[widebody911]

I've been using PayPal for a while, and am being very cautious. I've read about numerous cases where a customer complains to PayPal that they didn't receive and item, even when they have UPS/FedEx/USPS proof to the contrary, and PayPal simply slurps the money out of the bank account. They will also pull a neat trick where they freeze your funds; you can't get your cash out, but you can continue to accept payments.

One other bit about PayPal that sticks in my craw, is that of 'upgrading' to a "Premier" account. If you want to take credit cards, you have to upgrade. But then they skim 3% of all of your transactions, cash or credit. I can see taking the fee on credit cards, but not on cash transactions.

I set up a separare PayPal acct just to take credit cards. Then I learned about the 'limits' - I could accept payments until the cows came home, but could only transfer out (ie pay people) up to $2000. That's it. To get the rest, you have to provide bank account info. So I opened a new bank account, and 'verified' myself, but I'm not going to keep much cash in the account. I'm sure others setting up similar accounts to protect themselves.

Another aspect of PayPal that I'm not super-comfortable with is the sheer volume of financial data they want to maintain on you. It's a matter of when - not if - this data gets sold or stolen. Since they are not a bank, they're not beholden to any regulatory agency, so they could decide to pack it in tomorrow, close the doors, and there's nothing you could do about it. They've been fighting tooth and nail to prevent being classified as a bank.