QUESTION: In late 1998, Peter Thiel and Max Levchin founded a company called, "PayPal." (It was originally called Confinity). PayPal is a way to send money securely over the internet. There are two ways of sending money through PayPal: sending money through the Friends & Family channel (F&F) or sending money through the Goods & Services channel (G&S).
F&F is intended for sending money to pay back a friend or to give a relative a gift. PayPal does not charge a fee when money is sent through this channel. However, PayPal does not offer protections or guarantees if something should go awry (e.g. a scam) when money is sent through this channel.
G&S is intended for commerce and purchases, and money sent this way is subject to PayPal fees which are currently 2.99% of the transaction. With G&S, if you never received what you bought or upon arrival, the item was not as the seller described, PayPal provides certain buyer protections to allow for a refund.
PayPal makes its money in two ways. PayPal collects fees as outlined above and PayPal also collects interest on money left in PayPal accounts as all the money held in PayPal accounts is placed into interest bearing bank accounts.
To avoid paying PayPal fees, is it permitted for a business to take payment for a purchase through the F&F channel? Can the term “friend” be defined as any person that you trust and include a trusted business customer?
The question was posed to Rav Yisroel Dovid Harfenes, one of the leading Poskim in the United States. [Each person however, should make his or own inquiries to both Paypal and to one's Rav or Poseik or call the Sefas Tamim Foundation’s Emes Halacha Hotline – 718-200-5462]. Rav Harfenes responded that one must ask PayPal if they truly do not care if a business uses F&F instead of G&S. If they do care then it would be a problem. When the question was posed to PayPal however, they did not respond.
When Rav Harfenes was told this, he responded that it would seem from their lack of a response that it does not matter to them, and therefore there would be no prohibition for a business to utilize the F&F channel.
