Good riddance, PayPal
The customer service angle sucks, no question, and I'm worried about getting into similar trouble (I sell downloadable games via PayPal).<p>But I actually think holding an issues worth of revenue in reserve is a decent enough compromise. If the company goes bankrupt before an issue ships, for whatever reason, PayPal themselves are going to be on the hook for refunding every single payment, as well as chargeback fees that may apply.<p>PayPal's fees are around 5% - what's their gross profit on each transaction, 1-2% at most?<p>So if there's a 2% chance of an issue going awry and angry people starting chargebacks, a magazine <i>50 issues old</i> could turn into a net loss for PayPal <i>overnight</i>, which is why even merchants with long and clean track records get stung by this.<p>PayPal's freeze on that money means their end is covered, and you can still bring the sales to a bank and get a line of credit to cover the printing costs.<p>The way PayPal handles the customer service end rightfully earns their horrible reputation. But too many people act like the risk itself is not there, or that there's a clear, obvious line between fraudulent businesses that con artists start and solid trustworthy businesses that we start. If PayPal wasn't as aggressive with their fraud prevention, they'd be skinned alive.<p>And, as other people are pointing out in this thread, standard merchant accounts are not immune from the same level of shoot first, ask questions later fraud prevention.