PayPal, the popular service for making and receiving payments over the internet, is to start fining those who use it to pay for on-line gambling and porn services, according to a report by Reuters. PayPal will also target the unauthorised sale of prescription drugs.

According to Reuters, from 24th September, buyers and sellers using PayPal will face fines of up to $500 if they use the service in relation to gambling or porn web sites, or for the sale or purchase of prescription drugs from unlicensed sellers – all in breach of PayPal's user agreement.

The action follows that taken by credit card issuers such as American Express and Citygroup who have blocked payments to gambling sites on a voluntary basis for some time now.

Regulatory pressure on banks, credit card companies and payment service processors is intense in the US, as authorities seek to crack down on internet gambling and pornography.

Despite legislation and enforcement action at both federal and state level, authorities are pretty much powerless to directly stop US citizens accessing off-shore web sites, and are turning to indirect means of doing so including the targeting of the on-line payment methods used by consumers, particularly for gambling.

But PayPal spokeswoman Amanda Pires told Reuters that the tough approach was not the consequence of regulatory pressure. "What you're seeing here is an evolution of our program. We're trying to deter people who would offer PayPal as a way to pay for anything in these categories," she said.

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