PayPal Updating Policy on Crowdfunding

A recent blog post by PayPal’s VP of risk management, Tomer Barel,  hints towards an upcoming change in PayPal policy which will make it easier for crowdfunding sites to take payments through PayPal. In the post Barel says,

‘Crowdfunding sites are an exciting and innovative new way to directly connect entrepreneurs with the people who want to help them create new products and services. However, there are unique regulatory and risk aspects inherent to this new way to raise money from supporters around the world. To name one, we sometimes hear from campaign contributors that they are confused about what exactly their money is going towards, and assume that they’ll get it back if the venture is not successful.

Because the model is so new, it is potentially open to abuse. PayPal has a responsibility to ensure that the system remains secure, in compliance with Government regulations around the world, and that consumers who contribute to these campaigns understand where their money is going.

We are now in the midst of overhauling our policies in this space. We’re talking to the major crowdfunding players that we work with to put in place a permanent solution that avoids unnecessary account limitations. But making this work for all stakeholders – contributors, entrepreneurs, crowdfunding sites and us — is pretty complicated. As soon as I have more to share, I promise to update everyone.

In the meantime, we will ensure that each crowdfunding campaign is reviewed by a senior member of my team before any action is taken. It’s a small, but important step.’

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