People get upset about the way Paypal deals with fraud because they lose a lot of money to it and take extra precautions. While that is reasonable, they do a lot of things other people (and I) find to be ineffective and hurtful to users. For example, Paypal escapes banking regulation in the US due to loopholes. If you have your account locked for any reason they will hold your money for 6 months without interest. No exceptions. Their customer service sucks, it's nearly impossible to get ahold of a human and they'll require documentation they have no legal right to in order to unlock your account (example: complete bank statements: http://openca.mp/blog/paypal-hates-conferences-especially-op...). I believe the world without Paypal would certainly be a better place. I emphasize with their difficult issue of preventing fraud but that doesn't make their actions ok.
Edit: In response to following comments, I amended above where it made it sound like Paypal escaped a banking regulation to withhold your money. My issue is that they use the 180 hold on account that haven't been locked for good reason.
Some people may be able to get customer service. They offer different kinds of accounts and maybe with a merchant account through Paypal or a business account. I've personally found Paypal to be lacking when trying to get in touch with them. I had someone attempt to scam me out of money by doing a chargeback for an eBay product I shipped via USPS (no tracking number). When they opened a hold on the account because the person said they didn't receive the item, Paypal had a field where I could put the tracking number. Having no tracking number, I tried to attach a note saying I shipped via USPS. I tried contacting support and no one ever answered. I offered to sign something making my personally liable if there was a lawsuit (as I had shipped the item). After all of that, their response was to refund the money so I was out the product and money, and close my account.
Don't act like I'm the only person who's got problems with Paypal. If you have had only great experiences with them, more power to you, but there's many more people who have been wrong by Paypal than other money processors:
"paypal sucks" About 65,800 results
"visa sucks" About 3,970 results
"mastercard sucks" About 1,760 results
If they had a true competitor, they'd be struggling to stay in business.
Holding your money for 6 months without interest IS the banking regulation. That's a rule that comes straight from the Visa Operating Regulations which was written by the member banks that comprised Visa and MasterCard. Those regulations specifically say 180 days and that the funds be held in a non-interest-bearing account. It's exactly the same policy enforced on every merchant account underwritten by every regulated bank in the country.
PayPal has customer service by phone, and they answer on the first ring. No automated system on the business support line either.
Except PayPal is not a bank (in the US), and your account with them is not a merchant account. Consequently the 180-day hold rule does not apply.
I don't agree with proexploit's assertion that we'd be better off without PayPal, but I also wouldn't carry signs and chant slogans in the streets if the US government forced them to be better stewards of their customers' hard-earned money.
To be fair, PayPal does offer real merchant accounts underwritten by real banks. PayPal Website Payments Pro accounts are underwritten by one of these banks: JP Morgan Chase, HSBC, Wells Fargo and National Westminster Bank.
The point of my comment was that proexploit makes it sound like the 180 day hold follows from PayPal not being a regulated bank, where the reality is that regulated banks have the same 180 day hold.
I fear I may sound fishy standing up for PayPal considering its unpopularity (despite so many on HN using it without problems), but I don't like to see the perpetuation of untruths. The people that write these complaints must have never read a merchant account agreement. The list of banks that underwrite the Payments Pro accounts are on the PayPal website under the Legal Agreements link. I do read every contract I agree to.
You're absolutely right that my initial comment made the 180 day hold sound different than it is. To be fair, I'm not talking about PayPal Website Payments Pro accounts at all but basic personal or business Paypal accounts. It sounds like you've had a pleasant experience as you've been using a different product. Speaking of baseless opinions: "despite so many on HN using it without problems". I'd love to see a source for that. The fact is, even if 80% of people using Paypal have a great experience, too high of a percentage is being screwed over.
If 20% of PayPal users were having a negative experience, you'd see a lot more complaints than you do. That'd be around 46 million people.
Even if only 1% of PayPal's users were dissatisfied you'd have much more activity than a couple dozen forum posts a month spread across the web and an outdated PayPalSucks site. That'd be over 2 million people with a reason to vehemently complain. The level of chatter you hear makes it much more likely that significantly less than 1% of their user base has serious problems with the service.
No, I'm not using a different product than you. I've been using the plain-jane standard PayPal payment links and subscriptions since 2000. I'm not immune to their risk department either; someone called me just this month to express concern at my account's refund rate after I cancelled some suspicious looking orders.
I'm sure my account has enough notes on it that I'm a single mis-step away from being frozen myself through no fault of my own. But that's nothing less than I'd expect from any of my payment providers. This is business, I understand why their policies are what they are, and I'm prepared for the chance that they may choose to stop doing business with me at some point in time. A little bit of basic knowledge about the financial industry they operate in and you'd run your risk department the same way.
For a good read, get a copy of the book "Founders at Work: Stories of Startups' Early Days". One of the stories is that of the founding and early growth of PayPal. The only reason they are here today, where their great many competitors during the dot-com boom aren't, is that they figured out how to manage fraud risk. They were hemmorhaging tens of millions of dollars a month to fraud losses, but they held on long enough to build the risk management systems you need to provide payment processing to the masses.
Other companies have to manage fraud too and do it without upsetting so many people. The exact number doesn't matter, it's a lot higher than other financial services companies. The fact that they had to lock down against fraud to keep their business from failing doesn't excuse their business practices and customer service. There's multiple open loopholes for scammers that do not treat honest people well. We could debate this forever but we're going to have different opinions as we don't have a lot of exact statistics and perfect knowledge of their company policies / fraud prevention measures. I will continue to recommend people do everything they can do stay away from Paypal and you will continue using it. That's ok because we don't have to agree and although I feel differently, I recognize your right to your opinion.
It is hard to compare PayPal to other companies. Their business is 100% online payments (higher risks then B&M transactions) with a huge share of international transactions (even higher risks).
Paypal is a bank in Luxembourg and obeys luxembourgish banking rules, thus also fraud detection and money laundring detection, which is probably the cause when of why you see many people complaining of having to sent in an ID or more.
Edit: In response to following comments, I amended above where it made it sound like Paypal escaped a banking regulation to withhold your money. My issue is that they use the 180 hold on account that haven't been locked for good reason.
Some people may be able to get customer service. They offer different kinds of accounts and maybe with a merchant account through Paypal or a business account. I've personally found Paypal to be lacking when trying to get in touch with them. I had someone attempt to scam me out of money by doing a chargeback for an eBay product I shipped via USPS (no tracking number). When they opened a hold on the account because the person said they didn't receive the item, Paypal had a field where I could put the tracking number. Having no tracking number, I tried to attach a note saying I shipped via USPS. I tried contacting support and no one ever answered. I offered to sign something making my personally liable if there was a lawsuit (as I had shipped the item). After all of that, their response was to refund the money so I was out the product and money, and close my account.
Don't act like I'm the only person who's got problems with Paypal. If you have had only great experiences with them, more power to you, but there's many more people who have been wrong by Paypal than other money processors:
"paypal sucks" About 65,800 results
"visa sucks" About 3,970 results
"mastercard sucks" About 1,760 results
If they had a true competitor, they'd be struggling to stay in business.