Elliot Jay Stocks is a designer, speaker, and author. He is the Creative Director of Adobe Typekit, the founder of typography magazine 8 Faces, one half of Viewport Industries, and an electronic musician.

Good riddance, PayPal

Posted on 04 September 2012 146 comments

(UPDATE, 24 hours after posting: it seems this blog post found its way to the powers-that-be at PayPal HQ and I received a phone call telling me that I could now access all the funds in my account. I’m grateful for that, but I still won’t be using PayPal again.) Over the years, I’ve heard countless tales of PayPal screwing over my friends who choose to sell products, services, or tickets through their system (UPDATE, 2 hours after posting: how timely — now it looks like Andy has got his account frozen, too). I’ve read numerous horror stories about what happens when PayPal’s staff blindly follow their draconian rules without applying common sense; I’ve seen whole conferences cancelled thanks to PayPal’s unforgivable treatment of event organisers; I’ve watched from the sidelines as my friend Johno battled to keep Codex magazine afloat after PayPal applied ruthless account freezes. And concurrently, I’ve suffered my own problems: from the very first day 8 Faces #1 was launched, I was hit with PayPal’s idiocy time and time again. By and large, I got off lucky with only temporary holds on my money, until yesterday, when a 100% freeze was applied to my account.

Fortunately for me but unfortunately for PayPal, I’d already been planning my exit strategy and today, after over two years of being treated like dirt by a company whose entire revenue stream depends upon business from people like me, I’m happy to be taking that business elsewhere.

So why such vehemence for PayPal? Am I just another seller bemoaning my punishment for pre-selling a product when PayPal clearly states that pre-sales are something they discourage? Well, no. When people ask me what exactly I have against PayPal, I say the same thing every single time:

PayPal have all the power of a bank and yet none of the responsibility.

And really it all comes down to that. If PayPal want to hold your money, they can, and they will. A freeze on your account means you absolutely cannot get at your own money, and even if you eventually do, it will only be after a hefty delay and in staggered percentages. Can a bank do this to you? No, they can’t. So why should PayPal?

A brief history of fuckwittery

Let’s back-track a little. I want to briefly describe my history with PayPal, from launching 8 Faces through to the present day. Other legitimate sellers out there will recognise most — if not all — of these activities:

  • When the first issue launched and sold out in two hours, it caused a large spike for a previously-quiet account and it set off all the alarm bells at PayPal. This was completely understandable, of course, so I didn’t hold it against them when they placed a temporary freeze on my account. However, after getting stuck in an endless automated phone call loop (good luck ever speaking to a human at PayPal unless they call you), I became less sympathetic. Luckily for me, I knew someone who worked at their head offices at the time and he was able to escalate the case for me. The freeze was lifted and all was well with the world, but only because I had that man on the inside. Who knows if it would have ever been resolved otherwise?
  • After this initial contact, PayPal’s EU Office of Executive Escalations encouraged me to email a dedicated address just before I put every issue on sale to warn them of a spike. I was grateful for the dedicated contact, but is making money really such a suspicious activity?
  • The next couple of years went by with several smaller — but still infuriating — issues sparked by PayPal’s paranoia. I was frequently asked to provide information I couldn’t ever hope to conjure up, like postal delivery receipts for — wait for it — PDF copies of the magazine. Yes, you read that right. Various transactions were reversed (often without the actual customer’s knowledge) and in the process, PayPal took back not just the cost of the item, but also an ‘administration fee’ that cost more than the magazine itself. As an extra display of their woeful ineptitude, I’ve had an alert for an ‘open case requiring [my] action’ for the last year or so… even though there is quite. Clearly. Nothing. There.
  • So, lots of general annoyance, but nothing as bad as what so many of my friends were going through. Until yesterday.

The dreaded freeze

In all honesty, I knew a freeze had to be coming. I received a phone call from PayPal last week, during which I answered several questions about the nature of my business, such as the price, frequency, circulation, and delivery of each issue. The lady on the phone was polite, but clearly interested in the space of time between orders being placed and magazines being shipped: it was obvious she was dubious about whether or not my customers’ orders were technically pre-sales, which is what scares PayPal so much, and is the reason for their paranoia surrounding conference tickets. I knew this, which was why I’d intentionally been closing the gap between orders and shipment: issue 5 was being printed while we opened the shop and is being shipped this week. I also explained to her that technically it wasn’t a pre-sale, since every single customer receives an automatically-generated link to the PDF edition with their order receipt. She made lots of positive ‘mmmm’ sounds and said ‘that’s good’ a lot, but when she said that they’d be in touch again in a few days once they’d concluded their inspection of my account, I wasn’t holding out too much hope.

After a day or two, I decided to transfer the balance of the account to my bank, which at the time was a pretty substantial, five-figure sum. I half-expected the request to be denied, but to my pleasant surprise the money cleared in my bank account a couple of days later.

And thank god I made that withdrawal when I did, because yesterday came the second phone call, informing me that a reserve would indeed be placed on my account. At the time I didn’t mind, because I do appreciate that PayPal have to protect themselves from fraudulent sellers, and I was told that I’d have staggered access to percentages of my funds after 7, 10, and 30 days. It sucked, of course, but it wasn’t completely unreasonable.

What was completely unreasonable was the email the followed our phone call: an email that stated that the reserve on my account was for 100% of the funds, and that the staggered releases would only start once the balance reached… £15,000.

Yep, fifteen thousand pounds.

Where had this figure come from? On the phone call, I had been asked what the approximate revenue was per issue and had said around £15,000, but as I’d just made a large withdrawal fairly close to that and the initial spike of sales was over, there was no way the account balance would get anywhere near £15,000 until the next issue’s release in November. Worse still, it effectively meant that all of my sales between now and then — PDF editions of the current issue and our four back issues — were being subjected to the freeze, even though those orders offered immediate digital deliveries and were absolutely not pre-sales. I explained this in a reply, but PayPal’s response was simply that the reserve would remain. Again: no common sense applied; no consideration whatsoever for the type of product being sold; just a generic, blanket response.

Enter: the merchant account

Fortunately, as I said at the beginning, I’d been planning my exit strategy for a while. When Keir and I started Viewport Industries at the end of last year, we were determined not to use PayPal, given the many issues I outlined above. Instead, we chose to do things the truly professional way and get our own merchant account from HSBC, our business’ bank. Combined with Shopify for the e-commerce front-end and Cardstream for processing the payments and gluing the whole thing together, we’ve had a pretty robust system ready to go for quite some time, and we quietly rolled it out a few weeks ago for anyone who wanted to get some Insites: The Tour coasters. (We wrote about our ‘holy trinity’ payment set-up in length for issue #228 of .Net magazine, and they’ve since republished the article online.)

I’d been toying with the idea of using VI’s e-commerce set-up to sell 8 Faces, but had never made any serious moves to switch over. Until, of course, PayPal put a freeze on my account and gave me the best reason in the world. Thanks, guys.

So, if you buy anything from 8faces.com from today going forward, your payment will be processed by Viewport Industries Ltd. and will be displayed as such on your bank or card statement. We still accept all major credit and debit cards, so it should make absolutely no difference to customers whatsoever, unless of course you like to pay by PayPal because you treat account like a slush fund: sorry, you’re going to have to put your card details in. The switch also means we can now take payments from countries who don’t have access to PayPal, so if anything, this is actually far better for customers, and it’s certainly better for me and my business from an accounting point of view.

Most importantly, it means that I can finally leave PayPal behind. Sadly, I expect I’ll have to battle to withdraw the £600 or so that’s still sitting in my account, but hey, PayPal have been sued before for withholding sellers’ money and I’ll take them to court if I have to. Is it worth it for £600? No, but it might be to make a point.

My decision to quit PayPal means they’ll lose fees on annual sales of about £40,000, if you combine the magazine, the prints, and a few other things I had — until today — put through their utterly abysmal service. I’m sure that’s a drop in the ocean for them, but if you’re a seller with a decent turnover, I would urge you to take your business elsewhere, too, whether that’s to an alternative provider, or to your own merchant account environment (don’t be daunted by the scary paperwork — it really isn’t that hard to set up). Perhaps a mass-exodus of sellers would be enough to make this clueless company wake up.

From my experience and that of others who’ve suffered the same, it’s clear that PayPal are interested in buyers, not sellers. Why else would they provide customers with refunds at the drop of a hat, but withhold money amounting to thousands — literally thousands and thousands and thousands — from buyers without any valid reason, when not even your bank is legally allowed do that? (I’ve expanded on this point in this comment.)

