Many people use PayPal to pay for and sell goods and services online. It is convenient, simple to use and always open for business. When you think about it, PayPal is a lot like a bank. It looks like a bank and acts like a bank, but there is one major difference. Using PayPal is a lot riskier than using a bank: 7 Big Risks
A good example of both would be how PayPal helped to make Mojang millions of dollars, and the decided that they hadn’t quite earned them yet: http://www.escapistmagazine.com/news/view/103385-PayPal-Freezes-750K-in-MineCraft-Devs-Account
You see, PayPal gets to decide the rules when it comes to transactions it handles. It can hold money that you have earned with little or no reason for an indefinite amount of time. The real damage is dealt when companies such as Mojang need to pay their employees, and can not because their payroll money is frozen. If a hold remains for long enough, a company may be forced under, unable to pay for its own upkeep. Its a hard lesson to learn, but one that is repeatedly taught to Indie game developers and small businesses all over the world.
Companies aren’t the only ones affected by this policy. Let’s say you sell a tv on ebay, using PayPal. The buyer sends the money, and PayPal puts a 21 day hold on it. At this point, even though the goods will be delivered before you are paid, you are obligated to send the item. That 21 day hold may turn into an indefinite hold. The buyer has his tv, paid for it, and PayPal gets to keep all the money.
So PayPal is risky, but there has to be a better way to make money right? Well lucky for you, here is a list of no less than 17 alternatives to PayPal. Take a look, shop smart, and keep your money safe: http://blog.webdistortion.com/2010/07/28/paypal-alternatives-e-commerce/