After losing sales show after show because I didn't have a merchant account, and thus couldn't take credit cards, and thus only a personal check if they didn't have enough cash (yikes...), I bit the bullet and got a VISA/MC merchant account. It costs me $300 a year, but I know for a fact that I would lose way more than that in sales if I didn't take cards so I think of it as just a business expense, and I throw it into the shop overhead account when figuring actual profit at the end of the year. I don't do business online yet (don't have the time to make that much product) so I just do shows, thus don't do the paypal/cc thing either. I have used paypal myself a few times, both to pay and to recieve funds, no problems yet, but I just don't have a good feeling about it given the problems I hear every once in a while. Just the fact that I've been spammed with umpteen million bogus paypal emails scares me away. It seems to be a huge target for the bad guys.
Thing with a merchant account to remember if you're the merchant is, the BANK ISSUING the CARD holds all the cards (pun intended), and the bank tries to side with the customer if it can (because that's where they make their money). If a customer calls their cc bank and disputes a charge, the merchant is assumed guilty until proven innocent, and gets slapped with a chargback charge etc. I haven’t had a problem yet, but I've heard horror stories there also. Keep all signed receipts for at least a year in case you get a bad apple that refuses to acknowledge they made that sale when they get their statement. Even then... all they have to do if they really wanted to scam you from the start is sign their name falsely. On large sales, I always ask for a drivers license etc. On very large sales I call my merchant account (800 number) and verify that the cc is good, not canceled etc... but that costs me $2.
Bottom line is, not to sound cynical, but there are bad guys out there, and if you go 10 years in a business without ever running into a cc problem, you are fortunate.