PayPal will not allow its service to be used for the sale of erotic books, but said it was to stay out of legal trouble, and not to impose its moral beliefs on others or restrict free speech.
The payments company has run into criticism from and anti-censorship organisations after it asked online publishers and booksellers to remove erotic books containing descriptions of rape, incest, and bestiality.
PayPal director of communications Anuj Nayar said that the decision has nothing to do with PayPal's personal views on the content or any desire to limit rights to free-speech. "It has everything to do with running a sound business and complying with our legal responsibilities," he said.
A number of online publishers and booksellers have received the ultimatum from PayPal, said anti-censorship organisation, Electronic Frontier Foundation. The EFF and a coalition of civil liberties organisations and publishers is calling on PayPal to reverse the policy, stating that "PayPal, and the myriad other payment processors that support essential links in the free speech chain between authors and audiences, should not operate as morality police".
An important factor in PayPal's decision not to allow its payment service to be used to purchase material focused on rape, incest, and bestiality is that this category of e-books often include images, Nayar said. The content also intentionally blurs the line between fiction and non-fiction. "Both these factors are problematic from a legal and risk perspective," Nayar said.
In an email to its customers, e-book publisher and distributor Smashwords, said it believes it is wrong for credit card companies, banks and other financial institutions to censor legal fiction.
"We believe it would be unfair to authors and readers alike for any organisation to censor what writers are allowed to imagine and what readers are allowed to read," Mark Coker, founder of Smashwords said, suggesting that classical books like Vladimir Nabokov's Lolita, a novel on child molestation, could get banned under PayPal's restriction.
"Even the Bible could fall under the net since it contains scenes of rape and incest," he added.
Last month Smashwords notified authors, publishers, and literary agents that it would no longer be providing a platform for certain forms of sexually explicit fiction. "As with the other e-book retailers affected by this enforcement, PayPal gave us only a few days to achieve compliance otherwise they threatened to deactivate our PayPal services," it said.
Smashwords said the "hot buttons" for PayPal are "bestiality, rape-for-titillation, incest and underage erotica". Smashwords has modified its terms of service to include PayPal's demands.
The publisher however ruled out changing PayPal as its payments processor. "PayPal is designed into the wiring of the Smashwords platform," Coker said. It is also an extremely popular, trusted payment option for Smashwords' customers, he added.
"It is not feasible for us to simply switch to another provider, should such a suitable provider even exist, especially with so few days notice," Coker said.
A petition on Change.org, a social action platform, asks PayPal to stop abusing its power over online retailers, online publishers, writers and readers. "No corporation should consider itself a moral authority in any way, shape or form," it said.