PayPal, you are the scourge of the internet. Fuck you.


  1. Chris


    06 September 2012 @ 12:46PM #

    Bravo! I encourage more to do the same. I had an ecommerce venture I few years back, and I was growing my business organicaly and reinvesting what little money I made – I encountered the dreaded freezing of MY money. Which meant I could buy no more stock; my business was on freeze. The reason for this was because I, yes, I filed a dispute against a seller that had not paid me… and that apparently made my account suspicious?! What a wretched, hideous company. That ventures all over now, but long story short – I wish(ed) that companies like square and stripe work over in the UK – to give smaller merchants a chance.

  2. Paul Adam Davis

    Paul Adam Davis

    06 September 2012 @ 12:55PM #

    Hi Elliot,

    I wish I had something substantial to say, but alas, I don’t. I am really glad you’ve made this move though, must be a huge weight off your shoulders.

    I love the closing line too!

  3. Simon Leedham

    Simon Leedham

    06 September 2012 @ 12:56PM #

    Superb post and long overdue for PayPal. I, too, have had money removed from my PayPal account due to a chargeback which PayPal allowed to go through as the product was ‘non-tangible’, i.e. a website. Do not use PayPal for anything digital as their user agreement does not cover you!

    Great to see someone else taking a stand, I’m planning my own exit strategy myself so appreciate the links and references to the alternative setup!

  4. ryan


    06 September 2012 @ 12:56PM #

    Whilst its no secret that PayPal aren’t well liked in the industry, ironicly the only good things i’ve ever heard anybody praise PayPal for has been their fraud prevention. I guess this is the ugly flipside.

  5. Kamal


    06 September 2012 @ 12:58PM #

    some of my friends have the same issued as yours and they have to wait around 6 months so they can withdraw their money, cause their account freeze withouth any reasonable reason.
    anyway, we can all live without paypal didn’t we?

  6. strages33


    06 September 2012 @ 12:59PM #

    Wow, I like it when someone can speak their mind while at the same time also has a wide range audience. That last sentence is gold. Good luck, however what about a strategy for people without a stupid creditcard?

  7. Marcel Neumann

    Marcel Neumann

    06 September 2012 @ 01:00PM #

    Switching to a merchant account is, for sure, the best decision. I don’t have experience as a seller on PayPal, but many years ago I had to open a dispute to get some of my money back from a chinese seller who never delivered and PayPal did absolutely nothing to help me. That was the day I stopped trusting their system.

  8. Sam


    06 September 2012 @ 01:02PM #

    Absolute bunch of crooks… My dad’s recently been having problems with them, just for selling a few things on ebay. He’s been trying to verify his bank account, but the system is apparently ‘broken’, and anything he uploads to them (statements, bills, etc) seems just seems to ‘disappear’, at one point the account itself disappeared off their system. Then, when he filed an official complaint, that too, vanished into thin air and yesterday he received an email informing him his account was going to be frozen (Coincidental, huh?). Luckily we were able to transfer the funds into my paypal account, and then into my bank account.

    Bottom line is, if they want to keep your money, chances are, they will. I sure as hell won’t be encouraging anyone to use them. I hear they aren’t regulated by anyone (such as the FSA) which may be where the problem lies.

  9. Gloria


    06 September 2012 @ 01:05PM #

    Paypal would have been my first choice as a potential seller, but not anymore.
    What’s the point in freezing an account that is bringing you money? What is it in your business that is so suspicious? I don’t like companies with no common sense.

  10. Jamie


    06 September 2012 @ 01:06PM #

    “PayPal, you are the scourge of the internet. Fuck you.”
    100% correct.


  11. Rohit Mehta

    Rohit Mehta

    06 September 2012 @ 01:13PM #

    Fuck, That’s a scary story. Thanks for sharing Elliot. Alerted!

  12. Alun Rowe

    Alun Rowe

    06 September 2012 @ 01:13PM #

    Paypal on the whole have treated my customers well so I don’t have much to say on the bulk of your article but it’s important to note that a lot of small businesses wouldn’t know how to setup transactions to a merchant account, mail due to woeful documentation by the providers (HSBC caused me months of headaches a few years back).

    There’s also the issue of the continuous payments required by some of the merchant systems where as Paypal can be run on a transaction fee only basis. If the banks got real and started providing merchant services FOC (it’s a way for them to rake in more cash!) or on a per transaction basis perhaps people wouldn’t turn to PayPal so readily.

    Finally make sure the bank know you are taking ‘pre-payments’ through your merchant account. It’s not always permitted.

  13. Marin Usalj

    Marin Usalj

    06 September 2012 @ 01:25PM #

    I can’t agree more while reading this whole text!
    The `best` thing that happened to me, is that I can’t get any money on it anymore, and there’s nothing wrong on their side.

    I could write this much more about the other stuff they’re doing.
    The worst company ever.

  14. Duncan


    06 September 2012 @ 01:27PM #

    Well, thanks for that. I’ve been looking of ways of getting rid of Paypal and your link to moving your online sales away from paypal is a really useful link.
    I shall be doing that as soon as I can.

  15. Matthew Buxton

    Matthew Buxton

    06 September 2012 @ 01:27PM #

    Unfortunately for me I don’t think I can just up and leave and code my own solution. It’s great if you have the time and resources to do so, but for us less successful publishers on the web who have to do everything ourselves, all the e-commerce plugins and pre-made shopping carts support Paypal, and even worse customers will flat out refuse to deal with us if we don’t take Paypal. If you can afford to lose a few sales from Paypal loyalists that’s great, I sadly, can’t.

  16. Alan Horne

    Alan Horne

    06 September 2012 @ 01:27PM #

    I have been looking to jump ship from PayPal recently too as I always have the fear of my money going missing when I use them, be it a dodgy trader or them just being total fuckwits.

    I can across Go Cardless recently, its run by RBS, seems to be less charges for it and works in the same way, it could be an option for some – https://gocardless.com/

  17. Kevin Bruce

    Kevin Bruce

    06 September 2012 @ 01:28PM #

    wow! Thanks for this post, Elliot. They really put the cuss in “customer service”

  18. Dave


    06 September 2012 @ 01:33PM #

    Classic read. Couldn’t have said it any better. My account was frozen once because apparently I accepted a donation which set off the circus. I rang a friend who produces one of those cheesy current affair programs .which she loved the concept of. Anyway as soon as there is some.competition that is relatively easy to set up I’m out. Fuck you indeed paynotpal

  19. Craig


    06 September 2012 @ 01:37PM #

    I have a friend who nearly lost his newly created startup business because of PayPal freezing his account. He spoke to them and their lawyers for weeks before going forward with them, but then they suddenly decided his business was violating their rules after he had been using them for over 2 months. To say the least, he will never do business with PayPal again.

  20. Paul Yabsley

    Paul Yabsley

    06 September 2012 @ 01:38PM #

    An interesting read and a welcome development. I’ve been doing my best to avoid using PayPal for purchases but there still seem to be a few sellers using it. 8Faces has been something I wanted to buy and PayPal was previously the only option, so I’m thrilled you’ve switched. I will have to think hard about a product now if the only way to pay is through PayPal.

  21. Dan Grossman

    Dan Grossman

    06 September 2012 @ 01:41PM #

    The very premise of your “vehement hate” is untrue: banks can and do have the exact same policy regarding terminating merchant services accounts. They can terminate you at any time, without reason, and when they do so, establish a reserve account in which your funds are held for exactly 180 days. PayPal did not make up this policy; it is the policy at every regulated bank, as it is based on Visa and MasterCard’s Operating Regulations, which predate PayPal’s very existence. I have first-hand experience that not only is this in every merchant services contract at every bank in the US, but it’s actually enforced, exactly the same way PayPal enforces it.

  22. Tim Martin

    Tim Martin

    06 September 2012 @ 01:43PM #

    I applaud your boycott, EJS. PayPal are scum. They’re the kind of people who switch the stickers around on Rubik’s Cubes.

  23. Sorel Mihai

    Sorel Mihai

    06 September 2012 @ 01:45PM #

    I learnt early that I should focus my haterism and furstrations on Politicians, Pedofiles and PayPal only. I call them the three "P"s.

  24. Dan Griffiths

    Dan Griffiths

    06 September 2012 @ 01:49PM #

    Great post – glad another person has stood up to PayPal. Countless clients and friends have had their accounts frozen too – often without real reasoning. Fingers crossed this and other critiques force them to change their approach but that is rather hopeful I guess.

