Hong Kong-based cloud storage company MEGA is stuck without a payment provider after PayPal dropped its services following pressure from the US authorities.
The company, which allows users to upload and share files of up to 1GB, has long courted controversy for its seemingly hands-off approach to content, which saw its previous iteration, Megaupload, become a “haven” for pirated video.
In January 2012, Megaupload was briefly shut down by the FBI, who also seized $50m of assets and confiscated much of the site’s advertising profits. The site re-launched as MEGA exactly one year later, and claims to have picked up 100,000 subscribers in its first hour alone.
However, because the site uses AES algorithms to encrypt the data on the customer side, files cannot be decrypted and accessed by the company itself: in essence, MEGA can’t determine the content of the files themselves.
As part of widespread international security crackdowns, US investigators have reportedly begun pressuring card companies such as Visa and MasterCard to refusing service to any site’s that can’t monitor user uploads and behaviour.
PayPal, which partners with card companies to facilitate transactions from linked user accounts, appears to have been caught up in the fray.
MEGA is offering existing customers two months’ free subscription while it searches for an alternative payment provider. Whether companies that refuse to play by the Fed’s security rules can continue to access the financial networks they need to survive, however, remains to be seen.
Whitepapers
Related reading
Travel industry must keep up with consumers’ payments demands
Payments providers must keep up with the fast-paced change of consumer demands in the travel sector, according to Kevin White, Mastercard’s director ... read more
Nissan joins in-car payments race
Payments services providers and fintechs have unleashed a flurry of collaborative innovations over the course of the past decade in order to ... read more
Ripple courting banks, paytech and big fintech to beat Swift to emerging markets
Midway into 2019, Ripple is broadening its clientbase in order to boost growth and capture emerging market volumes, according to Marcus Treacher, ... read more
UK SMEs need to embrace technology revolution
Modulr CEO Myles Stevenson and Seamus Smith, executive vice president of worldwide payments and banking for Sage, on why now is the time to embrace digitisation
