PayPal Revises Policies to Become More Crowdfunding Friendly PayPal and the crowdfunding community have clashed in the past, but the payments company is turning over a new leaf.

By Kate Taylor Mar 14, 2014

Opinions expressed by Entrepreneur contributors are their own.

PayPal hasn't always been the biggest fan of crowdfunding. The intricacies associated with crowdfunding -- a relatively new form of fundraising that is constantly evolving -- have made life tricky for the payments company, but it looks like PayPal is ready to make nice with the crowdfunding community.

Last September, PayPal promised to adjust its policies after getting flack for freezing a huge amount of crowdfunding funds. On Thursday, it announced those changes.

PayPal now plans on upping engagement with campaign owners early in the process. PayPal's increased early engagement allows the company to provide users with "upfront guidelines and expectations," and ensure the campaigns comply with PayPal and government regulations.

Early engagement also helps PayPal's categorization process, with PayPal and crowdfunding sites working together to classify if campaigns are preselling merchandise or simply fundraising. For preselling campaigns, PayPal makes sure owners are "explicit and transparent" that there is no guarantee of the delivery of rewards.

"Crowdfunding is fundamentally different from regular ecommerce," PayPal's Chief Risk Officer Tomer Barel said on the PayPal website. "Currently, PayPal is the only payment company that has customized its policy and processes to specifically support crowdfunding and we have done it without changes to our price structure."

Kate Taylor

Staff Writer. Covers franchise-related trends and topics.

Kate Taylor is a staff writer covering franchises for Entrepreneur.com. Related areas of interest include chain restaurants, franchisee profiles and food trends. Get in touch with tips and feedback via email at ktaylor@entrepreneur.com or on Twitter at @Kate_H_Taylor.

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