PayPal essentially doubled as an underwriter for people backing Kickstarter campaigns. Engadget touches on the online payment giant’s change of heart about carrying the risk for successful fundraisers that simply fail to deliver on their promises.
Kickstarter notes that about 9 percent of its projects never deliver — even though PayPal only handles some of those transactions, that’s a lot of potential refunds. We’ve asked PayPal for its official reasoning, but it might simply be a matter of wanting to keep costs down.
PayPal statement:
“In Australia, Brazil, Canada, Japan, United States and certain other countries, we have excluded payments made to crowdfunding campaigns from our buyer protection programs. This is consistent with the risks and uncertainties involved in contributing to crowdfunding campaigns, which do not guarantee a return for the investment made in these types of campaigns. We work with our crowdfunding platform partners to encourage fundraisers to communicate the risks involved in investing in their campaign to donors.”
Full version: http://www.engadget.com/2016/05/08/paypal-drops-crowdfunding-protection/