[yc1010]

The thing about paypal is that when it works its fairly nice service, and people do not understand (or read terms) that it is not THEIR money displayed by digits on screen, but money held by a private company who does everything to not be regulated like a bank would.

So average people then demand merchants accept Paypal and throw a hissy fit when the merchant balks rightly pointing that beside the fees there is a very real risk that merchant would be screwed. And of course really good/big merchants (Amazon etc) have already great deals with banks/credit card networks directly and fraud detection systems in place.

So you endup in a situation where Paypal basically screws small merchants every single time. I had an account frozen before with business nearly going out of business thanks to Paypal, it is unnerving trying to get in contact with support technicians who speak English and are not robots reading from a sheet and having to PROVE THAT YOU ARE NOT GUILTY of whatever paypal thing you are guilty of, and of course they rarely tell you why money is being held ransom.

There are alternatives, here in Europe SEPA (and various either bank transfer methods such as Ideal) which makes Paypal redundant. Prepaid solutions such as paysafecard are good too (but high fees of circa 10%). And of course there is Bitcoin buy I better not talk about that on HN out of fear of being instantly down-voted by people who do not realize that outside the US there are very little payment options online or who do not understand bitcoin (which is strange for a nerd site) as can be seen from various past threads regurgitating same cons (its almost as if there is a coordinated effort one would think...).

[dangrossman]

> who does everything to not be regulated like a bank would

People say things like this all the time and I don't understand the basis for the claim.

What does PayPal do to not be regulated like a bank? They're perhaps the single most heavily regulated financial company in existence. They operate in more countries [1] than almost any other, and each of those countries regulates them in some way. In some of those countries they are a licensed and regulated bank (including the European Union [2]). In the US, they are overseen by 54 separate governments, including every state and territory, all of which license and regulate money transmitters [3]. They wanted to be a bank in the US to get the FDIC insurance on deposits (they originally believed themselves to be eligible and advertised it as a feature), but a federal agency 13 years ago decided they don't qualify as one.

On the flip side of the same coin, why do you think being regulated like a bank would change how any of these situations play out? Most banks offer merchant account services for accepting credit cards online. Every merchant account agreement I've read has allowed for termination without cause, freezing of funds for up to 180 days without recourse, and establishment of reserve accounts or holds at the bank's whim. These real banks won't hesitate to terminate your account and hold your funds if you try to use them as an unsecured loan against future promises you've made to thousands of people, either -- if you're up-front about the fact that you're taking credit cards for crowdfunding you'd not make it past underwriting and get an account in the first place. No regulator steps in and stops banks when they hold a merchant's funds. PayPal operates no differently because it is, at its heart, a tech stack on top of those very same merchant accounts from actual banks with the same policies and same tolerance for risk.

1: https://www.paypal.com/webapps/mpp/country-worldwide

2: http://tamebay.com/2007/05/paypal-becomes-a-bank-no-longer-u...

3: https://www.paypal.com/webapps/mpp/licenses

[jeffmould]

IANAL, but I believe it is not that they are not regulated heavily, it is that bank regulations specifically are much stricter than money transmitter regulations. For example, a money transmitters (as PayPal claims it is) are only supposed to transmit money from person A to person B transparently. However, PayPal routinely will hold funds or refund funds to a buyer without giving the seller notice or fair warning. Under banking regulations there would be more transparency to the seller and these types of incidents would slow or cease to exist is my understanding. If you have a $1000 in your bank account and walk into the bank to withdraw $500 the bank has to honor your request as long as the funds are available. With PayPal it can be a guessing game of whether the funds are available and there is no one there to answer why they are not available when they make the claim. Again, IANAL but that is my general understanding of the difference.

EDITED TO ADD: Also, as I understand it if someone hacks your bank account the bank has insurance and your funds are almost always refunded sometimes the same day. With PayPal if your account is hacked and you have a balance there you risk losing your money with PayPal not refunding any of it. PayPal most likely would tell you it is your fault.

[yc1010]

When my money was frozen by 6 months (they didnt tell me duration back then) I rang the Irish Financial Services Ombudsman who resolve issues with banks and various financial services.

When I mentioned Paypal I was basically told they are a private company and they can do whatever the hell they want and I was the bigger eejit for using them (not in those words but more official wording of course...) and they could not help me and to go complain to the Consumer Protection service

I got my money back eventually. I still do not know why my account was closed years later and they refuse to tell me. every time I ring and ask I am told I will receive an email from someone with shitty Indian accent, but of course never happens as they fob me off. They still have my financial information on file which I suspect is actually violating Data Protection laws and rules here, i might make a call to Data Protection Commissioner about this now that I think of it.