PayPal is making a ton of money by charging these fees. This is something they started in the later half of last year (2010). A recent post on this same topic can be found here: https://www.paypal-community.com/t5/Fees/Fees-and-more-fees-that-is-the-question/td-p/171024/jump-to...
Plus, why idoes it take 3-5 days to deposit your "own money" from PayPal to your bank, but takes a split second to withdraw money from your bank account to PayPal? The answer to that question is float! Float is the time it takes PayPal to take your money and put that money into your bank account. The longer this takes, the longer PayPal has to play with your money. Since none of the money PayPal makes is their own, they float your money as long as they can which results in profits for PayPal. For every day you leave your funds in your PayPal account, PayPal makes money off those funds. This is also how your bank also works. Keep that minimum average balance and your bank account is free. Go below that balance and the bank charges you. PayPal however charges a fee for everything. When you receive money, PayPal is there to collect that fee instantly. Then you withdraw and PayPal is there to slow down the deposit so they can collect off your money. But wait a minute. If you write your friend a check and he deposits that check in his account, is he charged a fee for that? When your employer does a direct deposit for your paycheck, does your bank charge you for that? NO! But PayPal will... So why does you bank not charge you for this? It's because they do not make those funds available to you instantly which means they too are floating this money. But at least your bank doesn't charge you a fee for that.
For vendors who accept credit cards this float time is generally not as long as it is with PayPal. At the end of the day you "batch out" your credit card transactions and within hours the money is deposited into your bank account and made available almost instantly. Different credit cards can take longer for the deposit, but once in your account the money is available. For example, American express can take 2-3 days on average before you receive your money, but once in your account, you can spend it. But generally your Visa and Mastercard is deposited same day. PayPal however is dragging their feet on every withdrawal you make which is generating PayPal a HUGE paycheck when you factor in the amount of money that is exchanged through PayPal. PayPal's average float of your money is in the billions!!! Wouldn't you like to have an average balance like that?
I have nothing against a business making money, but ethics do need to play a part in how you make your money. Ethically I feel PayPal is pushing the envelope and the reason might be because of a lack of regulation. We live in the digital world and the distribution of money is instant. PayPal makes you believe PayPal is safer than using your credit card, but that's not true. You are MUCH safer using a credit card to make purchases on-line. I've been ripped off several times using PayPal and now if I do use PayPal to make a purchase, I use my backup funding credit card to do so. This is probably the safest way to protect yourself. If you're using PayPal money that is in your PayPal account or bank, you are in a HIGH risk situation. Do yourself a favor and use a credit card. You are protected by your credit card, but at risk if using PayPal.
PayPal still has momentum because people are not educated about how PayPal works and how well protected you are using your own credit card. PayPal pretends their method is safer, but those who have already been burned by PayPal will argue this including myself.
