PayPal to Halt Peer-to-Peer Transactions in Puerto Rico

Payment processor PayPal has long been a popular choice for quick, easy payments across the world between individuals and businesses. To date, the downsides of centralized payments has not really affected users enough to abandon the services as the convenience it offers outweighs the fees and delays.

To bitcoiners, the problems with centralized payment processing are well known; most notably the argument that a central authority has too much control over the ability of users to send value anywhere they choose. We’ve seen funding halted before for mutual aid groups like Fr33 Aid during times of natural disasters and for politically controversial groups like Wikileaks, but so far these problems have failed to hit close enough to home for the average consumer to switch to Bitcoin.

However, PayPal recently updated its policy  to halt payments from individuals in Puerto Rico, starting on November 1st, 2015. Effective October 1st 2015, PayPal will end merchant rates for transactions. The updated section 3.1 reads:

“3.1 You can send money to anyone with an email address or mobile number. The money will go to their PayPal account. If they do not have a PayPal account, they will have 30 days to create an account or the payment will be refunded. Currently, Personal Payments are not able to be sent from Puerto Rico.”

The move came as a result the Puerto Rican government approving a two percent tax on person-to-person transactions. The purpose of the policy is to discourage residents from transacting outside the Puerto Rican economy and PayPal mentioned that the act was influential in their decision to suspend services.

“Due to new government policies in Puerto Rico, we have made the difficult decision to no longer offer our person-to-person payment service to our Puerto Rican customers as of November 1, 2015.

Our customers in Puerto Rico will no longer be able send money to friends and family abroad with Venmo or PayPal, but will 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.”

PayPal has offered a solution if you disagree with this policy update: you can close your account. Unfortunately, it appears that PayPal is once again under the thumb of a government who has enacted policies unfriendly towards money transmitters.

Can Bitcoin Thrive in Puerto Rico?

The financially embattled territory has struggled with unpayable debt, prompting a political discussion on bail outs . The governor Alejandro García Padilla has stated, “The debt is not payable. There is no other option. I would love to have an easier option. This is not politics, this is math.” Politics is entwined with existing payment processors but bitcoin runs on math regardless of the political climate and is not subject to its whims. Technically, transacting with bitcoin may fall under the statute’s restrictions  but enforcement could be difficult considering how the decentralized network prevents the ability of corporations or governments to halt transactions.

So how can bitcoin help those in Puerto Rico unable to easily send funds out of the island? Well, it’s free to set up an account through wallet providers — for our app you only need a username and a PIN number and can set up a password at a later time. Payments between anyone in the world can’t be stopped by any central authority and fees are incredibly low. Puerto Rico has used alternative currencies in the past with mixed success and using bitcoin provides a degree of autonomy from a world reserve currency whose top spot is constantly challenged by other nations . Whether bitcoin catches on in Puerto Rico remains to be seen as access to certain tech services is limited but with PayPal halting services there, they may look to bitcoin for an affordable, unstoppable, permissionless alternative for sending value.

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