I’m going to come right out and say it – PayPal should not be used in collecting any type of fees in your law practice.
Listed as cons for using PayPal are reasons such as chargebacks to your IOLTA, fees being deducted from the retainer amount and commingling attorney funds with client’s money. Another reason not listed that should be mentioned is that paypal is unreliable.
Ask any large-scale merchant on ebay or do a search on paypal horror stories and you will find forum after forum full of merchants who had had their paypal account frozen purely at the discretion and whim of paypal. If they see that your account is “suspicious” they have the unilateral right to freeze the account and hold the funds for upwards of 90 days. All this you agreed to in the end-user agreement that nobody reads when they sign up.
What does PayPal consider suspicious activity? Who knows. It’s purely their decision. If they see a large transaction (such as a large retainer), they might freeze your account until they can ascertain the validity of the transaction. Meanwhile, you can’t access those funds and PayPal is not investigating with full deliberate speed.
If you’re going to accept credit cards as part of your law practice (as you should), then sign on with a reliable and trusted law firm merchant account such as Affiniscape or LawCharge. Don’t risk it with PayPal.