Skip to Content

WoW Insider has the latest on the Mists of Pandaria!

The Lawbringer: The relationship between Blizzard and PayPal

Pop law abounds in The Lawbringer, your weekly dose of WoW, the law, video games and the MMO genre. Mathew McCurley takes you through the world running parallel to the games we love and enjoy, full of rules, regulations, pitfalls and traps. How about you hang out with us as we discuss some of the more esoteric aspects of the games we love to play?

On Wednesday, Blizzard announced that PayPal would be its payment service partner for the new Battle.net wallet and Diablo 3 real money transaction Auction House coming with the release of the next Diablo game. Was anyone really surprised at this announcement? I sure wasn't, but that's because I already knew PayPal would be the payment service partner for the Diablo 3 real money Auction House from the moment the Diablo 3 real money Auction House was announced. I'm not trying to be smug here, because you knew it, too. You just didn't know that you knew.

The relationship between Blizzard and PayPal is an easy one to decipher because of the nature of the business Blizzard is getting into with the Diablo 3 RMT Auction House. Auctions for real money are firmly in PayPal's wheelhouse because, shocker of shockers, PayPal is owned by eBay. When you think about the feasibility of the RMT Auction House and all of the legal ramifications that go along with it, you point to the eBay model of online auction facilitation for what works and provides the path of least resistance.

This article is not a critique of PayPal as a service. There are plenty of places on the web to find that type of article. Instead, The Lawbringer will look at the actual services that Blizzard provides with PayPal, why PayPal was the obvious choice for real money transactions, and how PayPal's integration into Battle.net is not the potentially apocalyptic scenario that a few have presumed.

Blizzard and PayPal are already friends

PayPal has been a payment option for World of Warcraft subscription time for a while now, as more payment options for the game open up new players who don't necessarily want to pay via a credit or debit card. You can also purchase game time directly from the Blizzard store, but you still need a credit card to purchase game time codes. There is an interesting relationship brewing behind closed doors.

What does it mean when companies are friends, really? Is it all about mutually beneficial corporate positions and ventures? That's part of it, sure. There are other factors, including motives and industry outlook, that are a large part of the PayPal/Blizzard paradigm.

PayPal's involvement with the fight against gold selling

Remember back when PayPal issued those letters to gold selling companies overseas that it was going to investigate their businesses and make judgments on whether to remove those companies' ability to accept PayPal as a payment option? Blizzard had originally complained to PayPal about overseas gold selling operations selling Blizzard intellectual property that violated Blizzard's rights. From there, PayPal sent notices to gold sellers informing them of Blizzard's report and asked these companies to fill out objection papers to the infringement claims. The entire effort was potentially hollow but also potentially a big step in terms of the Blizzard/PayPal relationship.

The most widely used payment option for gold selling is PayPal. As we all know, gold selling isn't really slowing down, and the dangers of gold farming have switched from in-game farming disruption to out-of-game account compromising. PayPal stands to make a lot of money from transaction fees based on gray market gold sales and doesn't exactly have the incentive to cut these gold sellers out of the loop. However, the endgame goals of Blizzard now fuse with PayPal's interests more than ever -- why have X number of potentially infringing transactions when we can give you Y number of acceptable transactions and adding the PayPal service as an accepted payment option for all things Battle.net?

PayPal was fine with fighting gold selling with letters and stern warnings before. Now, PayPal is in the position to cut sellers off completely, with Blizzard as an even bigger partner.

Why was PayPal the obvious choice?

There was no question that PayPal was going to be the partner in this whole Diablo 3 RMT business. It makes sense because PayPal is in the perfect position to provide Blizzard with everything it needs in terms of mechanics and facilitation to make the RMT Auction House viable. Remember when I asked all of those questions about how Blizzard would have to deal with a bevy of legal issues associated with the RMT Auction House like issues with minors, tax concerns, etc.? Well, those questions are actually easier to answer than I imagined. All I had to do was take a look at eBay's terms of service and rules.

Basically, Blizzard is going to set up the Diablo 3 real money Auction House like an auction site in everything except the actual website online. A third party (PayPal) takes care of the cash-outs and everything having to do with the real money portion of the exchange. Since eBay and PayPal are synonymous, the expertise is already there. PayPal gets an established brand that will be pumping in huge amounts (potentially) of transaction fees, and Blizzard gets the expertise and (almost) decades of knowledge about online auctions from eBay. It's win-win-win.

A future without credit card issues

The final piece of interesting information is that Blizzard is having PayPal come on board in the future as a payment option for Battle.net, not just WoW subscription time. This means that you'll be able to purchase games, Blizzard products, and even game services with PayPal. The number of people who do not use credit cards for online purchases and video game subscriptions is still fairly high. How many times have you been in guild chat where someone is missing because they didn't get another game time card yet?

Opening up the payment options means that Blizzard is expanding the genre as well as the client base through accessibility of a different kind. The credit card is almost antiquated in this scenario, with digital money going back and forth, real money coming out on occasion, and digital games and services being paid for with Battle.net Wallet cash or PayPal money. With this much PayPal integration, you just might see the fight against infringing activity take the next steps into the battle, and more players OK with putting their money into the Blizzard system.

Personally, I think this is a non-story. PayPal is the leading player with the expertise, understanding, and infrastructure to make the Diablo 3 RMT Auction House a possibility. Blizzard is smart to bring PayPal on board. Then I started reading the comments on the post. Glad I did that after I wrote my article ...

This column is for entertainment only; if you need legal advice, contact a lawyer. For comments or general questions about law or for The Lawbringer, contact Mat at mat@wowinsider.com.

Filed under: Analysis / Opinion, The Lawbringer

Reader Comments (Page 2 of 2)

Around Azeroth

Around Azeroth

Featured Galleries

It came from the Blog: Occupy Orgrimmar
Midsummer Flamefest 2013
Running of the Orphans 2013
World of Warcraft Tattoos
HearthStone Sample Cards
HearthStone Concept Art
Yaks
It came from the Blog: Lunar Lunacy 2013
Art of Blizzard Gallery Opening

 

Categories

Joystiq

Massively

Engadget