An actor in police costume greets Megaupload founder Kim Dotcom (L) as he launches his new file sharing site "Mega" in Auckland January 20, 2013.
IN PHOTO: An actor in police costume greets Megaupload founder Kim Dotcom (L) as he launches his new file sharing site "Mega" in Auckland January 20, 2013. Dotcom, who is fighting extradition to face U.S. charges of internet piracy, has launched a new cloud storage service called "Mega" at a function at Dotcom Mansion in Coatsville, Auckland. Reuters/Nigel Marple

PayPal has decided to end the payments to Mega, an encrypted cloud-storage service by Kim Dotcom. Mega, in a blog post, has stated that MasterCard and Visa have pressured PayPal to terminate the services.

A PayPal spokesperson talked to The Verge and stated that due to business reasons the company has decided to not provide any further services to Mega.

“We respect the privacy of all our customers and former customers and will not provide further details about this decision,” the PayPal spokesperson added.

However, Mega said that PayPal has decided to end the relationship due to encryption which results in “unknowability of what is on the platform.”

Mega CEO Graham Gaylard talked to TorrentFreak and stated that the latest issue is because of the NetNames report. Mega revealed that after the publication of the report in September 2014 Senator Patrick Leahy asked MasterCard and Visa to cut ties with companies in the report.

Later, MasterCard and Visa asked PayPal to end its partnership with the cloud storage company. Gaylard mentioned that it has been quite disappointing.

“MEGA provided extensive statistics and other evidence showing that MEGA’s business is legitimate and legally compliant. After discussions that appeared to satisfy PayPal’s queries, MEGA authorised PayPal to share that material with Visa and MasterCard. Eventually PayPal made a non-negotiable decision to immediately terminate services to MEGA.”

Meanwhile, PayPal has accepted that Mega’s business is legal and it apologised for terminating the relationship. Currently, Mega cannot process the payments, but it is looking for an alternative solution to solve the issue. The company has decided to not end any accounts of the users due to non-payment. Moreover, Mega has extended the subscriptions of their users by two months at no extra cost.

It has to be seen how Mega deals with this issue. Stay tuned for more updates.

For questions/comments regarding the article, you may email the writer at t.mazumdar@ibtimes.com.au.