Not to disagree with Doug but the main reason for the "merchandise" category is that Paypal is like a credit card in that purchases are guaranteed. If the seller fails to deliver you can file a claim to get your maoney back. It costs Paypal money to make that service available (dispute resolution). There is no guarantee with a Gift option or any of the others. Paypal has no liability. I don't have a problem using the free services with other club members since our code of ethics enforces delivery as well as I believe that Paypal has a maximum amount that you can transfer for free over a lifetime ($5000?).