To be fair, PayPal does offer real merchant accounts underwritten by real banks. PayPal Website Payments Pro accounts are underwritten by one of these banks: JP Morgan Chase, HSBC, Wells Fargo and National Westminster Bank.

The point of my comment was that proexploit makes it sound like the 180 day hold follows from PayPal not being a regulated bank, where the reality is that regulated banks have the same 180 day hold.

I fear I may sound fishy standing up for PayPal considering its unpopularity (despite so many on HN using it without problems), but I don't like to see the perpetuation of untruths. The people that write these complaints must have never read a merchant account agreement. The list of banks that underwrite the Payments Pro accounts are on the PayPal website under the Legal Agreements link. I do read every contract I agree to.

You're absolutely right that my initial comment made the 180 day hold sound different than it is. To be fair, I'm not talking about PayPal Website Payments Pro accounts at all but basic personal or business Paypal accounts. It sounds like you've had a pleasant experience as you've been using a different product. Speaking of baseless opinions: "despite so many on HN using it without problems". I'd love to see a source for that. The fact is, even if 80% of people using Paypal have a great experience, too high of a percentage is being screwed over.

If 20% of PayPal users were having a negative experience, you'd see a lot more complaints than you do. That'd be around 46 million people.

Even if only 1% of PayPal's users were dissatisfied you'd have much more activity than a couple dozen forum posts a month spread across the web and an outdated PayPalSucks site. That'd be over 2 million people with a reason to vehemently complain. The level of chatter you hear makes it much more likely that significantly less than 1% of their user base has serious problems with the service.

No, I'm not using a different product than you. I've been using the plain-jane standard PayPal payment links and subscriptions since 2000. I'm not immune to their risk department either; someone called me just this month to express concern at my account's refund rate after I cancelled some suspicious looking orders.

I'm sure my account has enough notes on it that I'm a single mis-step away from being frozen myself through no fault of my own. But that's nothing less than I'd expect from any of my payment providers. This is business, I understand why their policies are what they are, and I'm prepared for the chance that they may choose to stop doing business with me at some point in time. A little bit of basic knowledge about the financial industry they operate in and you'd run your risk department the same way.

For a good read, get a copy of the book "Founders at Work: Stories of Startups' Early Days". One of the stories is that of the founding and early growth of PayPal. The only reason they are here today, where their great many competitors during the dot-com boom aren't, is that they figured out how to manage fraud risk. They were hemmorhaging tens of millions of dollars a month to fraud losses, but they held on long enough to build the risk management systems you need to provide payment processing to the masses.

Other companies have to manage fraud too and do it without upsetting so many people. The exact number doesn't matter, it's a lot higher than other financial services companies. The fact that they had to lock down against fraud to keep their business from failing doesn't excuse their business practices and customer service. There's multiple open loopholes for scammers that do not treat honest people well. We could debate this forever but we're going to have different opinions as we don't have a lot of exact statistics and perfect knowledge of their company policies / fraud prevention measures. I will continue to recommend people do everything they can do stay away from Paypal and you will continue using it. That's ok because we don't have to agree and although I feel differently, I recognize your right to your opinion.

It is hard to compare PayPal to other companies. Their business is 100% online payments (higher risks then B&M transactions) with a huge share of international transactions (even higher risks).

Paypal is a bank in Luxembourg and obeys luxembourgish banking rules, thus also fraud detection and money laundring detection, which is probably the cause when of why you see many people complaining of having to sent in an ID or more.