Online Retail Takes a Hit with Greece's Capital Controls

Monday was the day the music died for thousands of song downloaders and music streamers in Greece.

The imposition of capital controls on Sunday evening means Greeks are no longer able to purchase goods or services from many big international online suppliers including Google , Apple and Facebook.

Transfers of funds out of Greece were banned to prevent a collapse of the banking system after Prime Minister Alexis Tsipras rejected the terms of a bailout offer from international lenders.

The controls mean payments via debit or credit cards to accounts outside Greece are prohibited.

This is a problem for the big online retailers, music download sellers and airlines, who sell to clients across Europe from centralised transacting subsidiaries, often in Luxembourg or Ireland, and often for tax reasons.

Since Monday, many Greeks have found they can no longer make payments online to such companies.

"I tried to pay Facebook three euros for a small advertisement but my card was rejected right away," said Greek e-commerce consultant Panayotis Gezerlis.

He added that he had also failed to purchase music from Google and to make a payment from his bank card via eBay's payment unit, Paypal.

Google told Greek clients in a Facebook posting that it was working to find a solution.

Google's European customers contract with an Irish subsidiary when buying advertisements. The system allows the group to pay almost no tax on profits from these sales, but also means almost every sale is a cross-border transaction.

A spokesman for the Irish airline Ryanair said it was also having trouble processing payments from Greek customers, and was working on a solution.

Even the Taxi hailing service Taxibeat, which was founded in Greece but operates internationally, tweeted on Monday that it was hoping to be able to offer a viable payment system soon.

Gezerlis said that, while many of the products and services affected were not necessities, others, such as file storage and advertising, could cause problems for businesses unable to pay.

"There are many businesses which rely on Google servers and on Dropbox to share files," he said.

Many big online providers including Amazon, Google, Apple, Microsoft, Adobe and Expedia did not reply to requests for comment. (Additional reporting by Eric Auchard in Frankfurt and George Georgiopoulos in Athens; Editing by Kevin Liffey)