I just sold something for $5 and because ebay currently *requires* you to put in a Paypal account I gave mine. The guy that bought the item paid using Paypal, and after fees, I'm left with $4.53 - that's a 9.4% charge.
Because ebay was doing something bizarre when I listed it, I put the item up as $5 with no postage when I really wanted to do $1 with $4 postage. The listing and final value fee came to a total of 76 cents. So assuming it really does only cost me exactly $4 to post, I'll lose 29 cents from the whole deal.
Paypal's terms and conditions specifically forbid you from having a surcharge for transactions carried out using it. If they don't remove the requirement as a result of the recent ACCC ruling, I recommend that everyone add a note to the item description saying that Paypal won't actually be accepted at all despite it being listed, and that they refuse the payments in the Paypal wossname. Though apparently you're not allowed to do that either and your listing can be pulled! You could just correspond with the buyer and not accept the payment if they agree to pay it another way. Though apparently that's dodgy too. Recommendation - don't sell things on eBay.
As a buyer, PayPal+eBay isn't too bad. In fact, most dispute resolutions are weighted in your favour, and you can accrue frequent flyer points linked to your credit card for buying random junk.
I recently bought a template from the template design site, templates.com using PayPal. The amount was credited to my account and I tried to purchase the design, and it got stuck in a 'please wait' phase for several days before reverting to a 'timed out - please contact support' address. I sent four emails over just under two weeks and got no replies at all. The next step was to lodge a PayPal non-receipt of goods dispute. While the terms of this seemed to indicate that you were on your own when it came to digitally delivered goods, it still had an option for that in the submission process. The result? When I woke up in the morning, the download link had been fixed and someone had written to apologise for the delay! There was no explanation of the problem or why nobody bothered to reply to me until their $63 was put on the line, but at least I got the thing I bought, and it was much easier that lodging a dispute with my bank (though in the past that hasn't been terribly difficult either).
Would I buy from templates.com again? Ugh, probably not.
In order to get a cheap iTunes voucher, I ended up with a Visa prepaid gift card for $100. It seemed like it'd be an incredible pain to find and buy something that cost exactly $100, or to keep track of the balance and not be stuck with small amounts, so I decided that I'd donate the money to a good cause. I entered $100 and some bogus address details, and PayPal rejected the transaction because it couldn't verify the card details. So, I went to the card's Web site and registered an address and name, and noticed that the balance was now $99 because PayPal had charged $1 as one of those pre-auth transactions that reverses itself after a few days. Then I tried again with the card's new details and $99, but it failed with the same error.. presumably this time because there were now insufficient funds in the account. Worse still, the balance was now down to $98!
For the third attempt, I donated $97, leaving me with $0. I expect I'll get the $3 back in a few days, which means I'm stuck with my original fear of a ridiculously small credit balance, and I doubt that the successful pre-auths will be remembered by PayPal, so it's impossible to extract the final $1 in this way through PayPal. Ugh! $3 is below the minimum that retailers generally allow for credit card transactions, so I may just have to write it off. What a terrible scam!