I, like many, have been frustrated with Paypal the last few years. Their policy is a little one sided and it's the merchant who gets the short end of the stick. I know I am not the only one who has had their entire account locked—with all funds frozen—as a result of a single complaint from a buyer. I slowly took my payment processing to other venues and basically only use Paypal for eBay purchases now.
How are we supposed to process orders without a payment processing partner? There are many options out there that are suitable for selling goods (digital or not) online. If you want to go all out you can get a merchant account and setup an account with a gateway processor, such as Authorize.net or USAePay. That is a little extreme for most of us, especially those sites that are only selling a digital product (eBook, spreadsheet, etc.)
ClickBank is a very popular alternative for people who are selling eBooks online. I am one of those odd people who has never used ClickBank before so I don't have a real opinion on them. The people I know who use it say it's a decent system that they don't have too many complaints about. One thing I don't like about it though, is the $50 account setup fee. That's one of those things that makes me go Hmmmmm...
The option that is getting more and more popular is Google Checkout. I have been working with Google Checkout the last few months and honestly haven't had many issues. It does require a little more work on the merchant's part if you are selling digital goods. Basically you need to have a script running somewhere to process orders on your end and automatically email out the download information for your product.
It's software integration ability makes Paypal's look like childs play. Since I am also a programmer, I have been working on a system to automate my side of the Checkout purchases. I have been using gchecky module (written in Python) for my development and it's been a breeze to work with. There are also multiple libraries that you can use for your own development. Maybe once I am done with my system I will give away a free, smaller, version of it for all of you out there.
Google dispute policy is much more neutral than Paypal & others. The few times I have had to deal with it they have been fair to both sides and resolved the dispute accordingly. I have a friend who charges 5-10K a day using Google Checkout and since Google does a lot of the verification work, his charge backs have nearly disappeared!
If you are looking for an alternative to Paypal, try out Google Checkout! I don't think you'll regret it.