Why is no one competing with PayPal? Because these stories are the exception, not the rule. PayPal has posed absolutely no problems to our business since we adopted it early last year. I feel like a total idiot for drinking teh internet kool-aid and boycotting them for so long.
I've depended on them (with Moneybookers backup) for about seven years now, with no problems once the original setup was all taken care of. I had slow but steady growth from just a few payers, though (translation agencies) - things would probably have gone differently had I had explosive growth of small amounts from a wide variety of payers.
Also: have a US bank and stick with it. If you leave the US, don't tell your bank! (I've had the same account since the 80's - it's gone through four banks now - and that might also be one factor in my looking stable.)
One of my agencies is a lady who did a round-the-world trip over two years, getting back a year ago. PayPal locked her payments - every time - while she was in Africa.
I signed up when it was only available in the US now it's avialable in Scotland I tried to register for the UK version. You can't register for the UK cos you have a US account, you can't use the US account with a UK credit card.
I asked them to delete the US account and it's now stuck in some sort of Limbo where I can't open a UK account cos I have the US one, and I can't log into the US one because it's been deleted. Once a year I spend a few days emailing them to try and sort it out.
Ok then. My experience is we process hundreds of successful transactions per month, get about 1 complaint every other month, and 1 chargeback about every 3-4 months. They do impound fees on any dispute or chargeback, but I would hardly call it business crippling. Certainly less severe than our merchant account which has a higher chargeback fee than PayPal, and also PayPal doesn't charge for customer disputes. Also PayPal has ruled against every customer who filed a complaint about delivery once we showed proof of delivery (not a signature). Our merchant bank has screwed us every single time there is a chargeback over non-delivery, even when we fax them a copy of the recipient's signature.
In short, I can't wait to get the "delete merchant bank/switch all processing to PayPal" task to the top of my to do list.
PayPal has never required us to leave a reserve amount in our account. I believe that is due to our low complaint/chargeback rate.
