PayPal has Come to Israel and Nonprofits Yawn Their Indifference

PayPal is coming to Israel, reported Haaretz on September 13th. While this is great news for those individuals buying up those priceless items on eBay, nonprofits should be a little less enthusiastic.

PayPal, Haaretz summarized:

Provides a secure method of transferring payments between online buyers and sellers, without the need for either party to reveal their credit card or bank account information.

In an age where online buying increases daily, PayPal is an invaluable tool. (I personally use PayPal because of its great buyer protection program). So much so that other companies have followed suit. Google launched its “Google Checkout” back in 2006 and in Israel, Walla! introduced Buy and Pay in the same year (Walla! announced the closing of this service this September).

In the United States, PayPal, owned by eBay, is much more than a way for customers to shop at their favorite stores. It is a secure and easy way for nonprofit organizations to receive donations via the internet.

So you can imagine how excited I was when I heard that PayPal was coming to Israel. After all, this was chance for nonprofits in Israel to receive donations either in NIS or USD from any PayPal account, anywhere in the world. Even thinking strictly locally, PayPal’s average commission of 2.5% (not even including the benefit that many nonprofit qualify for) is a much better alternative than VISA or Isracard (two leading Israeli credit card companies), that charge Israeli charities commissions of between 3 and 5%. In July, a PayPal representative confirmed its pending arrival in Israel and I drafted my post “Defining an Israeli Nonprofit Organization” for PayPal Israel to prove to them that Israel nonprofits are rigidly administered.

Alas, it was not to be.

When I was speaking to the aforementioned PayPal representative in September, he let me know that PayPal Israel is run under a different charter than PayPal USA. Only in the USA can the service be used to transfer donations. PayPal Israel, however, can only be used to pay for goods received or services rendered.

While this fact does not and should not detract from the tremendous service that PayPal renders to USA charities, this provision in their by-laws was a proverbial buzz kill.

PayPal, if youre listening, please change your charter and help a brother out.

Tizku LeMitzvot [May you continue to merit doing good deeds],

Shuey

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3 Responses

  1. Good article. Just wondering–it has been a few months since you wrote it. Has the situation changed? Does Pay Pal in Israel allow nonprofits to receive donations?

    • Thanks for your comment and interest in the post.

      PayPal is interested in offering its services to Nonprofits. As of this moment, however, there is no change in status. I am in touch with Paypal and look forward to updating you and others when their product is operational.

      Regards,

      Shuey

  2. We set up a PayPal account for our Israeli registered non-profit (nowhere on the site does it say there will be a problem).

    A day later PayPal put a limitation on the account (we already received donations) asking for supporting documentation.

    We corresponded with Israel@paypal.com and sent them all the supporting documentation they requested.

    Two days later they froze the account telling us they don’t work with Israeli NPOs for compliance reasons.

    I was told on the phone that our donations are being held for 6 months, and only then will be released.

    I continued to correspond with some Israelis in PayPal, and they say they are looking into it for me, but they seem to not know anything either.

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