Some years back... maybe 10 years ago... I was told by a PayPal regional manager the reason why they had issues with adult was the high incidence of fraud. It wasn't just typical credit card fraud, but overall there was so much of it occurring that it led to a variety of "spin off" issues. For example, certain countries were more prone to issues involving adult processing... one of them was India. Indian men would regularly use PayPal to buy webcam shows... then immediately after the show was enjoyed, go to PayPay and dispute the charges to get out of paying. PayPal would almost automatically side with the buyer because it was happening in such high volume. The bookkeeping problems adult was triggering were almost unprecedented. As a result, PayPal adopted a pretty strict "no adult" policy. But, over the years as cyber security and processing methods have improved, they've eased up... adult tangible products (like toys) and reputable third party processors are not the taboo they once were. So, it doesn't seem that PayPal had issues of morality with adult... there were just too many operational hassles with it.
