PayPal vs. 2Checkout

[Paul M]

Ok.

Ive never had any of my accounts frozen, or inteferred with in any way, nor been asked for whatever paperwork you are referring to. What country are you in ?

[Alfa1]

Im in the Netherlands. Though such issues are common, it doesn't happen to everyone.

[Ramsesx]

Can confirm this in Germany too, paypal would be a perfect payment solution if they wouldn't act like jerks with own rules outside all norms.
Some years ago I used paypal as a payment provider to bill premium memberships on my forum. Because my forum contains some legal adult content (no porn) I asked if it's against their TOS. I received a mail from paypal customer service "yes you can use paypal for this".
8 month later they have frozen my account and I asked why they did this although they gave me the permission before to offer paypal as payment solution.
The answer was a standard mail (translated):
We are sorry but we can't undo the restrictions of your account.
Your account was deleted because you violated our Paypal TOS for adults."
Ok, I was lucky and could still draw all money from my account but I was very disappointed about how they treated me.

From wikipedia:

Several PayPal gripe sites have been created complaining of problems such as the freezing of accounts of eCommerce stores if they experience rapid growth, preventing them from being able to pay suppliers and fulfill orders.[71] One such site, Paypalsucks.com,[72] ranked third on a Forbes Magazine listing of "Top Corporate Hate Web Sites" in 2005 based on "hostility" and "entertainment value" of web forum postings and other criteria.[73]

In June 2008, the Australian Competition and Consumer Commission found that, "The evidence available does not support the view that PayPal is the most secure method of payment, or offers the best service for all transactions."[74]

In February 2010, PayPal stopped or reversed all "personal" transactions in or out of India without prior notice. Funds already transferred and transactions that had previously been "completed" were reversed leaving many vendor accounts over-drafted. Companies, contractors and service providers throughout India were left in debt to PayPal for services they had already provided when PayPal, without warning or consent, returned funds vendors had already received and withdrawn.[75]

In spite of its international reach, PayPal has limited functionalites for multi-country users, most notably the impossibility to have bank accounts in several countries, or to have a shipping address in a different country than one's bank account / credit card.

In March 2010, PayPal froze donations to Cryptome, seizing over $5300 of in-transit donations.[76] PayPal refused to inform Cryptome of the reason for this action, claiming that to disclose why the donations had been confiscated would violate Cryptome's own privacy.[77] A week later, PayPal offered an apology, which was rejected by Cryptome founder John Young as "insulting and unacceptable".[78]

In September 2010, PayPal froze the account of Markus Persson, developer of independent video game Minecraft. His account contained around €600,000.[79][80]

Also in September 2010, PayPal froze the account of the open-source revision control software TortoiseSVN. The lead developer compared the situation to a car shop that "decides not to do business with you anymore. ... But then the shop owner tells you that they keep your car for half a year first because that's their policy."[81]

In December 2010, PayPal permanently restricted an account used to raise funds for WikiLeaks citing it was in violation of the PayPal Acceptable Use Policy. At a conference in Paris, a PayPal VP, in response to an attendees question, stated the account was restricted after PayPal was allegedly pressured by the U.S. State Department.[82] Afterwards, PayPal reiterated the decision was based on violation of PayPal's Acceptable Use Policy. This was followed by cyber attack on the paypal.com website and a small boycott of PayPal, in which some users closed their PayPal account in protest.

[Alfa1]

Mind that once an account is frozen ('limited'), the account holder is given the runaround, and the paypal system seems designed to drive people into despair. Often the reason for the freeze is not given. Support often does not respond. Contacting support by phone does often not result in clarification or helpful response. The paypal system makes you select answers that do not apply or make things worse.
For example: my account was frozen and after repeated phone calls & emails I resolved many of their 'issues' and jumped through their hoops. Each issue was according to paypal 'the only thing that needs to be resolved to get the account in order'. But there always is a new issue. They even unfroze my account for a day but then froze it again. Unfortunately I was not able to get the money out.

Recently it became clear that I needed to provide a VAT number for the foundation that I run. Problem is that a charity foundation does not have a VAT number in the Netherlands. Im not sure if its the same in other countries. After many calls and email they have still not resolved this issue. But they pushed forward a new issue: my authentic chamber of commerce extract was not valid according to paypal. They needed a stamped and signed version. After getting that, there once again is no answer from support. So I am calling them again.