  25. Philip Coombes

    Philip Coombes

    06 September 2012 @ 01:49PM #

    While I agree with everything that’s been said here, am I alone in finding this page virtually unreadable, especially the comments. The comment font makes it look like Sanskrit! This is a screenshot (https://dl.dropbox.com/u/36213350/EJS%20-%20Grab.png) with Win7 Pro and Chrome 21.

  26. Bearpig


    06 September 2012 @ 01:52PM #

    Great article and I agree with Chris, the quicker Square/Stripe/etc setup over in the UK, the better for everyone.

  27. Gary Aston

    Gary Aston

    06 September 2012 @ 01:54PM #

    Best. Signoff. Ever.

  28. Another victim

    Another victim

    06 September 2012 @ 01:57PM #

    They held $30,000 of mine for 6 months for no reason. There is no accountability there. Life has been good without PayPal and business is great.

  29. Admire the Web

    Admire the Web

    06 September 2012 @ 01:57PM #

    Inspirational article. I may think twice with the confidence I have for them.

  30. Adii Pienaar

    Adii Pienaar

    06 September 2012 @ 01:58PM #

    I got burnt badly by PayPal about 4 years ago and we subsequently stopped support PayPal on WooThemes forever. By my calculation they lost out on quite a bit of transaction fees since. :)

    I’ll also echo your sentiment: PayPal – fuck you!

  31. Lee Keshav

    Lee Keshav

    06 September 2012 @ 02:00PM #

    I stopped using Paypal about a year back. The biggest issue with me (apart from the ones everyone else faces) was that I every time I would make a bank withdrawal from a different IP (any place except my house) they would block the account and reverse the transfer.
    I would then have to get the account unlocked and confirm that it was actually me who made the withdrawal . Fair enough till here, but there’s a catch!

    Since the transfer was outside US I would pay currency conversion for every withdrawal. When they reverse the money just a second after I make the transfer they convert it again from my currency to USD. This meant every time I would loose a few hundred $ to Paypal for basically nothing!

    To get the money back you’ll have to loose about 4 hours of your life just so you could talk to someone on the phone. Then hear their stupid answers for another 4 hours (they are really dumb and can’t notice this double currency conversion until you put a virtual gun to their head). Then wait another 2 months to get the money back.

    This happened 4-5 times before I gave up. In fact I was so exhausted by the end that I didn’t even bother with the last two transactions. Paypal still owes me a few hundred dollars :(

    But all’s well that ends well. Good riddance indeed.

  32. tim peterson

    tim peterson

    06 September 2012 @ 02:02PM #

    @Elliot, agree completely, thanks for the post!

  33. avangelist


    06 September 2012 @ 02:05PM #

    Paypal is free to setup though.
    I do think that for micro transactionsand low incomes it is a good solution.

    How much do you have to Pay for your HSBC Business account every year? I know how much mine is, and I looked before at using their payment gateway and again that cost and develooment is not as easy for some.

    Of course there is a natural point where Paypal isn’t the best business case, but it doesn’t mean it is never suitable.

    I’ve had pay freezes purely from buying and selling on ebay, something you would think they have end to end visibility of. The one thing bank related I have never liked is there is no interest.

  34. Sheldon Steere

    Sheldon Steere

    06 September 2012 @ 02:07PM #

    Wow, So glad I stopped using PayPal for everything but eBay bids.

  35. Ben Polidore

    Ben Polidore

    06 September 2012 @ 02:09PM #

    Hey, the typography on your website is all messed up on chrome for windows 7.

  36. John Davey

    John Davey

    06 September 2012 @ 02:14PM #

    Brilliantly written Elliot. Whilst I haven’t yet suffered some of the horror stories I have heard about PP, I know deep down that it is only a matter of time before something similar happens to me. Luckily I have had a merchant account since 2006, but have still used PP to pay speakers or transfer funds. Reading yet another story such as yours gives me more impetus to use other methods to do these things.

  37. Ashley


    06 September 2012 @ 02:14PM #

    This is fantastic. I wish everyone would wake up and stop taking this crap from businesses who treat them terribly. Paypal is an awful company and I also choose not to use them. Thanks for the great post.

  38. Oli


    06 September 2012 @ 02:18PM #

    You got all the way up to £40kpa and needed a freeze to tell you it was time to move away from Paypal? Even at their micropayment rate (5% + 5p), you’re loosing 25p an issue. If you hadn’t found that, you were losing at least 34p on the standard rates.

    In real terms, somewhere between 6 and 9 percent was going to Paypal.

  39. Richard


    06 September 2012 @ 02:20PM #

    Came from the articles stayed for the sign off line. Honestly, Paypal is a bitch to work with. I am thinking of switching over to Clickbank or something else.

  40. Samuel K

    Samuel K

    06 September 2012 @ 02:29PM #

    I learnt my lesson the hard way. Still got over 20k with paypal and without a date on when i would get my money back.

  41. Mark


    06 September 2012 @ 02:30PM #

    Couldn’t agree more. We turnover about £150k though PayPal and similar to you Elliot, it’s all pre-orders. They’ve been little more than an obstacle to success, the only thing that’s put me off doing anything about it is the difficulty in setting up Merchant Accounts et al.

    Perhaps with your guides above I’ll give it one last try.

    There is a huge opportunity for an organisation with better scruples to offer a much better product though. If you have the infrastructure and the desire to do something for the good of the community as well as your bottom line, I urge you (major banks) to design a PayPal alternative. I’d happily be your first customer

  42. Aaron


    06 September 2012 @ 02:31PM #

    Congratulations on the break-up! Enjoy.

    I did the same several months ago for the exact same reasons and have found life does go on ;)

  43. Blake


    06 September 2012 @ 02:31PM #

    I lost over $5k to a lying buyer’s dispute when I was fifteen years old. It almost convinced me to give up on trying to run a business, a decision I’m thankful I didn’t make, but I absolutely hate Paypal and their propensity for automated, heartless decision-making.

  44. Jack


    06 September 2012 @ 02:32PM #

    I just switched earlier this week to 2checkout.com after having a 21 day hold placed on my account for the second time. I’m very happy & the unexpected consequence is sales have doubled so far!

  45. uniquefx


    06 September 2012 @ 02:34PM #

    BOOM! What an ending to a great article.There are plenty of horror stories about PayPal floating around,but not many of them explain their situation and the problems that occurred.Thanks for that.

    “PayPal have all the power of a bank and yet none of the responsibility.” A real eye-opener.

  46. Angelo


    06 September 2012 @ 02:35PM #

    You did very well, they are a disgrace for all the web, btw I have to thank Google Chrome otherwise I would have not be able to read your comments with that type face and font so small.

  47. Paul


    06 September 2012 @ 02:43PM #

    Because of where I’m located, paypal is the only viable solution for me to receive payments. If you’re in the UK, check out https://gocardless.com/

  48. Faren


    06 September 2012 @ 02:44PM #

    Excellent post Elliot – its always good to see people taking a stand against companies like PayPal.

  49. Steve Lorek

    Steve Lorek

    06 September 2012 @ 02:48PM #

    Well done Elliot. PayPal is simply not a viable option for anyone depending on their business cashflow. I was using it when they first started introducing account freezes aggressively a few years ago and switched to a merchant account with Lloyds TSB and Protx (now Sage Pay). I would not advise anyone to use PayPal except for eBay auction payments.

  50. paco


    06 September 2012 @ 03:13PM #

    Paypal s*cks

    Notch from minecraft got also his account frozen.

    I’ve myself had my account frozen:
    If you earn more than X in one year you have to give all your personal information copy of ID etc for law reasons . OK with it.

    They requested my personal information in the next year for being near of the limit the prior year, it’s absurd as i was unable to go above the limit.

    Paypal is kafkian, they apply the rules absurdly.

    The hidden customer support can give more posts to write…

  51. James Whatley

    James Whatley

    06 September 2012 @ 03:14PM #

    Good work for drawing out the majority of the cash when you did and, as others have quite rightly pointed out already, this is indeed a GREAT post.

  52. Keigan


    06 September 2012 @ 03:25PM #

    Wholeheartedly agree. Commercially, we tried using PayPal to deliver payments for our customers, but the development was long. Other solutions, like PayLease (we’re a property software company) are much more developer friendly.

    On a personal note, friends have used PayPal to transfer money. That’s worked OK.

  53. Leon


    06 September 2012 @ 03:29PM #

    Indeed very good new for you! I hope your customers will accept the sans PayPal payment options. In some industries you absolutely have to offer PP though – which sucks.

