PayPal Might Be Losing Business While Trying to Help Netflix

February 16, 2016         By: Asif Imtiaz

Since Netflix expanded its market and included practically every country in the world with Netflix Everywhere, they have been fighting a losing battle with geo-barriers.

PayPal, being a good Samaritan tried to help out Netflix by banning VPN providers who specifically advertised to help customers get pass the Netflix geo-barriers and watch US program list.

However, the cost of being a good Samaritan may start to reflect on its bottom line and Netflix certainly won’t be picking up the tab.

Virtual Private Network or VPN is a technology that allows a user to fake their geo-location to the host server. Anyone living in Germany or Malaysia can use a US VPN server to present themselves as from the United States to the Netflix and can watch US program lists, which are not available to viewers in Germany (or any other country) via Netflix Everywhere.

Naturally, some Netflix subscribers tried to bypass the geo-barriers by subscribing to VPN providers.

Since Netflix was having trouble blocking IP addresses of these VPN servers themselves, they enlisted their payment processor, PayPal, to block the accounts of VPN providers who were facilitating these customers.

Last week, TorrentFreak reported that PayPal has started banning VPN providers. The TorrentFreak article said that PayPal sent a letter to UnoTelly, saying “Under the PayPal Acceptable Use Policy, PayPal may not be used to send or receive payments for items that infringe or violate any copyright, trademark, right of publicity or privacy, or any other proprietary right under the laws of any jurisdiction.”

PayPal also made the account of UnoTelly limited, which means they now have to find another payment processor to accept payments from their customers.

The problem is, for PayPal, that VPN companies like UnoTelly would simply ask their users to pay with Credit Cards or use one of PayPal’s competitors instead.

While Netflix has a business interest to block VPN, PayPal as a payment company does not have any incentive to block payments from VPN services. However, the case might be that Netflix is such a big customer for PayPal. PayPal might have decided it is better to keep processing payments for Netflix instead of all the other VPN providers.