I don't think this guy realizes the extent of how correct he is. PayPal is not a bank. They are basically a giant merchant account. Wells Fargo backs them, even while they compete with them (clearXchange.com).
So PayPal doesn't have to operate by the same rules. When you use PayPal, you are putting money into PayPal's bank account and hoping they act in your best interests.
A reasonable person (I feel) would conclude PayPal is a de facto merchant acquiring bank, especially given the volume, and therefore should be required to operate under those laws.
Of course, PayPal knows the real money is in becoming a card scheme, so it's only a matter of time before we see that (not co-branded with MasterCard). At least they'd have to operate under existing card scheme laws, but I sure as heck wouldn't use one.
Whose regulations, though? They're not a UK bank, and it doesn't seem clear that UK courts have any practical ability to help if a UK merchant has a dispute with PayPal and feels they need to resort to legal action.
So PayPal doesn't have to operate by the same rules. When you use PayPal, you are putting money into PayPal's bank account and hoping they act in your best interests.
A reasonable person (I feel) would conclude PayPal is a de facto merchant acquiring bank, especially given the volume, and therefore should be required to operate under those laws.
Of course, PayPal knows the real money is in becoming a card scheme, so it's only a matter of time before we see that (not co-branded with MasterCard). At least they'd have to operate under existing card scheme laws, but I sure as heck wouldn't use one.