X.com PayPal is an online payment service provider.

PayPal blew in on the Internet scene about a year ago.
Their slogan was “Free safe way to send and receive
payments online.”

Recently, PayPal instituted a business type of account
requiring bank account verification and promising
that a verified business account would never be subject
to chargebacks providing the owner follows a few rules.
Furthermore they stated in their TOS that they will never
withdraw money from a person’s bank account without
permission. For a mere 2.5% of each transaction you
could have an automatic sweep of funds into your bank
account daily. This all sounded good.

The exception being the loss of customers due to the
fact they would have to sign up with PayPal in order to
send payments to a merchant. I could not see any reason
a merchant would not want this service, but… (there is
always a BUT somewhere) PayPal went on to instituting
a transaction fee along with the percentage they withheld,
and now their pricing is right up there with a real
merchant account. That is not all. Remember the “Safe”
guarantee and the “never withdraw money from your
checking account guarantee?”

I accidentally stumbled upon a WHOLE BUNCH of
sellers using PayPal that have nothing but HORROR
stories and I think it is a good idea to shed some light
this. I would also like to point out some differences
between how a real merchant account would work in a
similar situation and show you that having a real
merchant account is safer than having a so called “Safe”
PayPal account.

“PayPal withdraws almost $1000 from user’s bank
account.” Note: X.com owns PayPal. The user’s comment

“This gets worse by the minute. I went to the grocery
store today and my debit card was declined. I knew
something was wrong because the last time I looked I
had over $1000 in my account. You guessed it! There is
an x.com reversal of nearly $1000 right out of my
checking account.”

The above quote was taken from a discussion board
dedicated to PayPal questions, etc.

With a real merchant account, if a customer disputes a
charge and a chargeback results, the actual amount of
the charge is pulled from the merchant’s bank along with
a chargeback fee. The merchant account acquiring bank
is not going to freeze the entire merchant account just
because of a chargeback. They will deal with just the
disputed portion and the merchant continues to have
access to the rest of the monies in the merchant account.
PayPal just freezes everything, the disputed portion and
everything else in the account. The only time an
acquiring bank would freeze the entire merchant account
is if the merchant is committing fraud. NOT simply
because the merchant accepted a credit card that may
have been stolen or the customer is committing
electronic shoplifting.

Disclaimer: The above information was drawn from
comments of dissatisfied users of PayPal and is only one
side of the story. I have not contacted PayPal at all about
these claims.

Thus, I can conclude this. It is safer to have your own
merchant account.