No, most businesses that use PayPal are using it as a credit card processor. Either by using a form hosted on the merchants website itself (via PayPal IPN) or a cheaper version where the user is redirected to a form on PayPal's site.
This is what the author was using before. His change was to enable a feature that gave him access to a "terminal" wherein he could type credit card numbers himself.
In high-risk markets, and new merchants, it's not uncommon for funds to be held. But apparently this was neither. This is just paypal doing what it's always been known to do -- Assault the merchant while whispering in his ear "this is for your own good."
In high-risk markets, and new merchants, it's not uncommon for funds to be held. But apparently this was neither.
We really can't tell from the OP what market this guy is in, and what he is really selling. He is deliberately vague..
"I run a few online stores which sell various products (non-Ebay, just regular old stores that sell stuff I make or provide)"
If he's going to attempt to draw such a large amount of attention, it might be helpful to know what specifically he is selling from all of his "regular old stores."
When he upgraded to PayPal Pro to get the Virtual Terminal, he separately applied for and received a real merchant account underwritten by a real bank (usually Chase or Wells Fargo). He accepted a separate agreement with that bank including the boilerplate Visa/MC agreements and the stuff about risk reserves. It's not the same as just turning on a feature.
This is what the author was using before. His change was to enable a feature that gave him access to a "terminal" wherein he could type credit card numbers himself.
In high-risk markets, and new merchants, it's not uncommon for funds to be held. But apparently this was neither. This is just paypal doing what it's always been known to do -- Assault the merchant while whispering in his ear "this is for your own good."