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PayPal Pulls P2P Payments from Crisis-Stricken PR

PayPal will no longer allow users to accept P2P payments sent from Puerto Rico, it informed users, as the U.S. territory faces a dire financial crisis.

“Person to person payments will not be available for payments sent from Puerto Rico after October 30th,” according to the notice of Amendments to the PayPal User Agreement. The change will be effective on October 30, 2015 for all U.S. users.

According to Caribbean Business PR, “The Puerto Rico Legislature amended Act 136 of 2014 through House Bill 2191 in December, and a 2% tax on person-to-person exchanges is now levied, prompting PayPal to reconsider that type of money transfer on the island.”

This June report in CNN explains the commonwealth’s crisis, and this update from Wednesday shows the crisis is far from over.

An EcommerceBytes reader from the U.S. reacted to the news, writing, “It is interesting that PayPal is choosing to deny Puerto Rican account holders that segment of payment functionality in order to avoid paying a 2 % tax, especially after announcing they were raising rates for many other users by more than 30% to “simplify” their fee structure.

“One wonders why PayPal has chosen to eliminate person to person payment transfers rather than simply pass along the 2% tax as a fee on users who might still want or need to utilize person to person payments using PayPal.”

In a statement provided to Caribbean Business, PayPal said customers in Puerto Rico would no longer be able send money to friends and family abroad with Venmo or PayPal, but would be able to continue to use PayPal to pay for goods and services and receive payments. “We regret any inconvenience this may cause our valued customers in Puerto Rico.”

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Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.