Back in 2004 or so, I logged into online banking and saw that where I had about $3000 the day before, I now had less than $100. Mortified, I looked and saw that there were a couple of Paypal transactions being processed. I didn't see anything in my email, and I logged into Paypal and didn't see anything on the summary screen, but when I looked at the fully history, I saw two eBay purchases: One for a hacked PS2, one for a laptop. I was able to contact both sellers: The guy with the PS2 hadn't shipped his yet, and canceled. The laptop seller lamented that he had mailed it right away - to the Philippines. To this day, I don't know how this guy in the Philippines accessed my Paypal account - I did manage to reach out to him, but he expected me to pay him to give up his secrets, and I'm not playing that game.
Anyhow, I called my bank and explained to them that these were fraudulent transactions, and thank goodness you have them on hold but haven't processed them, because my rent is coming up and could you please release the money.
The bank refused. I'd been a member of the same institution for probably a dozen years, had a car loan out through them, was on track to get a mortgage through them in a few years, and they told me that even though I had caught it that very morning, about as soon as I could possibly have caught it, that there was nothing they could do.
Paypal, on the other hand, asked me to sign an affidavit, and a couple of weeks later, fully refunded my account.
I've held Paypal above banks ever since. In retrospect, eBay had acquired Paypal only two years prior, and this transaction happening on eBay probably garnered additional scrutiny at the time. However, nearly every time I read about someone's Paypal account getting locked out, it turns out they weren't paying attention to the Terms of Service - which are, without a doubt, designed to minimize fraudulent use of Paypal as a payment provider. It's why you can't do pre-sales on Paypal - it leaves them open to liability.
For better or for worse, the overwhelming narrative becomes "Paypal sucks", but as you start to look at the big boy payment providers, you'll discover that Paypal is often more permissive by comparison, with rates that are comparable to or better than the big boys when you're running with such small transactional values. And if you end up going to some upstart that will let you do things Paypal won't, that party's only going to last as long as those providers don't get stung by regulatory fees or plain old fraud.
While it's nice to hear a good story, PayPal is not a bank and a PayPal account lacks the consumer protections that bank accounts in many countries (including the US) receive by law. PayPal takes advantage of this lack of consumer protection to freeze accounts and hold funds for up to 180 days on grounds that aren't necessarily reasonable or disclosed.
Financial institutions do not have this kind of control over bank accounts. All bank accounts inherit a level of trustworthiness from consumer protection laws that only apply to bank accounts. PayPal does not.
When PayPal freezes/limits an account in a way that a bank account could not legally be subject to, the problem is not the account holder, but PayPal itself.
Anyhow, I called my bank and explained to them that these were fraudulent transactions, and thank goodness you have them on hold but haven't processed them, because my rent is coming up and could you please release the money.
The bank refused. I'd been a member of the same institution for probably a dozen years, had a car loan out through them, was on track to get a mortgage through them in a few years, and they told me that even though I had caught it that very morning, about as soon as I could possibly have caught it, that there was nothing they could do.
Paypal, on the other hand, asked me to sign an affidavit, and a couple of weeks later, fully refunded my account.
I've held Paypal above banks ever since. In retrospect, eBay had acquired Paypal only two years prior, and this transaction happening on eBay probably garnered additional scrutiny at the time. However, nearly every time I read about someone's Paypal account getting locked out, it turns out they weren't paying attention to the Terms of Service - which are, without a doubt, designed to minimize fraudulent use of Paypal as a payment provider. It's why you can't do pre-sales on Paypal - it leaves them open to liability.
For better or for worse, the overwhelming narrative becomes "Paypal sucks", but as you start to look at the big boy payment providers, you'll discover that Paypal is often more permissive by comparison, with rates that are comparable to or better than the big boys when you're running with such small transactional values. And if you end up going to some upstart that will let you do things Paypal won't, that party's only going to last as long as those providers don't get stung by regulatory fees or plain old fraud.