I want to share how terrible PayPal turned out to be. I’ve been using PayPal for 20 years, and now I don’t even know what to do. I’m warning everyone about how PayPal can take away your money. On December 3rd, I got an order for 5 sponsored posts on 5 of my websites. I wrote the posts, published them, the client approved them, and asked for an invoice. I sent a PayPal invoice, including the 5 URLs of the posts and a description of the service. The client paid the invoice, and I received $125, marking the order as paid. Two days later, PayPal froze the $125, saying the bank had informed them the money was taken without authorization. I called support, explained why I received the $125, and guess what? For the first time in 20 years, I was treated rudely. The support agent said I must prove I sent the client a product. I explained these were services, clearly detailed in the invoice. The payment was made for the invoice, not just randomly sent to me. They said the bank opened the dispute and that they couldn’t do anything. I responded to the dispute, explained in detail why I was paid, and resent the links to all 5 posts. The bank that opened the dispute didn’t reply, so I thought the money would be unfrozen in 10 days. No! After 10 days, PayPal took the $125 and fined me $15 for losing the dispute. I called support again, explained everything, and demanded they check my published posts and the sponsored links in each one. I also asked them to check who paid the invoice. The invoice was paid from the website I promoted, so everything was 100% clear and honest. I asked to re-open that dispute, but a few days later, I was again declared the losing party. So basically, if someone pays you through PayPal, they can just take the money back—even months or years later—and you’ll also have to pay a fine for losing the dispute. How is this even fair? I did the work, but not only did I not get paid, I also lost $15 because PayPal fined me. And do you know what the most dishonest part of this situation is? PayPal didn’t issue a refund from the original transaction—they withdrew $125 plus a $15 fine in a new transaction. I might not have noticed it at all if this wasn’t an account I specifically use for receiving payments only. That’s the only reason I realized $140 had disappeared. When I lost and demanded that the dispute be reopened, it was closed again a few days later without even notifying me. I didn’t receive any email saying I had lost the dispute again. It’s January 8 today, and the second dispute was closed on December 31. To make things worse, that transaction still shows as received, so now I even have to pay taxes on it. So, in total, I lost: - $15 as a fine for losing the dispute, - Around $25–$30 in taxes I’ll have to pay for "receiving" $125. That’s a loss of nearly $40–$45 for doing the work and not getting paid. They charged me even more: I received 125 USD and they charged commissions, in total, I received 118,59 USD. But they "refunded" 125 USD + 15 USD fine. The dispute was opened by the client's bank, and not by the client.
And do you know what the most dishonest part of this situation is? PayPal didn’t issue a refund from the original transaction—they withdrew $125 plus a $15 fine in a new transaction. I might not have noticed it at all if this wasn’t an account I specifically use for receiving payments only. That’s the only reason I realized $140 had disappeared. When I lost and demanded that the dispute be reopened, it was closed again a few days later without even notifying me. I didn’t receive any email saying I had lost the dispute again. It’s January 8 today, and the second dispute was closed on December 31. To make things worse, that transaction still shows as received, so now I even have to pay taxes on it. So, in total, I lost: - $15 as a fine for losing the dispute, - Around $25–$30 in taxes I’ll have to pay for "receiving" $125. That’s a loss of nearly $40–$45 for doing the work and not getting paid. They charged me even more: I received 125 USD and they charged commissions, in total, I received 118,59 USD. But they "refunded" 125 USD + 15 USD fine. The dispute was opened by the client's bank, and not by the client.
This is how PayPal processed a refund: they left the original transaction as "received" and charged me $125 + $15 (fine) through a new transaction. There was no explanation provided for this charge or why it occurred. I might not have even noticed this so-called "refund." In this way, PayPal took money in a sneaky and secretive manner. This "refund" doesn't even look like I was charged anything. It's displayed in green, making it appear as something I received or a conversion between EUR and USD, rather than an actual charge.
Update: The client paid me a new invoice plus the expenses PayPal charged me. However, for the first time in 20 years, PayPal was treating me as if I were a scammer. They took 40 minutes to respond, told me they don't like my tone, and then hang up the call. Twice. They hung up the call twice because they didn't like my tone. I have no idea what's going on. Because of their mistake, I now have to pay taxes on the "received" $125, and my client had to pay me an extra $25 to cover all PayPal charged me. We all lost—except PayPal, who got their commissions.
