GET INFORMED!!!
In the eyes of the SEC PayPal is not a bank. - But that hasn’t stopped it from Posing like one.
https://www.sec.gov/Archives/edgar/data/1103415/000091205702030120/a2085776z10-q.htm
The main Point mentioned in above link provided by Pay Pal Themselves
14.
LEGAL AND REGULATORY MATTERS
Bank Regulatory Matters
Because the Company is not licensed as a bank, it is not permitted to engage in a banking business. The Company does not require customers to keep funds in the Company's system in order to use the Company's product. Although the definition of a "banking business" varies among state laws, and is not limited to entities that take deposits, the Company believes that its principal risk of being deemed to be engaged in unauthorized banking activities, as indicated in the concerns raised by the four states described below, arises from the possibility that the Company may be deemed to be keeping money on account for customers or otherwise accepting deposits.
The Company has taken two principal steps intended to create the result that customers who carry balances available for future spending through PayPal are not "keeping money on account" with the Company:
•as of November 2000, U.S.-based customers who choose to carry balances have had the option of investing those balances through a sweep arrangement to purchase shares of the PayPal Money Market Fund, which is a registered money market mutual fund. These shares are held by the customer directly, and the Company does not become the owner of the underlying funds, as it would in a deposit relationship.
•as of August 2001, the Company changed its user agreement and the management of its customers' funds so that, for customers who choose to carry balances but do not enroll in the money market sweep, the Company acts as agent for the customers in placing their money in bank accounts, and the Company does not have discretion to loan out those funds, or spend the funds for its corporate purposes. The Company has established relationships with three banks under which it places customer funds outside of the Money Market Fund into Agency Accounts at these banks.
PayPal is a third-party processor platform vendor, also referred to as an aggregator. That means the company on boards merchants as sub-users of one, giant merchant account that includes the entirety of PayPal’s merchant base.
Within a traditional merchant account your funds are deposited directly into your checking or savings account within 48 hours from the time the credit card transaction is settled.
With PayPal, you must wait until the funds from the sale are deposited to your PayPal account before you can request another transfer of these funds to your business account, which can take another three to five days.
By holding on to your money longer in your Pay Pal account, the Company is collecting more interest on the
entirety of
their sub merchants base. AKA - Your Account X 17MM others . Placing those funds in out side Agency Accounts with three other Banks, SEC Filling specifically point 14. above. Unfortunately is not FDIC protected.
IMO this translates to facing greater risk as PayPal can terminate your account and or place a hold on your funds with no notice to you. In some cases Indefinitely. In the US regulatory banking system -that is Illegal. But they are not a Bank!
PayPal does charge extra fees relating to payment processing
1.5% Cross-Border Transaction Fee: For US merchants who accept online payments from buyers out of the country, or in-person transactions involving a card from outside the US, PayPal charges a 1.5% cross-border fee.
2.5% Currency Conversion Fee: If PayPal has to convert the currency before it deposits the funds in your own account, you’ll pay another 2.5% conversion fee. Whether you have to pay the conversion fee depends on the customer’s bank - whether it will handle the currency conversion (usually at a cost to the customer).
1.5%+ 2.5% + 2.9% = 6.9 % + $0.30
Visa and master card fees are listed here
https://www.hostmerchantservices.com/current-us-interchange-rates
most vendors charge + $0.10
There is also
$20 Chargeback Fee: Chargeback fees are pretty standard, and if a customer files a chargeback against you, PayPal will assess a $20 fee in addition to withdrawing the funds to cover the transaction amount the highest rated in the industry.
"Apart from the issue of account terminations or funding holds, the only other consistent complaint about PayPal is its customer service, and reports vary. Some merchants say they’ve never had a problem with customer service. Others say that their support reps have been downright unhelpful when they’ve called in. Fortunately, PayPal offers extensive self-help resources so you should be able to deal with most technical issues without having to contact PayPal directly."
Just Saying
