In terms of web startups, what PayPal offers over most other services is simple: let the user directly enter a credit card number to pay you some money - without the user having a PayPal account. There are lots of options for payments such as Google, Amazon and others but they all require the payer to have an account. PayPal doesn't - you effectively get credit-card processing with no setup and no hassles for absolutely nothing (apart from transaction fees). Compared to getting a merchant account etc, it's child's play. Of course, the "hassles" part turns out to be not so great once they suspend your account.