But... its a service you're buying, not an item. Wouldn't any service face the same problem?

Yes they do face the same problem. Pay pal shut down the accounts of a few people who were using it for a charity fund raiser. They couldn't prove to pay pal that they had delivered the products as requested cause like they didnt have any products to deliver they were just taking cash donations. Took them ages to sort it out with pay pals customer service people, and during this time no more donations could be taken etc, pay pals just to must hassle if you don't have to use it don't.

Pay-Pal is very particular about what they will accept as 'proof' in regards to disputes between sellers and buyers. They don't even accept e-mails or faxes from their own company.

You very well could face the same difficulties from any like company but Pay-Pal has garned a certain reputation as of late. They've had several class action lawsuits filed against them for restricting customers access to their accounts.

A few? That was a good few thousand people, and the reason they shut it down was because over $20,000 was deposited into the account in half a day (source). As I remember, the final figure was about $30,000 in just over 20 hours before Paypal pulled the plug.

I don't think IRE will experience problems on quite that magnitude (read the article for the full fun), but the principle remains the same. Paypal is indeed the devil.

Matt and the owner of PayPal were buddies back in High Scool, and were both stars on the track team. In their senior year their track team made it to the state finals, which were highly publicized in that region. Hungry for the media attention that would come with finishing first, and knowing that Matt was the better runner, he sabotaged Matt's treadmill the night before the big race, causing him to fall and sprain his ankle. He was ruined, and too ashamed to even attend the race. He swore off running forever, and went into computer programming.

They have been enemies ever since.

Currently working in an ecommerce company. Constant disputes / chargebacks / what not (small % compared with the number of sales we make), but as far as I know, our accounts for both PayPal and EBay are still up and running. What I gather is it basically depends on how much money they make from you, and who you know in the company. Then again, we do have something like 20k USD on hold in one ebay account alone *ponder*