Some of the problems you can experience with Paypal
Paypal is advertised as a great way to take credit card payments, and also payments from other people's checking accounts. There are no monthly fees, (at this time), no minimum volumes, (like normal credit card merchant accounts), and you don't have to handle other people's credit card numbers. It can provide an easy way to purchase items from auction suppliers, and certain other businesses such as vendors of downloadable information e-books and publications. Some subscriptions to information and web hosting can even be paid for with Paypal. Some services even let you order things like roses and flowers using Paypal.
I thought that Paypal was a good way to do things too. Seems good on the surface. Certainly seems like a good way to process cards if your volume is so low that you're paying less than £100 a month in fees. Before getting too convinced by the love fest comments you might find concerning Paypal, please take the time to look at http://www.paypalsucks.com/
Beware that with services like Paypal, they have very far reaching terms of service that give them incredible control over your money, more so than any bank would attempt to exert. If anything comes up, (like you are travelling and access your own account from a foreign country), your whole account can be frozen until you get home and give them way too much personal financial information. If they limit your account, and you refuse to give them the too much financial information they will request, you can not even close your account and get your money back.
Paypal can give you a debit card that lets you retrieve your money from any ATM. But don’t, under any circumstance, think of it as some kind of backup to your regular cards. For example, if you are travelling, don’t stash a bunch of money in your Paypal with the intent to use it as a backup in case you’re other cards get lost. And, like I mentioned, don’t expect them to let you check in to look at it to process eBay payments, or to spend money, or perhaps even to check the balance, if you are in certain foreign countries. They change their rules capriciously, and it won’t matter how much you've previously proved who you are, or how much good record you've accumulated, you can end up limited out of your money.
Also, it's way too easy for them to grant specious refund requests and then reach out and grab money back out of your regular bank accounts for credit cards too.
So be careful about your reliance on Paypal. Don't put yourself in a position where you are relying on them as any kind of critical source of money. Don't reply on them for unfettered access to your own money.
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20 July 2006
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