Weekend Economists Salute Ruin July 3-5, 2015

[Demeter]

22. Paypal Shuts Down in Greece - Bitcoin Still Operates

https://www.cryptocoinsnews.com/paypal-shuts-greece-bitcoin-still-operates/

As if everything to do with money is not bad enough, Greeks no longer have access to their PayPal accounts, reports Quartz.

Capital controls imposed by the Greek government mean that Greek citizens can only withdraw 60 euros (effectively 50 euros after ATMs have run out of 20 euro notes) and online payment service, PayPal, has been left crippled, as a result. PayPal relies on the traditional banking sector and credit card industry for all its transactions to flow.

Announced by a PayPal spokesman today:

Due to the recent decisions of the Greek authorities on capital controls, funding of PayPal wallet from Greek bank accounts, as well as cross-border transactions, funded by any cards or bank accounts are currently not available. We aim to continue serving our valued customers in Greece in full, as we have for over a decade.

No Bank, No PayPal

That PayPal’s operations have become log-jammed under the prevailing conditions in Greece, emphasizes the extent to which it and other finance tech companies are dependent on the very banking complex they seek to compete with. Fact is, there is an old-style bank that underpins nearly every finance tech start-up that purports to threaten and disrupt the old guard. Examples are peer-to-peer lending platforms such as Prosper and Lending Club. Ironically, neither company holds the loans they award on their own balance sheets, but, instead, acquire the funds from WebBank, Salt Lake City, Utah.