Joe Konrath recently chimed in on Paypal's selective ban (now becoming not so selective) on processing erotica books for indie distributors like Smashwords. http://jakonrath.blogspot.com/2012/03/paypal-erotica-and-censorship.html
Here's my response:
I agree that the best way to circumvent oppressive institutions of this type is by creative solutions that bypass the need for these institutions. However, your solution is not a solution for people like me, who have a book that may end up being banned by someone like Paypal (for explicit sex, not for any of the so-far mentioned taboo subjects) but which I do not consider erotica and do not want to be sold alongside "Spank My Donkey." (I'm referring to my Jack & Dora stories, such as Jack & Dora Do L.A.)
It's good that most people are starting to see that this isn't about morality, it's about financial institutions having too much power.
But to say they're just private institutions and they can do whatever they want: Well, NO, they can't.
These huge financial institutions have become the primary controllers of the money flow. Financial institutions were once actually regulated so that they didn't become too big and gain too much power over the economic system and our society in general. When they reach the level these companies have, there are few realistic alternatives to using their services, unless one wants to commit business suicide (or create a financial processing company yourself as you suggest). The Founding Fathers would be appalled at the size and power of these institutions.
The huge financial institutions that control (and stole) our money now want to dictate what we read. I think it's about time these financial institutions were broken apart into smaller entities.
And it's all fun and games to talk about Spank My Donkey and such (and yes, I do think it's funny and I laughed and thanks for that), but it's a bit misleading because it encourages people to think they're safe cause they don't write incestual donkey porn. It's NOT so funny when you read of Tess Harding's book recently being rejected for distribution for showing a very tame photo of a women with one breast exposed in the INSIDE of the book.
Like Tess, I can't laugh that off either. I think we should look into creative solutions as you suggest. But I also think we should refuse to give in to what is surely a minority of people trying to banish free thinkers to the Donkey Porn section of the online book world. I, for one, will not go gently into that gross night.
Sign the petition and tell the financial institution that you don't want them deciding what you read.