"May 8, 2016: When you signed up for your PayPal account, you agreed to our User Agreement and Acceptable Use Policy. Because some of your recent transactions violated this policy, we've had to permanently limit your account.
Please remove any references to PayPal from your website."
They never mentioned which transactions violated the policy, we have never had any complains from our customers. There was no prior warning. We called them and they asked us to email them. We sent multiple emails and nobody bothered to respond back. We lost 30% of our recurring monthly revenue right away!
We now use Stripe as our sole payment service provider. After this experience, we will probably never accept Paypal again.
I guess this is how it is for most people, at least, I can use PayPal as a buyer on most online businesses I deal with.
PayPal support was so inept they claimed that I had not returned the merchandise despite giving them the DHL tracking number and shipping receipt multiple times and eventually they closed my case in favor of the merchant.
I had to keep calling and harassing them and finally threatening to have the charges reversed by my credit card company when they suddenly reversed their decision.
I will never use PayPal for anything if I can avoid it.
I immediately closed my bank account (PayPal wouldn't let me remove it while a refund was being made. Yes they were going to debit my bank account since I had no funds in my account, which I never kept).
Now they've put that amount in collections and honestly, as someone who cares about his credit, that one will stay the time until it's removed. I'm not paying them, or the thief.
I would raise the stakes a bit more and send PayPal a hard copy of supporting documentation and tell them that you will be disputing any negative report. Send this by a recorded delivery method like registered mail or courier. This means you can go to court and prove that PayPal had clear evidence of fraud and failed to take appropriate action. It also proves that they had knowledge of these facts prior to making the negative report to the credit agencies, which puts them in a bad spot if this all ends up in court. In the USA, the Fair Debt Reporting Act covers this scenario but similar laws exist in other countries.
Keep good documentation and send everything by a trackable method and never let these companies get away with ignoring you when you have a legitimate issue. Just make sure you are sure you have proof that you are correct, otherwise keep better documentation next time.
Forget all the policy problems. PayPal's basic technology platform doesn't work.
Has that changed?
Another thing to bear in mind is lots of people outside the "main Western" countries (for lack of a better term) still don't have credit or debit cards that can be used to pay online. PayPal accepts a lot of local payment methods and even lets you transfer funds from your bank account.
I live in Lithuania (part of the EU since 2004, and Euro since 2015) and only this year have major retailers started to accept cards online. Before that you would receive an invoice and have to make a bank transfer (each bank had their own online payment system merchants could integrate to make it more streamlined) before goods were dispatched. Even now most cards need to be opted in for online payments.
Paypal is huge: https://www.paypal.com/us/webapps/mpp/country-worldwide
And not enough people use Bitcoin to remove PayPal entirely.
EDIT: Yes, I know we have iDeal in the Netherlands. Every single company that processes it alongside other methods is either a nightmare to integrate, charges ridiculous fees, requires significant volume, doesn't do payouts over SEPA, or is similarly problematic as PayPal.
In my particular case, an added problem is that most of them refuse to process donations.
Money talks. If revenue goes up, then people use PayPal. It's that simple.
As a result, I feel it is much safer to avoid typing my credit card number into random websites. Thus, my first reaction to a site which asks for my credit card (directly or via Stripe) is 'OK, are there any alternatives which take a safer payment method'