I’m not sure how legal it is for PayPal to now charge a fee when opening a dispute. From what I understand, the additional €15 that PayPal took from me is a percentage, not a fixed amount. €15 equals 12% of $125. So, hypothetically, if tomorrow I send someone €5,000 and later claim the transaction was unauthorized, the recipient would not only lose the €5,000 I sent but also have an additional €600 (12% penalty) deducted from their own funds. I don’t understand how this can be legal. Charging a 12% penalty seems questionable. Moreover, penalties cannot simply be imposed arbitrarily. How does PayPal justify the €15 fee to tax authorities? Would it be categorized as revenue or as a service fee? If it’s a service fee for handling disputes, then PayPal is not fulfilling that service. I provided all the evidence and explained why I was paid, which would have taken PayPal no more than 10 minutes to verify. However, instead of investigating, PayPal simply deemed the transaction unauthorized and deducted €15 from me. How many disputes are opened every day? How much do these 12% fees add up to? How much money is PayPal collecting from these penalties? What if tomorrow I’m the buyer, and I get scammed? If I open a dispute and lose, not only would I lose the money I sent, but I’d also be hit with a 12% penalty. What kind of illegal fee is this? No matter who is at fault, PayPal always profits. The real issue, though, is that if PayPal charges 12%, they should at least conduct a minimal investigation to determine who is right and who should be protected — the payer or the recipient. In my case, the fact that the client ended up paying me again (this time including $15 for the penalty and $10 for phone calls with PayPal) proves that I was in the right. Yet, even in this situation, PayPal neither apologized nor refunded the €15. Yes, I got those €15 back from the client, and we’ll settle things between ourselves. But the fact remains: PayPal got €15 for the service they never provided. What’s worse, PayPal didn’t issue a refund. The first transaction still shows as received in my account, but the penalty was taken out separately in a new transaction, creating confusion. That transaction doesn’t even look like a fee or payment; it’s disguised. To me, this looks like a financial crime. I’m considering filing a lawsuit.
Here’s the breakdown based on my situation: I received $125. After PayPal’s transaction fees, I got a net of $118.59. Meaning PayPal took $6.41 as a commission. PayPal charged me €125 (instead of deducting it from the initial payment). This allowed PayPal to avoid refunding the $6.41 commission. Additionally, PayPal fined me €15 for losing the dispute. The buyer paid me again, covering the original amount plus the expenses PayPal charged: $125 + $15 (fine) + $10 (phone calls) = $150. PayPal charged a transaction fee on this payment (around $8). In total, PayPal got around ~$30 in commissions and fines. I will lose 25-30 euros in tax. My client paid $25 extra. So, welcome to the new PayPal rules, where you're always the one being ripped off. .
In all this discussion, I do not see your client's role. First, the bank doesn't just get up and open a dispute. They must collaborate with the client. During the dispute, what did your client do? Did he share the information with his bank in your defense? Chargebacks are not like earthquakes. They don't just happen. Someone filed a complaint to the bank, the bank disputed the charges, and PayPal had no proof from the client to support your claim. What would you do? Who would you believe the bank with a complaining client, or the service provider with no way to prove deliveries?
My client from the first day of the issue, offered me to pay again. PayPal support confirmed the dispute was opened by the bank, and not by the client. PayPay even didn't check my proof in the dispute chat. Client paid a new invoice + all PayPay expenses. PayPay had to suspend the transaction and check It before release and make me belive I got the payment. PayPay didn't refund, instead they charged me the full payment of 125 + commissions. From that transaction I got only 118 USD, not 125, but PayPay chsrged me 125 USD + 15 USD. This is a fraud. Imagine the situation when you do your work, get the payment, PayPay release It, and you give your client all passeord, templates or text, and the Next day PayPay takes back all money + high commissions.
This is nothing new. Paypal has been notoriously biased against sellers for decades. I only use Paypal to buy things.
This is not just "biased", this is a scam. They charged a fee on the amount they received that they released. So they assured me that I could be sure that the customer paid. I responded to the dispute and provided 100% proof of service. The bank that opened the dispute did not even respond after my comment. The $125+15 was debited by PayPay in a very suspicious way, it's not even reflected in the PayPal movements. The "refund" looks like a currency exchange, but not like a charge. .
PayPal was good for me until they committed this scam. PayPal is good for you until one day they scam you too.
By the way, if you received the money and everything is ok, then within 6 months or 1.5 years (I don't remember), PayPal can take the money you received from you in the same way. Now imagine that you did a work, a project that took a month or more, or sold your website or app, etc, received the money and gave the client passwords and files, and tomorrow PayPal will take this money from you + a commission in %
There are alternatives out there such as: Shopify Stripe Apple Pay Square Skrill Amazon Google Pay Venno Payoneer
I didn't ask about what is the best online payment system. I talked about PayPal scams and provided evidence. I understand that if a payment is not paid from a PayPal account directly, it may not be authorized or the payer may not have enough funds in the bank. But in such cases, PayPal freezes the transaction for 1 to 21 days. I would understand if PayPal froze the transaction after receiving it. However, they released the funds, which gave me confidence that I could continue providing the service. In this case, I was able to cancel the service when the problem arose. Besides, my client was a fair person, who offered me to pay again and even cover my expenses - PayPal fee, fine, and phone calls to support. But what if I had already sent the client all the files, passwords, or sensitive data? I would have lost not only the payment but my own money - through no fault of my own. The transaction was for $125, and PayPal's initial fee was only $7. However, after this scam, PayPal ended up taking $30. How many times has PayPal done this scheme to other clients and how much extra money did they make from it?
Instead of crying like a little baby because you lost a tiny bit of money, you can just switch...simple.
Are you normal? It's not just about the money—it’s about PayPal being a scam. As I understand it, the "fine" isn’t a fixed amount but a percentage of the disputed sum. So what if I had done a job for $2,000 or $3,000? I wouldn’t just lose the payment for my work—I’d also be forced to pay $100 or more out of my own pocket. For what? Because my client paid me using his bank account and not PayPal funds? And now, I’m supposed to just "stop crying like a baby"? If tomorrow someone beat you and robbed you, and when you went to the police, they told you "Why are you crying like a baby? Move on..."