For any country undergoing capital controls, the implemented measures aren’t fun for the local economy.
PayPal has now effectively pulled out of Puerto Rico, terminating its services in the unincorporated U.S. territory, as far as personal payments are concerned.
According to an update to its Policies, PayPal states the following:
“Person to person payments will not be available for payments sent from Puerto Rico after October 30th. “
The PayPal change in Policies follows a previous announcement:
“Due to new government policies in Puerto Rico, we have made the difficult decision to no longer offer our person-to-person payment service to our Puerto Rican customers as of November 1, 2015. Our customers in Puerto Rico will no longer be able send money to friends and family abroad with Venmo or PayPal, but will be able to continue to use PayPal to pay for goods and services and receive payments. We regret any inconvenience this may cause our valued customers in Puerto Rico.”
As the beginning of capital controls, the Puerto Rico government passed a law that forces all peer-to-peer transactions to be taxable at a 2% rate. Essentially, the Puerto Rico government is looking to extract any additional sources of income from Puerto Rico citizens.
Puerto Rico defaulted on a $58 million dollar bond payment in August.
Not surprised really. There have been several countries over the years that Paypal has restricted personal payment options from due to the local governments tightening the laws to prevent tax evasion as well as paypal trying to prevent fee evasion.