Customers of Kim Dotcom's latest business venture, Mega, will find it difficult to pay for its services since PayPal will no longer process payments to the cloud storage service.
Mega said PayPal was pressured by Visa and Mastercard to stop dealing with Mega after it was named as not being a legitimate cloud storage service in a report by Net Names.
Mega said PayPal had advised it that a key concern was its encryption, which made it impossible for third parties to see what was on the Mega platform.
The cloud storage firm said that was even though it had demonstrated it complied with its legal obligations in the United States.
Mega claimed it had more than 15 million registered users in more than 200 countries.
It said until it had new payment systems, it would not enforce storage limits or suspend any accounts for non-payment.
Mega said it had also extended existing subscriptions for two months free of charge.
This is the latest hitch in Mega's plan to complete a backdoor listing on NZX through the shell company, TRS Investments, which was first mooted a year ago.