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And alternatives cannot gain ground because everybody uses paypal. It's a vicious circle. And one of my favorite examples for why monopolies are bad.

I don't see where the monopoly is. Customers are free to switch to a better payment processor by just changing a few links on their website.

If someone offered European customers better service than Paypal at roughly the same price, I'm sure it would be popular. But it turns out that handling transactions in 30+ countries is pretty complicated and fraught with bureaucratic problems, which is why Paypal remains the only option.

There are alternatives like nochex, worldpay, etc. but none of them have a better track record than Paypal.

Google Checkout? Amazon payment?

These are both great solutions, but there are strong geographical limitations for both of them (US or UK only).