In the medieval times it was common for the church to put a religious spin on anything it didn't like. Pagan holidays were made into Easter and Christmas. Women were looked down on and so Mary Magdalene got turned into a hooker and mermaids lost their souls.
Mermaids of course were commonly believed in, gifts were left near lakes, fishtailed gods were prayed to and so the church, in an effort to do its job (covert the heathens and save their souls *) adapted older mermaid tales to suit their purposes and began to spread the stories of mermaids longing for souls so that they could go to heaven.
One such story is of the mermaid of Iona.
There was a monk who lived on the Isle of Iona on the monastery founded by St Columba. Every day a mermaid would visit the shore to beg the monk to give her a soul. For months she visited him, begging for a soul, crying and wailing and yet the monk always gave her the same answer; she must give up the sea forever. The mermaid cried bitterly but neither her beauty nor her tears helped her and in the end the call of the sea proved stronger than her longing for a soul. She made one last appeal before she left but the monk remained adamant. Weeping the mermaid returned to the sea, never to be seen on the holy Isle of Iona again.
As she left, the tears she cried became pebbles. To this day the locals gather the greenish-grey pebbles (known as mermaid's tears) to make jewelry and trinkets.
Wordsworth wrote a sonnet about Iona which included the lines:
"How sad a welcome! to each voyager
Some ragged child holds up for sale, a store
Of wave-worn pebbles; pleading on the shore."
* I would just like to mention that I am not "against" the church, I am merely commenting on their behavior in the past. I am, in fact, a christian.