Isn’t the point of “disruption” so popular in startup culture to leverage the agility of smaller enterprises (and even a pitch used to rise capital) the tool to fight old paradigms? My point being that it isn’t “capitalism” fault, but that the markets are lagging behind the demand and it will fix itself eventually (again, see Stripe efforts in this matter for example).
PayPal is long past the startup phase, though. They're a very well established player, and as such they have power they can leverage. A lot of people feel bound to use PayPal despite disliking the way they operate. That by itself is a sign of the market not doing what it's supposed to do in the ideal case.
Markets certainly don't always automatically fix itself. They require oversight and regulation, or else they tend to result in cartels and monopolies. The free market is great when it works well, but quite often it needs a bit of help.