  54. alastair


    06 September 2012 @ 01:28PM #

    “Can a bank do this to you?”
    Yes, yes they can. Moreover, if you have a credit card merchant account, they may very well do so. Typically, though, banks negotiate reserve arrangements and find out about your business up-front, while PayPal waits until something interesting happens on your account.

    “it’s clear that PayPal are interested in buyers, not sellers”
    A lot of PayPal’s behaviour is driven by card scheme rules and by penalties that are imposed on PayPal (and in some cases passed on to you, the seller, via their Ts & Cs). So, for instance, they are worried about the credit card chargeback mechanism, which, because it is the issuing banks who (a) decide whether a chargeback should happen, (b) get to pocket the chargeback penalty fee and © have the buyer as their customer, is horribly biased in favour of cardholders. In addition, a high volume of chargebacks could result in a fine from the card scheme itself, so PayPal has an incentive to act to keep the level down.

    PayPal also takes a risk if it lets you sell in volume through its system, particularly for pre-orders. Why? Because you might run off with the money without delivering the product, at which point PayPal is left holding the can for all of the non-delivery chargebacks that will result. The reason they’re so nervous about this is that it’s actually happened to them.

    Do I think they’re awkward, arbitrary and all the other things people criticise them for? Sure. But so are the banks, and for similar reasons; they just do it up-front, when you first set up your merchant account, rather than turning a blind eye until something interesting happens.

  55. Criacao


    06 September 2012 @ 02:15PM #

    Landed here via HackerNews.
    Epic post! I expect that this make the round over the blogosphere and many other merchants withdraw their businesses from this draconian company. Well done and I wish the best luck to you and your new payment system.

  56. Adam Clark

    Adam Clark

    06 September 2012 @ 03:42PM #

    Thanks for writing this. I have heard all the horror stories as well. However, I have to say that I’ve used PayPal for years, running all my business finances through them and have never had a single problem. No freezes, holds or bad customer service. Not once.

    I wonder if it’s different in the US. All the horror stories I’ve heard have been from UK users.

  57. Andrew


    06 September 2012 @ 03:42PM #

    Droconian rules without common sense will eventually catch up to any company. That’s why I’m with a company that cares about it’s customers, http://www.charged.fm/about/us.

  58. Dan Brusca

    Dan Brusca

    06 September 2012 @ 03:46PM #

    One big advantage of Payapl that shouldn’t be overlooked is that you don’t have to go through a credit check to use it. Good luck trying to open a merchant account if you have anything less than a glowing credit score.

  59. Jeff Finley

    Jeff Finley

    06 September 2012 @ 03:55PM #

    I couldn’t agree more Elliot. I have had some terrible experiences with Paypal, but we continue to use them as a necessary evil. In 2006, my account was permanently frozen after it was hacked. I lost $900 and was not allowed to sign up for a new account using the same credit cards, banks, or social security number for 7 more years!

    Recently, I set up an account for accepting sponsorships for my design conference WMC Fest. I got one person to buy my highest sponsorship tier package and Paypal deemed it suspicious and froze my account AND the sponsor that was paying. They were not happy.

    As a solution I have switched my conference sponsorship payments to Stripe https://stripe.com/, which was a breeze. But we still use Paypal for other subscription based sites we run and we’re always dealing with reversals and such. We sell lots of digital products (vectors, textures, etc) and it’s easy for someone to buy stuff from our site, file a dispute in Paypal and get it refunded. It’s BS.

  60. Aaron Sustar

    Aaron Sustar

    06 September 2012 @ 03:57PM #

    If it’s any consolation, I’ve probably got the worst PayPal story to tell…

    My company has been selling the exact same software product for 12 months now (it’ll be 12 months next Thursday, actually). All this time our chargeback + refund rate has been less than 3.0%.

    Back in June we released the 2.0 version of our software, and brought in just over $100,000 in a week. PayPal immediatelly froze our account, reviewed it, and decided to:

    - hold $50,000 of our funds till we close our account
    - hold 30% of incoming funds for 120 days on top of this

    Again, we’ve been selling the same product for a year with s anyone that can help me, I would appreciate it IMMENSELY. Our company is registered in the European Union — are there any regulatory offices that could help us?

    Thank you all in advance!

  61. Jamal


    06 September 2012 @ 04:06PM #

    Was just thinking today that it’s time for an alternative to both PayPal and eBay…but it will be super hard to beat their market share and brand recognition

  62. Havur Gate

    Havur Gate

    06 September 2012 @ 04:08PM #

    Have you considered Dwolla.com? They’re also a payment processing network with extremely low fees. I stumbled across them originally when looking to do some transfers that didn’t gouge on fees, and have been quite happy with them.

    Great article btw. PayPal is the scourge of online payment systems.

  63. Badpal


    06 September 2012 @ 04:12PM #

    Nice, but is this only just news to you? Why even bother with shitpal in the first place. Everyone, and I mean EVERYONE knows that Paypal sides with the buyer first.

  64. lemiffe


    06 September 2012 @ 04:14PM #

    I agree with Ben Polidore, the typography is messed up on Chrome for Windows, you can barely figure out what the comments say.

  65. Alun Rowe

    Alun Rowe

    06 September 2012 @ 04:17PM #

    This is by no means aimed at EJS or VI but I think a lot of businesses need something as straightforward as PayPal for small ecommerce startups BUT then fail to review their payment systems on a regular basis. Taking 1000 conference tickets through PayPal (at say £100 per ticket == £100,000) is a) expensive and b) probably not what PayPal ‘should’ be used for.

    Perhaps as devs/business owners we need to take some responsibility too.

    BTW I’m not defending PayPal but perhaps there’s another lesson to learn here.

  66. David Fauber

    David Fauber

    06 September 2012 @ 04:27PM #

    “PayPal, you are the scourge of the internet. Fuck you.”
    This, a thousand times this.

  67. Goran Peuc

    Goran Peuc

    06 September 2012 @ 04:27PM #

    Good for you. Really good. Fuck PayPal.

    With that said, please keep in mind that PayPal was intended for small person-to-person (selling stuff on eBay) and really small business transactions. Any business which grows out of the very small box into the region of “well this could be actually a good business” is not suited for PayPal. There is a reason big business do not use PayPal. Yes, your whole business started small, but once it started blooming – you should have immediately switched, and not wait for PayPal to screw you.

  68. James


    06 September 2012 @ 04:37PM #

    I’m currently in a dispute with paypal, seems about 50 people bought pre orders of Guild Wars 2 from a seller on ebay. The seller did not send the keys and is not responding to anyone’s emails or phone calls now that the game was released last week. Because we paid months ago, we are not covered by Ebays or Paypals protection policies. Added to the fact PayPal considers the purchase of a game license key as a intangible digital good, they will not even bother processing a dispute. 50 people x $50-65 a copy, that’s over $2000 USD that eBay is letting this scammer get away with. I’m truely disgusted by eBay’s actions handling this. 8(

  69. jeff white

    jeff white

    06 September 2012 @ 05:10PM #

    Elliot, did you have a base Paypal account or did you sign up for PayPal Payments Pro or one of the higher end accounts? I have had innumerable troubles with normal PayPal accounts getting frozen, etc. But, signing up for the Payments Pro account requires you to release a bunch of information at the start, and the process is very similar to setting up a merchant account with a bank. We have had a PayPal Payments Pro account connected to Freshbooks for our clients to pay invoices for several years without a single hitch. However, we had massive issues with a merchant account and them not understanding how Freshbooks works or how to accept payments in Canada (!).

    In any event, I bet the solution you’ve arrived at is significantly better for you and will be far more trouble free in the future.

  70. Sean Malarkey

    Sean Malarkey

    06 September 2012 @ 05:19PM #

    They got me for $13,000 – After 1 year they gave me back $8,000 and finally at 1.5 years I got the remaining $5,000….. WE sell digital products and had 0 refunds and 0 chargebacks with hundreds of transactions in the previous 2 years……. IT MADE NO SENSEAND THEY DIDNT CARE……

    My story here – http://seanmalarkey.com/paypal-powerpay

  71. george


    06 September 2012 @ 05:28PM #

    Seriously distracted by your choice of font. If you want to shout your message from the mountaintop, please choose typeface that doesn’t give your readers spasms. eeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee!

  72. Jon


    06 September 2012 @ 05:29PM #

    Also consider Bitcoin. Easy, fast (10 minutes whether you’re getting cash from the UK or Indonesia), no fees, no account freezes, no chargebacks.

