The chargeback, of course, is a cost of doing business: if anything, PayPal's chargeback rates are actually quite low (as they have such an extensive system for handling disputes internally) and as a seller of pure digital goods I've been amazed that I often win true chargebacks that are marked "unauthorized charge" (which really shouldn't happen: its really just buyer fraud) as PayPal argues the case on my behalf and can demonstrate "the user really paid for this".
What sucks, of course, is that the user got double-whammied on the currency conversion, but I really hesitate to blame PayPal for this... if anything, I blame the Indian banking system, which has decided to put in place the laws that state you aren't allowed to hold balances with your credit card processor; the result of this is that your balance in India has to be forced out of your PayPal account every day, even though that money could be charged-back at any time.
As for the money being credited back the first time and not the second, that's quite common: he didn't realize that fee existed the first time, so the customer support people there "let him slide" and credited everything back; however, the second time he really should have known that was going to happen... no one, to be clear, is forcing him to use PayPal; in fact, his country really doesn't want him to be using PayPal, and he's doing so anyway. If he were in a country that didn't have laws making it difficult to use PayPal, he wouldn't be having such a difficult time doing so.
Thankfully, this person does seem to understand that RBI is at least somewhat of a problem here: he even wrote an even angrier message about RBI making it nearly impossible for him to buy things from people online using PayPal.
http://www.yash.info/blog/index.php/entrepreneurship/reserve...
What I find ironic about this other article is that in this piece on PayPal he's angry that he can't just let his Indian bank handle things for him, but in his other article he's slamming the Indian banks and wishing he could use PayPal.
> Every time I spend $$ for something where I could have used my PayPal balance I have to give a cut to some worthless Indian bank for using the credit card!
To be clear: if he were in some other country, he'd be allowed to store a balance at PayPal in relation to his outstanding chargeback risk. Additionally, he'd be able to store his balances in his native currency. If he wanted to convert the currencies back/forth, he'd be able to do so on his own schedule and be able to do it to his outstanding balance (as opposed to while immediately moving funds), giving the flexibility to get the 2.5% rate (which really isn't that bad) for all conversions. In fact, he'd probably not have to do the conversions at all, as he could sell the software in his native currency and have the buyers do the conversion from whatever currency they have, rather than doing it from dollars on his end.
PayPal really does go to great lengths to make this stuff work and generally work well, but everyone is being screwed here by RBI's policies (which, to be clear, might have some underlying good reason I just don't understand because I'm not privy to India's political requirements): I mean, let's put it this way... he's still using PayPal, and yet he hates it that much? PayPal's not doing that badly here...