PayPal is protected in so many ways, it's not even funny. I have no idea how someone would disrupt their model. Wrap them. My guess is that fewer than 1% of

PayPal is protected in so many ways, it's not even funny. I have no idea how someone would disrupt their model. Wrap them. My guess is that fewer than 1% of PayPal transactions go awry, and that PayPal renders it difficult or impossible for the injured part to recover their loss in perhaps 1% of those transactions. If there is in fact any real, widespread dissatisfaction with this state of affairs, then you could set up a site to act as a proxy for receiving PayPal transactions and self-insure it again PayPal's malice and/or incompetence. Monetize by keeping a very small premium over PayPal's own rate. If PayPal is really that risky to do business with, then sellers won't mind paying 2.6% instead of 2.5%, or whatever PayPal charges. If, on the other hand, all this talk of PayPal freezing accounts is mostly just a bunch of FUD, then there's no point trying to compete with them at all unless you can do it on the basis of lower transaction charges.