Because in reality paypal is actually pretty awesome (note: I work for Etsy which uses paypal as a payment processor, so I guess I'm kind of biased). The cost for the business, compared to maintaining your own payments platform at scale, is pretty reasonable, and the failure rate is pretty miniscule when you consider the amount of potential fraud that goes through the platform.

Paypal wasn't really designed to handle one off personal payments, it was designed to let small (and large) businesses accept payments, internationally and fraud free. This is ridiculously difficult (how many of you have ever written software that integrates with a bank? ugh.) PayPal does this exceptionally well and because of that many huge businesses are built on its back.

The reality is, in most of the situations that people complain about freezing their money, without paypal their entire project would've been a no-go anyway.

I do feel for people who legitimately have their accounts wrongly frozen (I am one of them, though mine was unfrozen after a few days), but you have to understand how small a percentage of people that is, and that you can't have a system without failure. Again, paypal's failure rate, when you consider what they actually do, is astoundingly low.

Edit: Just for absolute clarity - I work for Etsy and have zero affiliation with the blog from the OP, and it has zero affiliation with Etsy. Also these are my opinions not my employers etc.

IIRC Paypal was originally designed for interpersonal payments.

Right on, Paypal was designed exactly for Bob to send Sally $10.27 for yesterday's lunch tab, according to Paypal's own promotion and vision on day one. Letting businesses, charities, and other orgs use it as a payment processor came quite a bit later.

I think it's safe to say that they, quite reasonably, figured out that the former is a risk-infested nightmare. Saying "hey, that actually cost $11, Bob!" is a minor thing in an interpersonal relationship, but when it has the potential to trigger a fraud investigation (think ex-girlfriend marking all 'casual' transactions as fraud after a breakup) you invite chaos.

So yes, they switched on that, but it's really not hard to see why. I wouldn't want to use it for personal transactions. (In Germany, we mostly use bank wire transfers for that.)

Well it was at least originally marketed as being for interpersonal payments, as a service that John Q. Public would want an account on for that purpose.

TBH you might be correct. I don't think that's what is currently optimized for, but even there, it still works pretty damn well. Haters gonna hate...

I wrote the software that integrates with WePay. They are a 'real' bank. Works great. ;-) https://github.com/lookfirst/WePay-Java-SDK

>> I do feel for people who legitimately have their accounts wrongly frozen (I am one of them, though mine was unfrozen after a few days)

This is the heart of the issue. Based on anecdotal evidence, there is little to no transparency in the freezing/unfreezing of accounts. This makes PayPal a cash flow risk to any business that relies on it for funding. I wouldn't be comfortable if my employees' pay depended on cash flow coming in from PayPal unless I had other dependable sources of emergency cash flow that could be tapped for indefinite periods of time.

It's good that your account was unfrozen after a few days, but what if you needed the money to pay your employees, so that they could pay their rents? Getting lucky with a short freeze is not a business strategy.

It's not that you are wrong, it's that this risk exists in every payment processor. Paypal anecdotally looks worse because it gets MUCH more press than other payment processors. A service that handles this better is a unicorn.

> These horror stories are so common

Don't take that for granted. PayPal has 232 million registered accounts, and many more unregistered buyers. Even if 99.99% of PayPal account holders were completely satisfied and never had any problem, that'd 0.01% would still be 23200 pissed off people.

Is it right to wonder "does anyone still use PayPal" if 99.99% of PayPal users have no problem using the service?

The problem with PayPal, and the reason why these horror stories exist at all, is simple: the entirety of PayPal's dispute-resolution system seems to consist of "the system flagged it, tough luck". And the only way to get actual service from PayPal past that point is to raise a massive cry of bad PR for them online.

So, yeah: if they don't want to deal with their customers, we can fix that by encouraging a situation in which they have no customers to deal with.

Because buyers keep demanding sellers use it. If you're a buyer, it's about the most painless thing out there. I got forced into it by a client once for that very reason. Unfortunately PyPal froze his account with about $20k in it. We switched to a real merchant account and everything went uphill from there.

Is there a current best alternative to PayPal that you would recommend?

You have two basic options: 1) A proper merchant gateway solution 2) A third party payment provider with better terms of service.

On the first, I have generally recommended TrustCommerce both due to their emphasis on security (having reviewed their Perl and PHP API classes directly) and the richness of services they provide. They do cost more because Paypal gets a tremendous volume discount, but it's an option. For online payments also you have additional PCI-DSS worries that are burdensome for small businesses.

The second option includes solutions like Amazon Payments. I currently use Amazon Payments because I process 4-5 transactions per year. At that volume it isn't worth maintaining my own merchant account and certainly is not worth worrying about PCI compliance......

I've used Authorize.net + a merchant account at a real bank a few times. It works, every time.

BrainTree is awesome too.

If you're doing subscriptions, http://spreedly.com/ is good.

And Stripe looks cool but I've never used it. (https://stripe.com/)

Taking credit cards on your own site with a merchant account and gateway. But it'll almost definitely cost you more, you'll invest 10 times the resources into handling and stopping fraud, and some customers won't trust your site with their credit card. The reality is PayPal has a lot of benefits for both sides.

Samurai is really good http://samurai.feefighters.com priced similarly to paypal at 2.3% + 30 cents

You really need a true merchant account plus gateway.

This looks seriously promising - I love that it doesn't require user sign-up. Their site is brilliantly designed, too.

Mainly international payments. Plus, customers are more likely to already have an account with them, and no one feels like signing up for a new payment system just to buy something at your store.

I'd be curious to know how conversion rates vary when you have Paypal vs. a merchant account (or something like Stripe) vs. both. Anyone have any data?

I have several websites; some sell products, some monthly subscriptions, some target consumers, some businesses.

Universally, on all of these sites, customers choose to pay with PayPal more often than credit card. For the most part, my payment pages are a secure credit card form with a "or Pay with PayPal" button to the right of the form. More people choose to click through to PayPal than to just put their card in to the form already on screen.

The preference for PayPal is larger outside the US among my customers.

Have you added Amazon payments as an option as well? I would choose that every time, given the choice, if for no other reason than Paypal is always trying to trick me into paying from my bank account, when I really want to pay with credit card for rewards and security. Amazon doesn't try to trick me.

same here - my preferred options are amazon, credit card and if there's no alternative and i really want whatever it is, paypal.

40% of my customers will only pay with PayPal. I went without PayPal for about a month at one point and sales were down dramatically even though I still had credit card and other options available.

There is no good alternative. Existing alternatives require additional user signup, and the fees are the same.

The Internet needs a good Paypal competitor.

Because it is what most sellers offer for transactions.

Because – as a buyer – PayPal is quite awesome.

Im guessing this rant was submitted and upvoted by the developers of Stripe. Paypal works.