This is an old thread, but in case anyone arrives here after searching and has a similar dilemma.
Having someone take a picture holding their ID to their face, so that you can match name and face, is an extreme form of KYC and verification. If you won't absorb the risk of this transaction, then don't do business at all.
Without assuming whether you would keep the money in a chargeback scenario, all of these measures already reduced the chance of the client even chargingback to something very low. Multiple the low probability of getting a chargeback with the low probability of losing the dispute, and you have a low enough p that you can factor that into your margin when calculating prices, so that effectively the legitimate clients are sharing the risk and paying for most of it.
If this is an amount high enough that you are not willing to take the risk, because your usual volumes are lower, you need to consuder your volume limit. You participate in a big market and your specialize in a volume range, you can't go too low or you are wasting your time, and you can't go too high because you don't have enough capital.
If you really want to extend your upper volume, do so gradually, and consider alternative payment methods more appropriate for higher amounts like direct bank transfers.
Also if you are going for really high volumes, investigate collection services or legal retainers, to intimidate into repayment. And if you go for reaally high volumes then maybe consider litigation.
But of course these volumes are not likely for someone using paypal for a gold trade. In short if you are using paypal, id with face verification is a good enough fraud prevention practice.
