PayPal (part of eBay’s Payments division) is one of the key pieces of the auction giants empire, powering it’s payment capability. It’s in the process of launching a revamp:

Although these are somewhat pleasant features to have, they’ll have to contend with a group of disgruntled Internet Marketers, particularly users of Jonathan Leger’s $7 script, which administers a mini affiliate marketing scheme through PayPal’s APIs.

Read through this thread at Jon Leger’s 7Dollar Forum and you’ll get the distinct impression that PayPal’s frontline customer service seems ill equipped to deal with the issues that Garrie Wilson, Patrick Petty and Jon himself have raised.

Is it because PayPal staff are used to dealing with auction payments and assume that the 7Dollar delivery mechanism is some type of nefarious multilevel/ponzi/pyramid scheme?

It’s not clear, though seeming to arbitraily freezing PayPal accounts certainly doesn’t seem to be a pro-customer measure.

Surely, you can hear us Internet Marketers out, PayPal?

Many of us use PayPal as a payment gateway for our smaller product launches, we contributed a fair amount of your $1.44 billion revenue last year.

As a payment processor, PayPal already generates income from the following revenue streams (from eBay’s financial filings):

PayPal earns revenues in the following ways.

• First, PayPal earns transaction fees when a Business or Premier account receives a payment.
• Second, PayPal earns a foreign exchange fee when an account holder converts a balance from one currency to another.
• Third, PayPal may earn fees when a user withdraws money to a non-U.S. bank account,depending on the amount of the withdrawal.
• Fourth, PayPal earns a return on certain customer balances. Finally, PayPal may earn ancillary revenues from a suite of financial products, including the PayPal-branded debit card, the PayPal-branded credit card and the PayPal Buyer Credit offering.

While PayPal can certainly determine it’s own policies without close dialogue with its non-eBay users, it’s merely a matter of time before alternatives such as Google Checkout, 2Checkout or Clickbank more aggressively market their services and expand their service offerings to meet the growing needs of Internet Marketers.

When that happens, it will certainly be interesting to watch the market develop.