"On May 15, 2007, PayPal announced that it would move its European operations from the UK to Luxembourg, commencing July 2, 2007 as PayPal (Europe) S.à r.l. & Cie, S.C.A.[33] This would be as a Luxembourg entity regulated as a bank by the Commission de Surveillance du Secteur Financier (CSSF), the Luxembourg equivalent of the FSA.[34] PayPal Luxembourg will then provide the PayPal service throughout the European Union (EU)." -- PayPal's Wikipedia page.
This status, within the EU, provides some protection for both businesses and customers.
For example, Soldier's Angels had their entire PayPal account disabled for simply processing the payments for a raffle where one prize was a pistol.
They were simply selling raffle tickets for someone else's raffle, and they're a registered charity, but PayPal is very strict: it's "relate[d] to sales of … (h) ammunition, firearms, or certain firearm parts or accessories", so boom, account disabled.
You have no recourse if they screw you (e.g., by suspending your account and keeping your money for 180 days).
Unlike a bank they will terminate your PayPal account if your store lists items they find objectionable, such as anything related to firearms.
http://www.keepandbeararms.com/information/XcIBViewItem.asp?...
See the recently launched GunPal for a response to this.
http://en.wikipedia.org/wiki/GunPal
PayPal might not be evil, but they are certainly not operating with your best interests at heart, and -- unlike a bank -- they aren't regulated.