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Comment by return0 | Hacker News Reader

  Unfortunately PayPal is pretty much an unregulated bank and
  there are a number of horror stories about them closing accounts, 
  freezing funds and making life very difficult for entrepreneurs.

Actually, in Europe, paypal IS a registered, regulated bank in Luxembourg. That, to me, makes it more credible.

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In addition many of the "freezing funds" stories are actually about holding a rolling balance in case of chargebacks.

No normal bank can hold your founds for 180 days for "review". If any bank in any EU country tried to do that, they could get sued to hell. Yet paypal can get away with it, but how? I don't know.

The 180 day hold is standard practice. Virtually all US merchant account agreements have clauses specifying when a reserve account, holding part or all of the merchant's transactions, will be established (when? at the processor's discretion, really). If the merchant is terminated, funds in that account are held for up to 180 days to cover future chargebacks. PayPal inherited that from the two banks underwriting all their accounts -- Wells Fargo NA and JP Morgan Chase. The policy predates PayPal's founding, and isn't anything unusual.

If they did that to you, you should sue them. They are a bank like all others

So what does that mean in practice?

They require lots of documentation when you register as a business. They also have to comply with EU regulations, which, hopefully, also protects us as business owners. IANAL, so i don't know what are the practical implications.

http://en.wikipedia.org/wiki/PayPal#Regulation

They pay very little tax

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