Now, an aspect of running even a small business is that I have some cash on hand, and a profit margin to cover the cost of eating one or two disputes if necessary. If a $100 sale goes down the toilet, I don't lose $100, but only my original cost of goods.

Where I read about horror stories is individual sellers who are selling things like a second hand electric guitar. In those cases, the buyer and seller are probably both not swimming in cash, so having their money tied up in a dispute is in fact painful. And that entire economy is rife with fraud and outright theft. Also, electric guitars are a case where there is extensive room for dispute about the provenance and condition of each piece. This gives the buyer an easy way to claim "item not as described."

In my view the hot business model for using the small payment services is selling an inexpensive physical good with a generous mark-up.