  73. YourFault


    06 September 2012 @ 05:31PM #

    Wait for 2 years to make the change? I say that is your fault for not making the change when your “friends” were complaining and you saw other people having issues left and right. This whole episode would have been avoided if you had been proactive and not wait till you had issues.

  74. Paul Castle

    Paul Castle

    06 September 2012 @ 05:35PM #

    Thanks for your insight in this article. I had considered adopting PayPal to sell prints and such, after being burned by Google’s merchant system (which is as equally draconian and idiotic – my account was locked down permanently after less than a day). A merchant account defiantly seems the way to go.

  75. Chris


    06 September 2012 @ 05:38PM #

    Fantastic! Really enjoyed reading this. I have been discouraging people from using Paypal for exactly these reasons plus they are one of the worst companies to deal with, along with BT. And don’t get me started on them…

  76. Matt


    06 September 2012 @ 06:05PM #

    I hope someone at Paypal reads your post…

    I use to have a Paypal account until I learnt they had frozen the account of Wikileaks. I tried closing my account but they would not transfer the half a EURO left on it. I had to make a transfer of 9,50 EUR to my Paypal account and then retransfer the 10 EUR to my main account. Stupid company.

  77. marc


    06 September 2012 @ 06:08PM #

    Man, that sucks! I know I should have done this much earlier. Now I disabled PayPal as payment method for my event. Hope it helps to show them that at least they loose money when acting like headfucked assholes …

  78. jseliger


    06 September 2012 @ 06:09PM #

    You’re probably tired of stories about Paypal being nasty, but, if you’d like yet another example, here’s mine.

    @Matt: “I hope someone at Paypal reads your post…”

    People have been writing about Paypal’s evilness since at least the early 2000s, when I began reading (and ignoring) stories on Slashdot. As far as I know, no one has ever responded to those stories. That Paypall still exists and people still use it is a testament to some combination of network effects and the difficulty of running a business like theirs.

  79. Bhavesh D

    Bhavesh D

    06 September 2012 @ 06:35PM #

    Read this somewhere today – ‘Don’t Complain – Fix It Yourself’

  80. Ben Rellick

    Ben Rellick

    06 September 2012 @ 06:48PM #

    My account – with $12,000 inside – was in the review process with Paypal and everything was going quite swimmingly until I got the email that the account was permanently frozen and I was not allowed to appeal any further. I called anyway, in a bit of shock since everything had been going fine thus far, and the fellow on the phone told me he WAS NOT ALLOWED to tell me WHY my account was frozen. Thankfully he briefly pulled a bit of humanity from the depths of his soul and took a quick look – said I hadn’t submitted a copy of my Social Security card as requested, and I assured him that I had just the day before. Sure enough – “Oh! Yep, here it is. Alright, I’ll tell you what, let me put this back in the queue for you.” It’s fucking offensive that they almost stole $12,000 from me because a mistake on their part, I got no apology, and I still had another 2 weeks or so of phone tag to go before I finally got the money.

    I’d heard the horror stories before too, but it was always one of those “Yeah, but it won’t happen to ME” things. Although I don’t do any major selling through my account anymore, I do still have it open. Thanks for the reminder that paypal is generally crummy, I’d fallen back into the mentality of “Yeah, but it won’t happen to me AGAIN.”

  81. Simon Cox

    Simon Cox

    06 September 2012 @ 07:01PM #

    i was suprised you kept going with PayPal to be honest especially with that kind of turn over. Good to know you made the move though. At least you will be able to go into a HSBC branch and discuss your business plans with a busines manager who will understand how you run your business and help you with it. PayPal is an obvious choice for small ventuers but its time has elapsed. It grew into a bank (yes paypal has a banking licence and is a bank) too quickly without the years of expertise in business. The tipping point of choosing a bank rather than Paypal is a lot lower than most here woul imagine – however integration into banking payment systems can be a little complex. However as Alan Horne and Paul have stated earlier – gocardless.com shoudl be a good starting point for most of us now. When Square.com launches in the UK things really will hot up and PayPal will lose the small business market. Well done and well saidElliot.

  82. Song


    06 September 2012 @ 07:05PM #

    Hi Elliot! I just wanted to say that I love your site’s design, and if you have any tips for an aspiring designer please send them my way. I bookmarked your site for design inspiration. Thanks for sharing your story.

  83. Rob H

    Rob H

    06 September 2012 @ 07:44PM #

    Just last week, my Paypal account was frozen (I made the mistake of using it from a country other than my home country, from a new browser that didn’t have a cookie to say I’d used it in that country many times before). Got instructed to change the password then upload some ID, but the ID uploading process could never complete (it ignored the third item, it’s a bug). The help screens did give me a priority support number, so I called Ireland and got a very pleasant person quite quickly, and she escalated it and got the account unlocked within the hour.

    But it was a wake up call. I pay for my web servers with my Paypal account (since both income and expense are in USD), luckily none were due that day and it got resolved quick. Next time I might not be so lucky. So I’m moving all those payments away from paypal to multiple real credit cards. And changing several incoming payments to pay me by other methods where possible (most of those are Paypal bulk payments from ad networks so I didn’t pay fees on them). Result: Paypal loses a six-figure annual transaction volume, and eliminates themselves from being considered as a payment method for my future sites whenever possible. I do wish there was a viable alternative without monthly fees though to receive consumer payments, especially for businesses that span multiple countries.

    And to echo the other comments, it’s close to impossible to read what you’re typing with the comments, odd fonts, odd alignment, overstrikes all over the place, a general unprofessional mess (viewed in Chrome, Linux). Try testing on a computer other than your own!

  84. Emma Smith

    Emma Smith

    06 September 2012 @ 08:53PM #

    Have you heard of WePay? They have one of the best customer service in the payment industry! I’ve used them to sell tickets for my events, and the WePay have been so helpful. The money is never frozen and always available to me whenever I want to withdrawal to my bank. You should check WePay out: https://www.wepay.com/

  85. Andrew


    06 September 2012 @ 09:53PM #

    I don’t sell anything online, and Paypal screwed me over too. Luckily, I kept $0 balance so when they froze my account and demanded that I pay them $140.00 (not sure why) and give them my SSN and other sensitive personal information. I tried to use their web-based resolution page, which is pitiful and designed to prevent you from actually contacting a human being. Finally, I called them and after about 40 minutes of phone robots and transfers I got ahold of a real person. I told them to close the account immediately as i wasn’t going to give them what they wanted. Rather than do that, the Paypal rep simply “unblocked” my account so that I could close it myself online… but I can only close it if I confirm my SSN and pay $140.
    Fuck Paypal.

  86. Mark V.

    Mark V.

    06 September 2012 @ 09:54PM #

    Riiight. I, too, tried to work with them once, and I wholeheartedly second this. PayPal blows in a hysterical way.

  87. Mark Lancaster

    Mark Lancaster

    06 September 2012 @ 10:10PM #

    Really good article, had many problems with paypal myself and been left out of pocket a few times.
    Recently closed my account after having it frozen again and don’t miss it one bit.

  88. AJ


    06 September 2012 @ 10:15PM #

    i got screwed by em also.. i had asked for my account to be unblocked because they had frozen it because of its non-profit, i asked for them to unfreeze it and change it to a normal account. which they said they can do it. So they partially unfroze the account so that i can update my info and banking details. as soon as i did updated my info, they froze it again. And now my primary banking account is linked to a frozen account and cannot remove it. How daft!

  89. John Surdakowski

    John Surdakowski

    06 September 2012 @ 10:29PM #

    Wow, I really feel your pain on this article. I’ve had my PayPal account frozen for basically no reason at all.

  90. Sang Dang

    Sang Dang

    06 September 2012 @ 10:44PM #

    Thank you, you said all I want to say.
    F*ck you, Paypal.

  91. gooutandplay


    06 September 2012 @ 11:04PM #

    Paypal exists for businesses that are not ready to get a merchant account. There is practically no barrier to entry compared to the cost, etc of getting a merchant account. So its not fair or reasonable to compare the two services.
    For most users of paypal, there will not be much cash flow, and there will not be much at risk. Conversely its clearly cheaper to process a higher volume of transactions — with a real merchant account! The problem is the merchants who start out with paypal, and then never bother to get a merchant account – meanwhile they are risking larger and larger amounts of money.
    The amount of fraud that paypal has to deal with is not trivial, and its not reasonable to assume that they will be able to respond to every request with a phone call. What is reasonable is to do some research before you connect anything to your bank account. The cautionary tales about paypal have been easily available for many years.
    If you need Paypal for a lot of transactions – then have a dedicated bank account that is just for paypal, and that has enough of a balance that you can deal with a chargeback. And its good practice since you better be ready for chargebacks that happen with a real merchant account. and in case you think that the merchant account provider will hold your hand when a problem happens like a chargeback — the credit card companies are going to side with the buyer first — just like paypal.

