I had to implement this on my old sites as if a customer from an area we do not ship to purchases an expensive item, we had to cancel the order and refund - But we still had to pay the card / PayPal processing fees which could be substantial. By stopping these customers registering and displaying the message "Sorry we do not ship to xxx postcodes" we avoided these situations.
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As the name implies, This gives the store owner the ability to restrict customers from certain postcodes from registering for an account.
