Using PayPal is basically a crap shoot for recurring virtual services. As one poster on Hacker News said, if you aren't putting physical items in boxes and shipping to customers homes, you aren't in PayPal's target market.
I have to disagree with that. I think the vast majority of businesses, even those selling services, have no problems working with PayPal. Services and virtual goods are as baked into their service as physical ones -- anywhere you describe a payment, in sending, accepting or disputing one, 'service' is an option in the dropdown. Their buyer protection policies and seller protection policies explicitly call out what portions apply and don't apply to virtual goods. Not shipping a tangible item does not automatically put you in a bad position with disputes or chargebacks -- I win virtually all of them.
I consume a lot of other SaaS products, and the majority of them accept PayPal alongside credit cards. I run several "recurring virtual services", and have done so for many many years, and have hundreds of subscribers paying with PayPal. My PayPal account is 11 years old now and some of my PayPal subscribers have been around more than half that long.
When PayPal's customer service fails it tends to fail spectacularly, but all evidence points to these failures being exceptionally rare given the size of their user base.
