Currently we have two choices. You have banks, which are huge, bloated, slow, massive barriers to entry. If you want to build an MVP and accept payments right away, good luck with a bank. But your money is safe.

On the other hand, we have PayPal. Sometimes they steal your money. For a very small business, paypal is easy to get going with. Millions of small business people have decided that this tradeoff is right for them - worst case, you lose a few grand.

I'm hoping congress doesn't turn PayPal into a bank. If they do, we will only have one choice (banks), and life will be harder for smaller businesses.

Thousands of very small businesses have decided PayPal's offers the right set of costs/benefits, why do we want congress to second guess them?

Then perhaps congress should force Paypal to clearly advertise that they make serious errors and steal from you, so that these small businesses are clear on the choice they are making.

>advertise that they make serious errors and steal from you

Might look a bit like a truism .. Paypal bank is a bank?

Seriously though even knowing that Paypal mess up and take money and have terrible customer service doesn't mean that they are necessarily worse than a highstreet bank. Banks mess up and have poor customer service too - admittedly knowing the occurrence rate of monies taken on both sides would allow the price to be weighed against the negative factors (of both Paypal and regular banks) in a more transparent way.

> I'm hoping congress doesn't turn PayPal into a bank

I'm hoping this doesn't mean you think any new regulatory oversight on PayPal would bring more harm than benefit.

In principle, I'm sure one could come up good regulations. In practice, I'm leery of congress's ability to do anything besides make PayPal more bank-like. That would be bad, since if customers really wanted a bank, they would already have a merchant account at one of {BankAm, Citi, Chase, PNC, ...}.

Some sort of "cc-number portability" regulations might be useful - i.e., if your customers saved their recurring payment cc-number into PayPal, you can take the cc-numbers to a new service provider. It's a minimal intervention which empowers customers.

I'd also be interested in having congress create a BankLite category of institution - more protections than PayPal, but not as heavyweight as BankAm. Some people want something which is 51% paypal, 49% bank, and a BankLite category might fit their needs better. Shoehorning PayPal into this would be a bad idea, but creating the option might be helpful.

[edit: As suggested by extension, better disclosure of PayPal's non-bank like nature would also be very helpful. Minimalist regulations which enhance customer choice/knowledge are awesome.]

I've been using PayPal since 2001 when I signed up in order to send Sluggy Freelance a $5 donation. Since 2002 I've used it increasingly for payments from my freelancing customers - there was no other convenient way to get money from Europe to America, and PayPal revolutionized the translation industry (along with Moneybookers and similar services, but PayPal is the biggest).

Not once have I had any problem with them.

Jacques, I've had a bank - a real live regulated bank - deduct my paycheck instead of depositing it, and not notice until I complained. Granted, they fixed it immediately when I complained, and PayPal may not, but human error does occur. Certainly PayPal has never gratuitously deducted money from my account.

Here's the thing though: when the bank made a mistake, you had recourse. You actually had someone to complain to - you could go to a branch or otherwise deal with a human. With paypal, you have no recourse, except to hope your case gets voted to the top of Reddit and some paypal insider takes pity on you.

There are several 'internet only' banks, or phone only banks. You have a similar amount of recourse with those.

you're overestimating the worth of that human- retail banks are generally franchisees, and they have very limited powers. If the problem has to be escalated, you're in the same place as you would be with Paypal, except BoA insiders don't read reddit.

You're with the wrong bank maybe. Once upon a time I overdrew my account by $10 and was charged $35 overdraw fee. My account balance became -$45. Someone sent me $50. I then withdrew another $50, and because the account balance was negative again, I was charged another -$35 and left with -$80. When I found out I was angry, I knew the rules were that if you overdrew your account you have to pay a fee, but it seemed ridiculous that they'd charge me twice when it only ever briefly went over 0 again. So I went to my local branch and asked one of the bank staff about it. They apologised and reversed not just the second overdraw fee but both as well! Quite happy with my bank that day; The rules were there and I knew them but they still refunded all my fees back.

I can't even imagine a Chase teller doing that, and I like the people at my bank.

It was the commmonwealth bank of australia.

I'm from the US, perhaps that's why we don't see eye to eye?

The ability to go into a branch and refuse to leave until something is done is not a silver bullet, but it's something. If you happen to run in to 2 or three other unhappy customers with the same idea, it's even better.

> Certainly PayPal has never gratuitously deducted money from my account.

I'm happy for you and hope that you will never be in my shoes.

Likewise. Sorry you're having troubles. I agree with the sentiments elsewhere in the thread, that you should take it up with the European banking authorities.

I think the whole thing will end up revolving around whether or not giving paypal access to your bank account gives them carte-blanche to remove and / or deposit money at their whim.

I would argue that they don't, that they need an explicit instruction from me to do so, they will probably argue that they don't need any permission at all, that the permission once granted stays granted until explicitly revoked.

I've been using PayPal regularly for over 10 years as well, as in, almost daily, for work. I, too, have never had a single problem. I have had occasion to call them for phone support in one instance where a PayPal debit card was stolen, and in another where there was an error in my account balance, as something was deducted twice. In both instances, they were very helpful and had the matters resolved in minutes.

I'm not discounting the problems other people hav ehad, just sharing my own experience with PayPal.

"Granted, they fixed it immediately when I complained, and PayPal may not"

That seems a rather large caveat.

I second that. I run my entire SaaS business through PayPal, dozens of transactions each day, and while I've had a few problems with large payments being flagged as "suspicious" they've not resulted in me losing any money (as far as I'm aware... ;-).