PayPal Says It Will Stop Blocking of Payments Backed by Credit Cards

PayPal Inc. has announced it will no longer allow sellers that have bank accounts registered with the San Jose, Calif.-based processor to block payments funded by credit cards, effective next month. Sellers' ability to refuse such payments has been part of the company's “Payment Receiving Preferences” policy for so-called premier and business sellers, some of which take advantage of the policy out of fear of chargebacks. PayPal does not allow personal sellers to accept payments funded by credit cards. Approximately one-half of PayPal's domestic volume is card-based, with the other half funded by checking accounts via the automated clearing house. The company says the change is based on “analysis and community input,” and should lead to less buyer abandonment of transactions. Some buyers, PayPal says, become confused when card-funded payments are rejected and walk away from transactions.