Paypal has frozen the account of micropayment service BitPass. Scott McCloud, one of their advisors and its most prominent user, stated that Bitpass was given seven days to provide Paypal evidence that their service isn’t a violation of the U.S. Patriot Act. Is this because Paypal is genuinely concerned that Bitpass could be used for money laundering, or are they interested in shutting down a potential competitor?
Scott reported this information at this O’Reilly’s Foo Camp over the weekend, and doesn’t appear to have hit the web anywhere yet. Please let me know if you find any more information about this story.
Update: Abe Burmeister spoke to Bitpass and confirms the report.
October 14, 2003: Paypal employee Patrick Breitenbach posted a comment on my site, stating that Paypal reactivated the Bitpass account this morning. Patrick said that Paypal didn’t intend to disrupt payment process, and claimed the decision to suspend their account was unrelated to competitive issues. Though the End of Free points out that their Senior Manager for Biz Dev is speaking a micropayments conference next month.