Anyone is free to cancel their PayPal account and start taking credit cards or checks through another service. But there seems to be a substantial misunderstanding of PayPal's fees here.

PayPal does not charge a pure percentage. It charges a flat fee plus a percentage. If you receive 30 cents through PayPal, guess what the fee is? It's 30 cents - or 100% of the amount received. That doesn't mean that PayPal charges 100%, though.

Instead, PayPal charges a flat fee of 30 cents per transaction plus a small percentage (between 1.9% and 2.9%). This is lower than banks or major credit card processors charge.

You can avoid the PayPal fee by having people send you a personal transfer from their PayPal account - no credit or credit cards. If the payment is marked as payment for goods or services, you will be charged a fee. If it is a "personal payment," there is no fee as long as it is paid from the PayPal balance.

While some would think the fees would go down in a bad economy, I would think fees would rise due to the level of uncollectable debt. Banks aren't charging less for overdrafts, and they aren't charging less for credit card debt.

Accepting PayPal is a convenience many merchants accept. Buyers like it because it doesn't cost them anything. Sellers like it because it means immediate money in the account without waiting for the mail or worrying about bad checks. I continue to use PayPal and either build the cost into the price or I have people tack on a small amount for using PayPal - an amount not much different from the cost they save by not buying a postage stamp. You might want to consider that approach as well.