Banking regulators in Lousiana have ordered PayPal to suspend the operation of its popular online payment service in the state until it applies for a money transmission license.
Louisiana regulators claim PayPal is operating an unlicensed banking business. PayPal is understood to be facing similar regulatory difficulties in at least nine other states, including New York, which accounts for 6.4% of the payment volume handled by the company. PayPal says it plans to file for applications in those states which have expressed misgivings.
The order, revealed by PayPal in documents filed with the Securities and Exchange Commission, cast another cloud over the company's forthcoming IPO. It follows a recent patent infringement lawsuit filed by PKI operator CertCo, which forced PayPal to delay its flotation until this week.
The company insists that its IPO will go ahead Thursday as planned.