Paypal claimed they were not allowed to sell Bitcoins, while currently it seems Google Checkout is a viable option.
So ... what's the story on this? Is this true, and if so does anyone know why?
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I can't speak for why Google Checkout seems to have no problem, it may simply be that they are unaware of Bitcoin as of yet. Edit: A Google Checkout employee has replied that they explicitly allow virtual currencies - at least for the time being. PayPal, on the other hand explicitly bans "the sale of traveler’s checks or money orders, currency exchanges or check cashing" in section 3(f) their acceptable use policy.
We don't have any official word from PayPal about why they prohibit these kinds of transactions. The usual conspiracy theory is that these types of commodities could ultimately compete with PayPal so PayPal wants to hold them back. This really doesn't make all that much sense -- PayPal is not going to decide whether Bitcoin succeeds or fails.
The likely explanation is that these types of transactions have a very high fraud rate, particularly buyer fraud. The buyer simply claims he never got his Bitcoins, and PayPal then has to figure out how to verify the transaction.
You'll notice that most of these sites charge a huge premium (25% or so) over exchange rates. This tends to suggest that they're falling victim to a "fraud spiral". When an exchange has a high fraud rate because of its more liberal policies, they have to raise their rates. Legitimate users just use other exchanges because they prefer to comply with the more restrictive policies rather than paying a 25% premium. Of course, those trying to commit fraud don't care that the rates are terrible, they're not paying them anyway. So high fraud leads to bad rates which leads to legitimate users leaving and thus a higher percentage of fraud, and so on.
Paypal does not allow their service to be used as a currency exchange. They classified Bitcoin as such, so people are forbidden to trade bitcoins using PayPal (see this post about CoinPal)
Google Checkout either considers that bitcoins are Virtual Goods or simply hasn't made any decision yet. These users selling bitcoins with Google Checkout started their business just a few weeks ago.
I run http://accesscoin.com
Here is what I have found. "Selling virtual currency via Google Checkout is allowed though." shamor - Google Employee - 7/31/11 -- http://www.google.com/support/forum/p/checkout-merchants/thread?tid=3dd3aaeb58f9fd94&hl=en
Presumably because Paypal is an arm of eBay which has to tread water on its own, making Bitcoin a fair threat, since it does away with the standard payment processing system.
Google Checkout is just a service of Google, which doesn't really factor into Google's overall earning strategy.
Also, google tries to appear nerd chic, which is easier if you don't anger your IT guys.