  92. Deron


    06 September 2012 @ 11:06PM #

    I run a large forum, and have donate button. I had someone donate $3 a few weeks ago. Mind you, you have to manually click the button, then go through the Paypal process to donate. Well, somehow or another it got disputed, so I explained my side to Paypal about “literally have to click etc.” – yeah they, after 2 weeks, refunded the $3 to whoever donated, my explanation wasn’t good enough I guess. Haha, they showed me!

  93. m


    06 September 2012 @ 11:23PM #

    @Adam Clark are you insane? UK only do some research man!

  94. Greg Hluska

    Greg Hluska

    06 September 2012 @ 11:36PM #

    Great article…

    I’m a Canadian entrepreneur, so I feel your pain about Stripe/other great providers that don’t do business outside of the United States (yet, I hope). The problem that I face is that there aren’t a lot of great options for bootstrapped entrepreneurs, short of paying massive fees for a merchant account that can still be frozen at practically any time. Some of the merchant services agreements contain onerous terms that, quite frankly, have scared me.

    Let’s hope for some competition!!!

  95. Ryan


    07 September 2012 @ 12:29AM #

    I would suggest to others to give wepay.com a try? — I’ve used them for a variety of personal transactions and I found them to by speedy and fair.

    Google also has a more robust payment system.

  96. Rob H

    Rob H

    07 September 2012 @ 12:34AM #

    Emma Smith mentioned “wepay”. Looks like another local one-country one-currency payment acceptance method. None of those will ever become a serious competitor to Paypal until they start to realise that 95% of the world (including merchants) lives outside the US.

  97. BladeMcCool


    07 September 2012 @ 12:39AM #

    Bitcoin. Use it. There is nobody that can stop you from sending or receiving bitcoins. No government, no corporation, nobody.

  98. Stickman


    07 September 2012 @ 03:42AM #

    Hi – another commenter mentioned DWOLLA, and I repeat that. They are, in fact, not a credit card processor at all – they have figured out a way to piggy back on the automated clearing house system banks use for transfers.

    It is a different paradigm, the result of which is that each transaction over a certain amount has just a fixed fee of (last I looked) $0.25, no matter the amount.

    Definitely worth a look.

  99. osmosis


    07 September 2012 @ 03:44AM #

    To receive bitcoin payments, checkout bitpay.com

  100. Scott


    07 September 2012 @ 05:07AM #

    Dwolla.com. check them out.

  101. Marco Berrocal

    Marco Berrocal

    07 September 2012 @ 05:48AM #

    I am also on a tight leash with them.

    I hate them but I also kind of need them. Have you considered options? I know of Neteller, but what I don’t know is how many people are willing to sign up for it just to receive/send something for me.

    Btw some notes about your site. The cursor when I type, is this deliberate?

  102. Erik


    07 September 2012 @ 07:07AM #

    Why would anyone use paypal when there is already great alternatives/trusted alternatives like Authorize.net and merituspayment.com -not sure if meritus works in europe.

  103. Nils Ververs Lübke

    Nils Ververs Lübke

    07 September 2012 @ 07:16AM #

    I am in the early beginning phases of starting my design business up online, and recently had my card verified by Paypal. Sweet mother of all sugar frosting, thank you for this article. The alternate payment setups are very helpful, and the profanity heartwarming :)

  104. Thibault Jouannic

    Thibault Jouannic

    07 September 2012 @ 08:33AM #

    Hi Elliot,

    I read more and more posts complaining about Paypal awful practices. As the number of alternatives seems to grow, I’m desperate to see that most of them only do business in US (French here). As far as I’m concerned, Paypal is still the only way for me to setup a payment for a boostrapped service without spending hours and hundreds of €. Can’t wait the alternatives to arrive here.

    Good luck for your next move.

  105. MeToo!


    07 September 2012 @ 08:51AM #

    Me too am a victim :) but I got back my money.

    People who are forced to use Paypal, here is a simple solution for you – Withdraw your money on a daily basis and never accrue anything over weeks / months. In such case, even if they suddenly put a freeze, you only lose 1 day worth of dough! :) I ’ve been doing this and life has been happy and peaceful :)

  106. Prisca


    07 September 2012 @ 09:18AM #

    sorry to hear about yet another pointless headache – and VERY glad you’re leaving them behind ;)
    Excellent post.

  107. Prasad


    07 September 2012 @ 09:19AM #

    Elliot, you rock! I was facing pretty much the same problems from Paypal and had to bear their “fuckwittery” (I am liking this term!) for quite some time (a year or so). We also make pretty much the same volume via Paypal and were pretty hassled with their entire policies about Indian merchants. This post has helped me think about moving away from Paypal and putting it in action. Thanks a lot!

  108. Rachel Reveley

    Rachel Reveley

    07 September 2012 @ 09:28AM #

    The problem with Paypal is that there isn’t enough competition in the market for payment providers that don’t require getting your credit card out of your wallet. I have stopped using Paypal because they kept asking me to answer stupid security questions all the time and so stopped being more convenient than simply entering my credit card number and also because yours isn’t the first case I have heard of a legit company being treated like criminals. Paypal should be regulated by the FSA in the UK and whomever is the equivalent in the US.

  109. Tim Rogers

    Tim Rogers

    07 September 2012 @ 09:58AM #

    Disclaimer – I work for GoCardless, a UK-based payments provider.

    I’ve really enjoyed this article and especially the comments. Although written by one of the members of the prolific “PayPal gang”, the points raised are valid and I agree with the assessment from Hacker News comments that the issue is not that PayPal are conservative (which they do have to be for their own protection), but that they are never willing to negotiate or discuss issues that arise.

    As some people have mentioned, if you’re in the UK, GoCardless (https://gocardless.com) could be a great alternative offering cheap payments (1% of each transaction and a £2 max fee) from a friendly and open company. We’re pleased to help almost anyone (the only exclusions are things such as gambling) and you can sign up and start taking payments right away. We’ll also be launching in Europe in the coming months too.

    Just to correct a mistake made by one person above – we’re not owned by Royal Bank of Scotland or run by them, but we access the Direct Debit infrastructure via them.

    If anyone is interested or has any questions, just drop us an email at help@gocardless.com.

  110. Aplomb


    07 September 2012 @ 10:01AM #

    Too bad I don’t have a creditcard and can’t order any Viewport Industries product in the near future. I understand your hatred for PayPal, of course.

  111. Marcel Neumann

    Marcel Neumann

    07 September 2012 @ 10:26AM #

    I’ve read some comments here saying PayPal freezes accounts because if a buyer ever gets scammed they have to take responsibility and give the money back to the buyer. Well, I can tell you they actually don’t.

    If you, as a buyer, get scammed they will try to retrieve the money from the seller’s account. If said account has no money PayPal will simply tell you "well, you are right, that dude wasn’t legit, but we can’t give you your money back’.

    Who wins? PayPal: they keep their comission for the payment and give nothing back. So, they take profit from scams…

    It happened to me.

  112. david


    07 September 2012 @ 10:37AM #

    As a buyer I already abandoned Paypal some time ago, due to excactly these kind of stories. Now it seems, Paypal only treats buyers well until they decide to leave: my credit card number and email account that I previously used with paypal now seems to be on some kind of blacklist and cannot be used to buy stuff with sellers that use paypal (but would otherwise allow to buy via CC without making a paypal account).
    Also paypal does not disclose to me, which information they are still storing about me (obviously they store email address and CC number somewhere), even after a written request via registered mail. A clear violation of EU law.

  113. Elliot Jay Stocks

    Elliot Jay Stocks

    07 September 2012 @ 11:30AM #

    Thanks for all of these comments, everyone! And thanks for sharing yet more horror stories — at least we can take solace in the fact that we’re not alone. As there are too many comments to reply individually, I’ll cover a few points that were brought up by multiple people.

    Firstly, I want to state that setting up a merchant account does not require any technical knowledge at all. It’s just something you discuss with your bank. Getting it all up and running (i.e. getting Shopify to speak to Cardstream, which in turn speaks to the merchant account) is also a relatively simple affair — just a case of filling in some online forms in each web app’s settings. You don’t need to be a developer to do this. It might help, of course, but it’s really not rocket science. That said, I’m not saying everyone on PayPal should go out and get a merchant account instead. As many commenters have pointed out, merchant accounts are better suited to businesses with a relatively decent turnovers, and — for most people — PayPal will remain the cheapest, easiest way to sell goods. But if you’re ramping up to a PayPal ‘Payments Pro’ account, maybe it’s worth considering if a merchant account might be a better option and give you a bit more control over your money.

