Ha, so I got charged back on for $256.50, and submitted my video proof of the transaction going down, but they claim it isn't valid proof. Now my PayPal is -206.50 because I bought some thing off of eBay before the charge back. PayPal thinks I'm going to pay them back, when it is their stupidity for allowing the charge back to take place. PayPal is full of idiots, I swear.
PayPal is what is known as a "Payment Aggregator", and therefore generally merchants are not protected by PayPal except in hard proof situations.
I'll try my best to explain the PayPal model.
As an aggregator, PayPal has it's own "merchant acquiring bank account", meaning, a bank which is willing to "pull funds" from another bank to do processing. With this bank account, PayPal says it will act as a "Maser merchant" on behalf of hundreds/thousands of smaller merchants. When you sign up with PayPal, you are agreeing to act in accordance with using their own bank account (they hold funds from lots of people, and present it to you as a ledger system so you know how much of the pool of funds is actually yours).
There are two ways a chargeback happens on PayPal. One is through issuing a dispute directly through PayPal. This is when PayPal become the mediator and ultimately decides who the funds to go to. Very little risk for them, because people generally don't know about the second way.
The second way, is to go to your direct issuing bank which you use to put funds into PayPal, and issue a chargeback there. What your bank will then do, is issue a chargeback against PAYPAL's bank account. When that happen, you are SOL.
PayPal's model depends on protecting it's own bank account from potential chargebacks while maintaining a large pool of funds from millions of individuals. People generally do not know this, but PayPal has an accepted payment rate of only about 40% - 60% which is done again, to cut down on their own fraud.
Shameless plug
One of the reasons why PA is an ideal processor for virtual goods, is because our risk management system was built specifically to support virtual sales, where PayPal's is not. We therefore screen again historical data, email/phone/ip/device ID reputation to screen out suspicious payments pulled from third party and proprietary data sets.
Additionally, we have the added bonus of being one of PayPal's first clients. We have a
long standing relationship with them.
Just out of curiosity OP, how did they classify the items you sold, and what were the commission/fees they took out of the transaction?
jake
