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Paypal managed to skirt the issue that they are an unregulated bank by claiming that they were a payment processor and not a bank. It kept them in business, but did not change the fact that they are an unregulated bank.

Even if you pay for purchases using a credit card through Paypal do not expect the same protections as dealing directly with a merchant. Most credit cards companies have added limitations on their liability for transactions processed by a third-party. Paypal is one of the major third parties that the restrictions were designed to cover.

I have not had any problems with Paypal, but I have it linked to a separate checking account that has a limited balance and it is not with my primary bank.

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