    Secondly, the other reason we went with our own set-up (rather than simply a PayPal competitor) is because we wanted to be charged fees separately, rather than have them taken off each transaction, which makes reconciliation and accounting an absolute nightmare (i.e. the amount you charge a customer is always different from the amount that arrives in your account). I’m happy to see PayPal competitors springing up, but every solution we looked at still took fees off each transaction rather than invoicing us for them separately, so for us, they were a no-go.

    Thirdly, it’s true that banks can impose stupid reserves on merchant accounts, too, but the key difference is that you’re forewarned before it happens and during the application stage we were able to inform our bank that we’d be taking pre-sales, which they okay’d. Of course, we’ll have to see how it goes and maybe in a year I’ll have several horror stories about the trouble with merchant accounts, but the important point is that if it does all go tits-up, we can still walk into our local branch of HSBC, speak to our dedicated account manager, and get it sorted. With PayPal, you haven’t got a hope in hell of reaching someone who can help you, as demonstrated even further by Andy’s troubles yesterday.

    Lastly, to those without credit cards: you don’t need one — as I said, we take debit cards, too.

    Hope that’s cleared a few things up!

  114. ChrisH


    07 September 2012 @ 11:32AM #

    About the remaining balance: I advise getting the small claims form from your local court, filling it out, then posting a photocopy to PayPal informing them that if they do not pay up within 28 days that you will file the form with the small claims court.

    I pretty much guarantee this will make them pay up, and you won’t need to pay the small claims filing fee, nor go to court.

    This trick has worked for me every time I have used it, including the time when I pulled it on the Secretary of State for Health and Social Security!

  115. Ludovic Urbain

    Ludovic Urbain

    07 September 2012 @ 12:11PM #

    It’s incredibly valuable information.

    As a buyer, I pick paypal because I know I’m 100% protected, and I hate stores that ask for my CC info, because I cannot possibly trust eleven billion parties with my CC details.

    So as much as you may hate them, your advice is useless without this one bit :
    paypal are true assholes but they’re still the fastest easiest way to pay (no kidding, with an express checkout you just need a login and a click, no tedious information input, from any computer/phone), you need a buffer between you and them that you can trust and that they can’t fuck with (many payment processing companies include a pay through paypal feature so that’s possible).

    I would pick anything over paypal, IF it had better international support, lower transaction fees, better customer service, simpler checkout process (i.e. login screen w/ payment details included → button pay instead of login → bye).

    Currently, there’s no one in that category, and that’s just ridiculous .. but I believe I’m too late to build a paypal-killer so I’ll leave this one to others.

    Thanks for the warning, but still I don’t believe anyone can live without paypal today and not lose a ton of money in the process. Good luck with your idealism, I hope it works out for you.

  116. sawan


    07 September 2012 @ 01:01PM #

    i think paypal is just trying to exploit the gap in the industry where people need quick payment collection.

    i have got frozen accounts many times, and I thought I was the only one. it is good to know that i was not the one targeted. this article is a great initiative to voice concerns.

    in this world of globalization there is no way to collect money globally for individuals…. except of being at mercy of sites like paypal.

  117. BobThorton


    07 September 2012 @ 01:51PM #

    You’ve put tears into my eyes.
    2 years ago same (worse) story for my startup, 150k€ frozen for 6 months, bankrupt.
    I argue with your “if everyone leaves, Paypal will wake up” it should be “everyone should leave and let this scumbag of internet service monopoly DIE forever”
    How many horrors stories need to be written to stop this massive scam? I don’t know, your great article sure will help though!

  118. Ludovic Urbain

    Ludovic Urbain

    07 September 2012 @ 03:08PM #

    IMHO, this post is very interesting, but it lacks the solution -
    here’s my proposed solution, feel free to help make it far more useful, and have a nice day.


  119. Daniel Davis

    Daniel Davis

    07 September 2012 @ 03:36PM #

    In the last paragraph you say “but withhold money amounting to thousands […] from buyers”. Shouldn’t that be sellers?

  120. Steve


    07 September 2012 @ 04:11PM #

    Wow…I picked up on this story through Twitter, I’ve been hearing a lot of people speak about PayPal and the freezing of accounts. I will be taking your advice with my projects..Thanks for sharing your story.

  121. Michael


    07 September 2012 @ 06:09PM #

    As a buyer I had the same experiences . Blocking my account after 4 years from one day to an other , because there couldn’t find the necessary and then asking a re-inscription fee, the promised to pay back to reopen my account, thing that only worked after 4 attempts. I never saw my money back.
    Then after a full refund from a seller to me, in complete accordance, they kept 37 % of the sum as a fee .
    Notice, that by there own rules a buyer NEVER can or may be charged of transaction costs on refunds. Those fees are Always on the charge of the sellers account. End of story, after all further communication with Paypall were in vain, so I decided , Never to handle again with paypal.
    There are just ordinary thieves….
    As a part of and property of Ebay , those practices of Paypal cast a big slur on their reputation.

  122. Leo


    07 September 2012 @ 08:19PM #

    And don’t think that buyers are safe when it comes to PayPal’s inexplicable and untimely ‘investigations’ and totally unfunded accusations. I decide to help a friend paying for her bottle of perfume she won on eBay. The seller only accepted PayPal, so I paid from my account……… I shouldn’t have. Next thing I get is a message that my "Account is frozen while they investigate my purchase and payment for fake perfume….. I phoned them (useless), e-mailed them (also useless) and finally had my lawyer write them, that the seller was a genuine French Perfume store, the product a genuine product and that I was not the buyer but the agent handling the payment. The same day I got notified their HQ had received the letter, the freeze was lifted. To make sure I am not pulling the same filthy scam one more time, one of their computers has been programmed by one of the chimps working there, to once every year freeze my account “Account frozen, pending investigation” seriously I have the time marked on my calender where three years in a row, accurately to the day they have their three week investigation period. Well PayPal FUCK YOU TWENTY TIMES OVER. I’VE GOT SPARE ACCOUNTS ON MY WIFE"S NAME, BOTH OF MY DAUGHTERS’ NAMES AND DARN EVEN MY DOG HAS A PAYPAL ACCOUNT. HOW’S THAT FOR FRAUD.

  123. dark green

    dark green

    07 September 2012 @ 09:41PM #

    The font in the comment section is hard to read. BTW, removing the lower line in a capitol F makes it a greek gamma (http://en.wikipedia.org/wiki/Gamma).

  124. Dominic Toscanelli

    Dominic Toscanelli

    07 September 2012 @ 10:27PM #

    I love the movement and conviction of this blog! I work for WePay, Inc. and we are THE best alternative to PayPal for the informal economy. This economy we believe, is comprised of small merchants and ecommerce businesses.

    We have a robust platform that offers custom invoicing, event pages with tickets & guest registration, donation pages, embeddable stores with shopping carts, and simple html payment buttons. These payment buttons are not your average, they are iFrame widgets where the entire checkout happens on your site.

    I am more than willing to speak to anyone interested in our platform. Dominic[at]WePay.com | 650.521.5946 (direct line).

    If you let me know you’re from this blog, I can discount your rates and even open a free virtual terminal for you (PayPal charges a $30 monthly fee for this).

    I hope to hear from some of you.

  125. Robdotdotdot


    07 September 2012 @ 11:13PM #

    Speaking of horror stories, Paypal truly screwed me over with my account. I had sold some items on eBay, and shipped them out internationally, but the buyers said they never received them. They naturally filed a claim through Paypal, which Paypal then froze the funds on my account. I went ahead and provided all the evidence that Paypal needed to unlock my account. These items included images I had taken of the product sold, the images of the shipping labels w/ tracking, as well as my receipt from my supplier showing that I had made the purchases, my supplier info, etc. After I had submitted all the proof they needed to unlock my account, they ended up permanently banning me. This ban mean t that I couldn’t use any of their services at all, which includes both paying for purchases and accepting funds from future sales! So, not only did I lose out on the money from the items I had sold on eBay, and the cost of the goods sold, but I was also banned from Paypal!!

