2,940 crowdsourcing and crowdfunding sites
PayPal has had a tumultuous relationship with crowdfunding.
The eBay-owned company regularly freezes the accounts of successful crowdfunders, often without prior explanation, leading to significant delays in acquiring that capital. This negatively affects the fundraisers themselves and crowdfunding platform operators that rely on PayPal to handle their payments processing. In the last month alone, Google Glass competitor GlassUp and encrypted email client Mailpile publicly grappled with PayPal in order to receive the money they raised through crowdfunding campaigns on Indiegogo.
Thankfully, PayPal recognizes there’s a problem and promises to fix it.
In a Wednesday blog post, PayPal’s vice president of risk management Tomer Barel promised to improve the situation for crowdfunders receiving funds via PayPal.
“We are now in the midst of overhauling our policies in this space,” wrote Barel. “We're talking to the major crowdfunding players that we work with to put in place a permanent solution that avoids unnecessary account limitations. But making this work for all stakeholders — contributors, entrepreneurs, crowdfunding sites and us — is pretty complicated. As soon as I have more to share, I promise to update everyone.”
In the meantime, Barel said, a senior staff member on PayPal’s risk management team will review each questionable crowdfunding campaign before the company takes any action, like freezing a crowdfunder’s account.
“PayPal's very essence is connecting buyers and sellers,” he continued. “The last thing we want to do is get in the way of the innovative new products coming from entrepreneurs raising money via crowdfunding.”
We’ve reached out to PayPal for more details about what the company’s revised crowdfunding solution will entail. We’ll keep you updated as soon as we hear more.