When dealing with PayPal payments to buy or sell Bitcoin, one can never be cautious enough. Even though a lot of people – including this author – would recommend using any other non-reversible payment method available today, there are those who swear by PayPal despite the risks. If one does want to go through with this deal, some necessary precautions need to be taken by the recipient of the PayPal funds.
PayPal And Bitcoin Is Still Not A Good Idea
While there is very little one can do to reduce the risk of fraud and chargebacks with PayPal, covering all the bases is the best way to go about things. First of all, make sure the Bitcoin buyer has a verified PayPal account, as this indicates they have taken the time to properly set up the online payment option rather than create a new account with a stolen credit card. Even though this is no guarantee for success, it is a small step in the larger scheme of things.
Secondly, if you are dealing with a PayPal transfer outside of regular bitcoin trading platforms – such as LocalBitcoins – make sure to mention to the buyer how they should send the funds as a “gift.” This significantly reduces the chances of disputing the transfer, as “gift” transfers are not covered by PayPal’s Buyer Protection. If the person looking to buy your bitcoins does not agree with this, just cancel the deal and move on.
When completing the deal, it might be well worth the effort to ask the sender of funds to verify their identity at some point. Open a video chat through Skype, and ask them to hold up their ID card or something similar to proof they are who they claim to be. Platforms such as LocalBitcoins advise a similar verification process when dealing with PayPal payments on their platform as well.
While it may not be advisable to ask the buyer to wait until you have withdrawn the funds to a bank account before sending the bitcoins over, it is another resort to protect oneself from financial harm. Depending on where the user lives, these bank transfers can take anywhere from two to five business days, although the funds should be relatively safe as soon as PayPal marks the request as “completed” in one’s account.
In the end, there is no safe way to deal with PayPal payments in exchange for Bitcoin. The precautions as mentioned earlier will help to weed out most of the scammers from legitimate buyers, but there is always a particular risk associated with these types of transactions.
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