  126. Lauren


    07 September 2012 @ 11:15PM #

    Good for you. Like almost everyone here, I feel the same way about PayPal. It’s hard to leave because it’s so convenient, but they’ve been nearly impossible on more than one occasion. I’ve had accounts frozen more than twice and have even been cheated on PayPal because of their policies on intangible goods. Like you say, they have all the power of a bank without any of the responsibility. Thanks for the inspiration to take a leap and finally call it quits with PayPal.

    By the way, your site is beautiful. Looking forward to reading more of your posts.

  127. Stephen


    07 September 2012 @ 11:27PM #

    @Ben Polidore: I am using Windows & Opera 12 and the fonts are tough to read too. The lowercase e is practically non-existent.

    As to the story itself, great.

  128. Info


    07 September 2012 @ 11:48PM #

    I help companies add bitcoin to their revenue model, send us an email so we can help.

  129. codeglot


    08 September 2012 @ 04:23AM #

    100% with u. F paypal. Hold my 5k for 2 months just because my ip was in China. Mofos.

  130. Melvin Hoyk

    Melvin Hoyk

    08 September 2012 @ 06:29AM #

    Recently, I’ve got difficulty when doing a transaction to a service and after I stumped into your article, I had decided too. Here is a link for other service provided: http://www.webdesignerdepot.com/2012/09/leading-online-payment-services-to-help-your-design-business-flourish/?utm_source=dlvr.it&utm_medium=twitter

  131. A reader

    A reader

    08 September 2012 @ 08:08AM #

    …so, why don’t you ask the newly formed Consumer Financial Protection Agency at cfpb.gov for an explanation and an investigation?
    PayPal should be subject to their intervention.

  132. Andreas


    08 September 2012 @ 10:09AM #

    We used paypal for payment as many others around us. It offered a cheap and easy way to accept credit-card payments. All was well until somebody hacked are account and start to make payments. Paypal recognized this as fraudulent and blocked our account and the transfers. Well done !
    Our balance was around zero at that time as we just withdrawn to our bank account. I contacted PayPal and they say all was fine. The transfers where blocked and the account would be released.
    Nothing was more wrong. Paypal started to try to withdrawn the fraudulent money from our bank account. They said that should not be an issue as we could book the money back. But of course they charge a fee for that. Of course we blocked the transfer. Then they blocked my account.
    I contacted paypal to discuss the issue. I think it is wrong they want to charge a fee for an payment which is fraudulent. As the hacker tried to move money to a skype account I asked which account so we could go to the police. Beside that I was suprissed to see that somebody could move money with only an login and without second check (like any normal bank would use). They where not cooperative, simply reminded us that we need to unfreeze the bank transfer before the account would be released. Even canceling the account became impossible as the account was blocked. E-mail send where totally ignored. After three years and having paypal removed from our website we still get monthly mails that “something is wrong with our account and we need to take action”

  133. Megan


    08 September 2012 @ 07:04PM #

    Great post, thank you for sharing. You make a good point it that PayPal is only adequate until a certain threshold. Diminishing returns set in because of the zero tolerance PayPal applies to high quantity sellers. You would think they would adapt their structure for high volume sellers like most online merchant accounts.

  134. Alan The 3rd beast of 4th street

    Alan The 3rd beast of 4th street

    08 September 2012 @ 10:34PM #

    PayPal is okay – to pay for things. I have been in a couple transactions going the other way and settlement took a while longer than it had any business doing. Contacting anyone there is nearly impossible.
    If I had a business though, I’d skip PayPal entirely. It’s simple: the vast majority of people who have PayPal also have credit card accounts. That’s the way to collect. It may be harder to set up a seller’s account with Visa and MasterCard, but your bank should help you there and it will be over and done with.

    No need for PayPal. They are just leeches. But if you offer to sell my something via PayPal I just might use it if it’s convenient to me at the time.

  135. George


    09 September 2012 @ 03:20AM #

    Good riddance from my small business too..

  136. Kenneth Ellman

    Kenneth Ellman

    09 September 2012 @ 06:06AM #

    From Kenneth Ellman, ke@kennethellman.com
    Very happy to see that more and more people are realizing that Paypal is somewhat useless and appears to me to be a “legal” scam. There are many ways to receive payment ranging from the various credit card processing systems ( a large number to choose from) to ACH and on and on. There is just no reason for Paypal at all. Money can be sent all over the world with little cost or fee. Wonderful you realized Paypal is not for you.
    Get rid of Paypal and go to a normal financial institution or payment system.
    Years ago when they took money out of one of my accounts at the request of Ebay , without my permission, I then back charged Paypal. By doing that I immediately received my money back and permanently blocked Ebay and Paypal from access to my accounts. They could do nothing about it. I never deal with them for anything. Garbage to me. So many better ways to do business. Remember when they keep your money and “freeze your account” they Paypal still have use of that money. I doubt that they keep it in “escrow” and deny themselves any benefit. When you begin to understand how much profit and advantage things such as Paypal may be getting from delaying payment, you begin to see reasons to question that type of firm. Of course separate from anything else, their charges and fees are just ridiculous.
    Remember there are so many other financial institutions and payment systems used every day by business. You have many other choices.
    Thank you very much for your interesting story.
    Kenneth Ellman

  137. Rick Roberts

    Rick Roberts

    09 September 2012 @ 03:10PM #

    Bravo, and welcome to the ex-Paypal club. It’s nice here.

  138. Rainer Markiefka

    Rainer Markiefka

    09 September 2012 @ 04:45PM #

    Before longer time I had annoyance with PayPal… them do not need me, I do not need PayPal. I can live very well without.

  139. Adamfoxie


    09 September 2012 @ 11:10PM #

    This was a company with potential, but you have to have the right people in a business and your eye on your customers. They’re your bottom line! Never lied, never screw, know what you r doing. Pay Pal fill a need I had. They screwed me ( I was waiting for it already), lied and after the account being closed for months they just sent me notice my new card is in the mail…that well run still. They cost me money, but guess what, they lost it on some else’s. I know they violated the law but I find them so inconsequential that I let them screw someone with a good lawyer and take their azz to the ground hole.

  140. Matt Thompson

    Matt Thompson

    10 September 2012 @ 12:52AM #

    So is Google Checkout a better option? I don’t sell enough in a year to justify the merchant fees associated with payment processing companies. Anyway, thanks for the heads up and all the follow up comments. You all seem like genuine people with credible stories and thanks to you, I will NOT use PayPal for anything I sell after this point.

  141. Nick


    10 September 2012 @ 06:54AM #

    How about Bitcoin’s (http://bitcoin.org/)?

  142. lo sauer

    lo sauer

    10 September 2012 @ 09:20AM #

    I would like to know what has been going on in this company for the past decade – well pretty much since its creation.
    There are several points to consider:
    a) Paypal is no bank and operates pretty much by its own set of rules.
    b) Paypal is not very transparent – not even about its own set of rules.
    c) Paypal’s track record speaks for itself. Compared to the incident rate of frozen accounts at major banks, Paypal has several orders of magnitude higher rates of account freezings.

    So, good luck with your account.

  143. Steffen Hanne

    Steffen Hanne

    10 September 2012 @ 10:23AM #

    Hi, I was a customer of PayPal, but no longer. They closed my account because a buyer said the product did not reached him (the shipping was not insured as he exactly wished). Somewhere in the loooooong PP business rules which are also not suitable for the german law stands it is not allowed. Okay but it was my money and the risk of the buyer. PP believe allways the buyer. And I cannot take them to the court because they do not have a legal firm in Germany (But a big house south of Berlin). They are not a bank. My credit card firm do what I say and do nothing against me. PP did.
    Life is easier whitout them

  144. Tim Keay

    Tim Keay

    10 September 2012 @ 11:39AM #

    Really good article, thank you. I have a few ventures which may be springing up in the near future and, for me, Paypal would have been an automatic choice, following years of problem-free minor eBay sales. Following this, however, I will seriously consider all the options and alternatives. Thanks.

  145. Heribert


    10 September 2012 @ 03:47PM #

    Bravo to everyone who’s smart enough to leave paypal as soon as possible!
    I don’t think i have to tell of my experiences, others did so quite eloquently.

  146. Elliot Jay Stocks

    Elliot Jay Stocks

    10 September 2012 @ 05:18PM #

    Thanks for all of these comments, folks. I’ve just got back from the weekend to find the good news about Andy being contacted by PayPal’s CEO. Let’s hope he stays true to his promise — picking up the reins for a company like that can’t be an enviable role. However, I still feel it’s too little too late, which is what I said to .Net magazine in their neat summary of the whole situation.

    As enough has now been said on the matter, I’m now going to close comments on this post. Thanks again for contributing your stories and opinions!

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