You'll Get Weaker Protections. Security is frequently touted as one of the upsides to alternate-payment programs. After all, there is no credit-card number to steal. "But that means you won't have the same protections as if you were paying with a credit card," said Consumer Federation's Ms. Grant. "[Fraud] coverage is extremely limited, and whatever protections the service does give you are voluntary."

I'm not singling out Paypal here; it's simply the most popular example of an unregulated financial institution. They are not bound by the same laws as banks and consumers do not enjoy the protection of FDIC insurance or credit card liability limitations. While the risk is low, it would be a critical condition if you're an event organizer with $10,000 of invoices and a frozen Paypal account.

Here at MotorsportReg.com, we'll continue to accept good old fashioned, guaranteed payment so organizers don't have to worry about their bank account going dry. We pay out every two weeks via direct deposit whether you're due $1 or $100,000. Like clockwork!

Update Jan 24th: Paypal freezes Ron Paul donations. Yikes!

Update 2014: To be clear, we're mostly talking about protections for event organizers who would RECEIVE money.  Paypal is certainly secure in the sense of protecting attendee cardholder data.  However, you have less control on the merchant side.  Here are two examples from the past year that demonstrate this is an ongoing challenge that could be devastating to an event organizer who needs to pay their bills:

Paypal Freezes $45,000 of Mailpile's Crowdfunded dollars (2013)

Paypal Freezes $35,000 donation to fund treatment for a cancer patient (2013)