Paypal has just sent out it’s Notice of Policy Updates for 2017. Among the standard raising of rates, one new clause in the agreement caught my eye – the “non-discouragement” clause which makes talking bad about, or discouraging customers from using Paypal or promoting another payment method over Paypal, a violation of the Paypal agreement which could lead to your account being closed and/or your funds being “held”.
Paypal Non-Discouragement Clause
In representations to your customers or in public communications, you agree not to mischaracterize PayPal as a payment method. At all of your points of sale (in whatever form), you agree not to try to dissuade or inhibit your customers from using PayPal; and, if you enable your customers to pay you with PayPal, you agree to treat PayPal’s payment mark at least at par with other payment methods offered.
The first part of the non discouragement clause is a little confusing to me: “you agree not to mischaracterize PayPal as a payment method“. This means that by calling Paypal a “payment method” you are wrong (mischaracterizing it) and violating PayPal’s rules. What I don’t understand is, if Paypal is not a payment method, WTF is it? I’m sure there is some wording buried in the service agreement/terms of service/legal mumbo jumbo that names Paypal as something other than a payment method, but to me, if people use Paypal as a method of paying for stuff, it is a payment method.
The second part of the non discouragement clause is the kicker and where Paypal can ban you for talking bad about, or not treating it the same as your other payment methods – or even trying to push people to using another payment method instead: you agree not to try to dissuade or inhibit your customers from using PayPal; “…and, if you enable your customers to pay you with PayPal, you agree to treat PayPal’s payment mark at least at par with other payment methods offered.”
This means that if you, for example offer both Paypal and Square, but you prefer people to use Square because they don’t gouge you as hard as Paypal, you can’t say anything about it, you can’t ask customers to use Square instead, you can’t offer an incentive to use Square instead of Paypal – you can’t do anything. You can simply display a Paypal button/logo and a Square button/log next to each other. You can’t even make the Square logo bigger than Paypal’s button. The PayPal button must be “at par” with other payment methods. Who decides if the way you placed Paypl’s payment mark is “on par” with your other payment method? Well, Paypal does of course.. But don’t worry, you can trust Paypal.. Right?
Unfortunately, because currently there really is no other payment method as large, easy to use, and as widely accepted as Paypal they have a virtual monopoly on the online payments market and can pretty much make up any rules they want, and still ban whoever they want.