. It may apply, for example, when a buyer pays but does not receive the item negotiated. In such cases, the company may withhold charges to prevent fraud.
In addition to art and NFT, the protection policy also currently excludes transactions involving real estate, vehicles, financial products, among others.