It is still clear to me that all of the people complaining about Paypal as a merchant account provider have not dealt with regular merchant account providers.
Regular merchant accounts are actually not as bad as people think. One major difference is that merchant account providers make getting started a pain. That's when they do all of their analysis to determine if they are comfortable processing for the merchant. PayPal on the other hand does little vetting up front, making the signup process smoother, but can come down unexpectedly later in a merchant's life when it detects risky activity.
This also affects how each implements reserves. While merchant account providers may institute a 5% or 10% reserve over 3-6 months, it is more of an insurance policy spread across all of its accounts since it doesn't have a good handle on which individual account will blow up. Whereas PayPal implements reserve only after it has detected risk, it immediately places a larger reserve.
It never ceases to amaze me how negative the sentiment is towards PayPal from an audience that I would expect to be much more understanding of how difficult it is to process payments in real-time. And that PayPal became successful because of its actions, not despite them.
